Justice Department asked to investigate Amazon’s "monopolization" of book market

This posting was written by Jeffrey May, J.D.

A group of authors, and the American Booksellers Association—a trade association representing independently-owned bookstores—are asking the Department of Justice to scrutinize the business practices of online retailer Amazon. They are calling on the Department of Justice Antitrust Division to investigate Amazon’s “power over the book market, and the ways in which the company exercises its power.”

In separate letters sent July 13 to William J. Baer, Assistant Attorney General in charge of the Antitrust Division, the groups made their case against Amazon. Among other things, they contended that the online retailer abuses its monopsony power over large and small publishers and harms competing book sellers though predatory, below-cost sales.

The author group, which calls itself Authors United, cites published figures in an effort to demonstrate Amazon's monopoly power. According to the authors, Amazon controls more than 75 percent of online sales of physical books; more than 65 percent of e-book sales; and more than 40 percent of sales of new books.

Also noted by the authors were Amazon's hard-ball business tactics with publisher Hachette Book Group during a long-running contract dispute in 2014 and the retailer’s purported efforts aimed at “content control.” Last year, Authors United sent a letter tothe directors of Amazon, accusing the company of “sanctioning Hachette authors’ books” in order to “enhance its bargaining position” with the publisher. In that letter, the self-identified “literary novelists, Pulitzer Prize-winning journalists, and poets; thriller writers and debut and midlist authors” explained that “[n]o group of authors as diverse or prominent as this has ever come together before in support of a single cause.” During the contract dispute, Amazon allegedly “engaged in content control, selling some books but not others based on the author’s prominence or the book’s political leanings.”

This latest call for a Justice Department investigation comes one month after the European Commission (EC) announced that it had opened a formal antitrust investigation into Amazon's e-book distribution contracts with publishers. The EC is looking into whether Amazon, the largest distributor of e-books in Europe, violated antitrust laws by requiring publishers to give Amazon the right to be informed of more favorable or alternative terms offered to its competitors and/or the right to terms and conditions at least as good as those offered to its competitors. 

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.

Predatory Pricing

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.

Private Suits

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).

Government Enforcement

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).