NEW YORK--(BUSINESS WIRE)--Retail booksellers today hit Amazon.com and publishing companies with a class-action lawsuit alleging a massive price-fixing scheme to intentionally constrain the bookselling market and inflate the wholesale price of print books, according to Hagens Berman and its co-counsel Sperling & Slater P.C.
The lawsuit was filed in the U.S. District Court for the Southern District of New York on Mar. 25, 2021, and states that Amazon colluded with the Big Five U.S. book publishers – Hachette, HarperCollins, Macmillan, Penguin Random House and Simon & Schuster – to restrain competition in the sale of print trade books, or non-academic texts such as fiction and non-fiction material.
The Big Five publishers control 80% of the trade book market, and Amazon accounts for about half of all books sold, including 90% of all print books sold online. Attorneys say these factors and more make this market ripe for price-fixing through the highly restrictive most-favored-nation clauses (MFNs) in their distribution agreements. The lawsuit states these anticompetitive provisions fix the wholesale price of books and prevent Amazon’s competitors from competing on price or product availability.
“We believe we have uncovered a classic antitrust price-fixing scheme akin to exactly what Amazon and the Big Five book publishers have been accused of in the past,” said Steve Berman, managing partner of Hagens Berman and attorney representing the proposed class of booksellers. “The Big Five and Amazon have sought to squeeze every penny they can from online and retail booksellers through a complex and restrictive set of agreements, and we intend to put an end to this anticompetitive behavior.”
Amazon and its co-conspirators have been involved in similar litigation before. 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 that matter, Hagens Berman’s successful class action resulted in Apple settling for $400 million after the case went to the Supreme Court, and the publishers settling for millions more, with hundreds of millions of dollars going back into the pockets of e-book consumers. Amazon and the Big Five publishers were also sued in 2021 for allegedly inflating the price of e-books.
Throwing the Book at Amazon & the Big Five
The lawsuit is brought by a Chicago-area bookstore that maintains both an online and brick-and-mortal competition to Amazon, purchasing books directly via wholesale from each of the Big Five publishers.
“Most independent bookstores are deeply embedded in the communities they serve. They match readers with books that enrich their lives,” said Nina Barrett owner of the lawsuit’s named plaintiff, Bookends & Beginnings LLC. “They help teach kids to love reading. They build communities around talking about books and ideas. They give gift cards to local fundraisers and reach out to populations where just owning a book might be a luxury. And they do it because they care, not because they’re trying to sell you a commodity.”
“I’ve been involved in bookselling since the early 1990s, and I’ve watched Amazon grow into the juggernaut it’s become,” Barrett added. “I’ve experienced first-hand the devastation to publishing, bookselling, and to local brick-and-mortar shopping that’s resulted. Indie bookstores like mine battle every day to survive on a commercial playing field that is anything but level, and I’m proud to do whatever I can to help remedy that.”
Bookends & Beginnings LLC operates a bookstore in Evanston, Illinois, and also sells books online through its website.
MFNs were previously put in the spotlight when Hagens Berman’s eBooks case led to concurrent investigations by federal and state prosecutors in the United States and by the European Commission’s Directorate General for Competition. This resulted in orders prohibiting the publishers from entering into MFNs in connection with the sale of eBooks on either continent for a period of five years.
As outlined in the lawsuit, MFNs entitle the buyer to the lowest price or best terms that the supplier offers to any other buyer. When combined with Amazon’s market dominance, they serve an anticompetitive purpose that controls the wholesale price of print trade books, destroys Amazon’s retail competition, reduces consumer choices and creates a disincentive among booksellers to compete on price or non-price promotions in the sale of print trade books, attorneys say.
If not for these MFN agreements stifling competition, it would benefit the Big Five’s book distribution and economic self-interest to let Amazon’s rivals gain more market share by offering them lower wholesale prices or exclusive early releases.
“But Amazon’s contracts with publishers cover practically all the potential avenues a competing bookseller may attempt to use in order to differentiate itself against Amazon,” the suit states. “To control wholesale prices, the Big Five agree to anticompetitive restraints that prevent Plaintiff and other booksellers from competing with Amazon.”
End of the Monopoly
The lawsuit details the MFNs set to ensure no rival bookseller can differentiate itself from, or otherwise compete with, Amazon on price or product availability in the sale of print trade books. Attorneys say that this classic antitrust tactic is exactly what the Sherman Act is designed to stop.
“Our firm has a long track record of breaking up anticompetitive behavior under laws like the Sherman Act, designed to break up illegal monopolies that stifle the free market,” said Berman. “We intend to hold Amazon and these publishers to the law, just as we have done in previous cases of this very kind.”
The plaintiff and proposed class is also represented by a team from Sperling & Slater P.C. a Chicago-based firm that routinely represents clients in high profile antitrust matters, led by Eamon Kelly and Joseph Vanek.
The proposed classes of online and brick-and-mortar retail booksellers seek monetary damages under the Sherman Act, as well as an order from the court that terminates the ongoing monopoly and price-fixing.
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.