Monday, October 26, 2009
Antitrust Division Asked to Investigate Bestseller Book Pricing
This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.
The American Booksellers Association—a trade organization representing locally owned, independent booksellers—has asked the Department of Justice Antitrust Division to investigate alleged predatory pricing by Amazon.com, Wal-Mart, and Target.
In its October 22 letter, the trade group requested a meeting with Christine Varney, Assistant Attorney General Antitrust Division, and Molly Boast, Deputy Assistant Attorney General for Civil Matters, to discuss the retailers' pricing of recent best sellers and its impact on small bookstores.
Price War in Internet Sales
The trade association points to recent reports that Amazon.com, WalMart.com, and Target.com have engaged in a price war in the pre-sale of new hardcover bestsellers, which typically retail for between $25 and $35. The companies are currently selling these and other titles for between $8.98 and $9—losing money on each unit, according to the trade association.
The group contends that Amazon.com, Wal-Mart, and Target are using these predatory pricing practices to attempt to win control of the market for hardcover bestsellers. These companies are purportedly using “mega bestsellers . . . as a loss leader to attract customers to buy other, more profitable merchandise.” As a result, “the entire book industry is in danger of becoming collateral damage in this war.”
The association also called on the Antitrust Division to scrutinize the loss-leader pricing of digital content. The letter points to Amazon.com's purported below-cost pricing of digital editions of new hardcover books.
Over the years, the American Booksellers Association has filed Robinson-Patman Act suits against publishers and book stores for alleged price discrimination, with varying success. In the 1990s, the trade group obtained settlements from major publishers in price discrimination actions. Around the same time, the Federal Trade Commission (FTC) dropped investigations into price discrimination by the country’s largest book retailers (Trade Regulation Reporter ¶24,109).
Generally, the FTC, and not the Department of Justice, has been the federal antitrust agency that has taken the lead in enforcing the Robinson-Patman Act. However, the number of cases has dropped significantly in recent decades. The FTC has not issued a Robinson-Patman Act complaint since its action against spice company McCormick & Co. in 2000 (Trade Regulation Reporter ¶24,711).