NEW YORK--(BUSINESS WIRE)--Today, consumers hit Amazon.com with a nationwide class-action lawsuit accusing the world’s largest retailer of artificially inflating the retail price of e-books through anticompetitive agreements with the nation’s five largest book publishers, according to Hagens Berman.
The lawsuit, filed in U.S. District Court for the Southern District of New York, states that Amazon, which controls approximately 90% of the U.S. e-book market, has colluded with the country’s “Big Five” book publishers to fix the price of e-books and raise the price of e-books sold through Amazon’s e-book retailer competitors higher than they would be in a legitimately competitive marketplace.
The complaint states that Amazon’s co-conspirators have been involved in similar litigation before – and have apparently failed to learn anything from the experience. In 2011, Hagens Berman filed a lawsuit against Apple and the Big Five, accusing them of fixing e-book prices at artificially high levels in response to the threat to their profits posed by retailers’ discounted pricing of e-books. Under this scheme, the Big Five – Hachette, HarperCollins, Macmillan, Penguin-Random House and Simon & Schuster – entered into agreements with Apple, whereby the publishers all switched from a wholesale model (where the e-book retailer determines retail prices of e-books) to an agency model (where the publisher determines retail prices and the e-book retailer acts merely as its agent). As part of their conspiracy, the Big Five agreed to a most favored nations clause (MFN) to prevent retailer discounts, and to sell their e-books at the same inflated prices through Apple’s online store as through all other e-book retailers.
Hagens Berman’s successful class action resulted in Apple settling for $400 million and the publishers settling for millions more, with hundreds of millions of dollars going back into the pockets of e-book consumers who’d been victimized by the scheme. Now, as the current complaint makes clear, Amazon has stepped into the anticompetitive role once occupied by Apple, and its monopolistic actions have been condemned by U.S. and European regulators.
“Amazon’s behavior is astonishingly brazen, especially in light of past litigation and recent government actions in the U.S. and abroad,” said Steve Berman, managing partner of Hagens Berman. “Time and again, Amazon’s response to competition is not to compete on a level playing field, but to try to eliminate the competition – and that’s not how things are supposed to work.”
NEW ECONOMY, SAME OLD PRICE-FIXING
According to the complaint, consent decrees entered in the prior lawsuit prevented the Big Five from interfering with retailers’ discounts for two years, resulting in lower, more competitive e-book pricing in 2013 and 2014. Instead of allowing competitively priced e-books, Amazon and the Big Five entered into price-fixing agreements in 2015, which allowed the Big Five publishers to increase their e-book prices by up to 30%, while – much like the Apple conspiracy – protecting Amazon from price competition from other e-book retailers.
As a result of this alleged collusion, the plaintiffs all share a similar experience: When they shopped around for better prices on a given e-book title, they instead found uniform, anticompetitive pricing across the internet.
In a report issued on Oct. 5, 2020, the U.S. House Judiciary Committee criticized Amazon as having “a history of using MFN clauses” for anticompetitive purposes. Although Amazon changed the name and specific mechanisms over the years, the Committee found that Amazon has continuously imposed contract provisions that effectively function as MFNs on book publishers. Furthermore, the report compared Amazon to “the kind of monopolies we last saw in the era of oil barons and railroad tycoons.”
“Amazon’s abuse of power proves, yet again, that when it comes to violating antitrust laws, the New Economy is up to the same old tricks,” said Berman.
The lawsuit against Amazon states that the e-book retailer violated antitrust and consumer-protection laws by pushing fraudulent price increases onto consumers through illegal pacts with its Big Five co-conspirators. The lawsuit calls for monetary reimbursement for consumers who purchased e-books through e-book retailers that compete with Amazon, and also seeks injunctive relief that would require Amazon and its co-conspirators to stop enforcing anticompetitive price restraints.
Hagens Berman Sobol Shapiro LLP is a consumer-rights class-action law firm with 10 offices worldwide. The firm’s tenacious drive for plaintiffs’ rights has earned it numerous national accolades, awards and titles of “Most Feared Plaintiff’s Firm,” MVPs and Trailblazers of class-action law. More about the law firm and its successes can be found at www.hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.