E-Books Antitrust Litigation

E-Books Antitrust Litigation

On August 9, 2011, Hans Berman, a law firm, filed a suit in the U.S. District Court for the Northern District of California (the law suit is ANTHONY PETRU-V-APPLE INC).

It is a class action suit, alleging that

“… Apple Inc. and five of the nation’s top publishers, including HarperCollins Publishers, Hachette Book Group, Macmillan Publishers, Penguin Group Inc. and Simon & Schuster Inc. illegally fix prices of electronic books, also known as e-books.”

http://www.hbsslaw.com/cases-and-investigations/ebooks

I didn’t report this the day it broke, because I wanted to research it a little more (and these kinds of things typically move pretty slowly).

While I have read the above statement from HBSS (as they abbreviate themselves), I have not yet seen the actual filing. I went to the Court’s website, but it looks like I’d have to set up an account and do some other things to see it. I may yet do that, but I think I can give you a reasonable idea of this at this point.

The lawsuit has to first be considered. If it is approved, it is a nationwide, class action suit. You can join the suit already:

http://www.hbsslaw.com/joinacase/suit/557

If this is eventually settled, anyone in the suit who bought an Agency Model book might be entitled to a payment.

Random House, by the way, is not included. They joined the Agency Model in March of this year, whereas the other five of the US largest trade publishers started basically in April 2010.

Will it succeed?

It’s an interesting tactic. Criminal charges might be much harder to prove, in my opinion. Although Steve Jobs is named in the statement on the website, that doesn’t mean he would be criminally charged because of this. He might regret having made the much discussed statement that pricing was going to be the same in the iBooks store and at Amazon, though.

There are some interesting allegations in this statement, and you should read it.

If you had to actually prove that the Agency Model raised the prices, that would be tricky. If you had to actually prove that the Agency Model publishers colluded, that might be hard.

However, a jury might certainly decide that Apple and the publishers are at fault here and owe the members of the class in the suit something…as I understand it, that’s a much lower proof standard.

We’ll keep an eye on this.

By the way, this same law firm is investigating claims that the Big Six have underpaid authors royalties on e-books:

http://www.hbsslaw.com/newsroom/?nid=2081

This isn’t the first legal investigation of the Agency Model, but I believe it’s the first civil action in the USA on it.

Feel free to comment on it…I expect to hear a lot of approval of the suit in those comments. Anybody who is opposed to the suit, who perhaps thinks that Apple and the publishers are entitled to have the Agency Model, I’d love to hear from you.

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

8 Responses to “E-Books Antitrust Litigation”

  1. Mark Says:

    It is about time. I’ve been wondering why Amazon hasn’t filed a lawsuit, do you have any ideas?

    • bufocalvin Says:

      Thanks for writing, Mark!

      It would be a very different thing for Amazon to sue other companies than for it to be a class action suit representing the public. Public Relations-wise, this is much better. I think it’s more likely for a judge to approve the suit as well.

      Also, it might be hard for Amazon to show losses. Everything e-book related (well, maybe not the DX) 🙂 , seems to have exceeded sales expectations. Hard to argue a negative impact.

      On the other hand, an individual can show harm. In the case of New York Times bestseller hardback equivalents, we can show a much greater growth rate in price than there had been before the Agency Model…and more competitive price flattening at that higher level.

      Also, it’s probably worth noting that the same firm (or another) might go after Amazon….not for the specific price, but for the “favored nation” pricing. Amazon requires that publishers using their Kindle Direct Publishing not charge less elsewhere. That’s a questionable practice…

  2. Riva Laughlin Says:

    I don’t know if you’ve found the filing, but it’s posted at the law firm’s website now. Just follow the first link in your post and look at the right border. There’s a link to a pdf document titled “E-books Complaint”. That’s what you want.

    I haven’t read it yet (it’s over 40 pages), but I’ve downloaded it for later. It will be interesting to see what happens.

    • bufocalvin Says:

      Thanks for writing, Riva!

      That’s exactly what I want. 🙂 I don’t know if I missed it, or if it wasn’t there.

      I’m having Amazon convert it and send it to my Kindle. I’l probably end up listening to it in the car…if it doesn’t read the line numbers…

  3. Edward Boyhan Says:

    Both the AG’s of Texas and Connecticut are pursuing investigations to determine whether agency pricing runs afoul of price fixing rules. In Europe, the UK’s OFT (Office of Fair Trading) is pursuing a quite aggressive action complete with office raids; more generally the EU competition authorities are conducting their own separate investigation.

    Several blog posts have claimed that the agency model is already illegal in Australia (I haven’t looked into this deeply — so I don’t know upon what basis that is).

    My own view is that the agency model will probably ultimately be found to be unlawful. It will, however, take years (in the US) for this to be adjudicated thus buying time for the big six to adjust business models (if they can) to the heavy discounting that eBooks and entities like Amazon put into the marketplace. Agency pricing also gives Apple an easier entree into the eBook business v. Amazon than they otherwise would have had.

  4. More on the class action suit: have you joined? « I Love My Kindle Says:

    […] is certainly getting to be some buzz on the class action suit about Agency Model pricing about which I wrote […]

  5. Mamye Martineau Says:

    I was unaware of the Apple/Amazon feud until I read the lawsuit that was filed. I did notice prices being higher at Amazon since purchasing my kindle 3G last May 2011. I have really enjoyed my kindle ebooks but have purchased less due to the increased prices and was hoping for the prices to drop in the future. It is disgraceful and gready for Apple to cause prices to increase for ebooks and for bringing pressure against Amazon to increase their pricing method against their kindle customers. I hope the lawsuit is settled soon against Apple and their strongarming book companies and Amazon can be allowed to once again offer lower prices to their loyal kindle customers.

  6. Round up #55: AMZN vs CA on The Daily Show, EU vs Agency Model « I Love My Kindle Says:

    […] it may be class action suits that effect a change in the United […]

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