The law firm currently leading a sprawling class action price-fixing suit against Amazon and the Big Five publishers in the e-book market has filed a second lawsuit—this one on behalf of booksellers. But where the previous suit alleges price-fixing in the digital market, the new suit, filed on March 25 in the Southern District of New York by Seattle-based firm Hagens Berman, accuses Amazon and the publishers (Hachette, HarperCollins, Macmillan, Simon & Schuster, and Penguin Random House) of a conspiracy to restrain price competition in the retail and online print trade book market, with Evanston, Ill.-based Indie bookseller Bookends & Beginnings the initial named plaintiff, on behalf of a potential class of booksellers.
“To control wholesale prices, the Big Five agree to anticompetitive restraints that prevent Plaintiff and other booksellers from competing with Amazon,” the complaint states, alleging that 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.”
Similar to the claims made in the in the recently-filed, ongoing e-book price-fixing case, the suit turns on Amazon’s use of Most Favored Nation clauses in its contracts with the Big Five publishers, which, lawyers for Hagens Berman claim, have "the intent and effect of controlling wholesale prices of print trade books and preventing competition with Amazon in the retail sale of print trade books."
The suit comes as online print book sales, a market which Amazon dominates, grew in importance for indie booksellers in 2020 amid the pandemic, facilitated by the emergence of the upstart Bookshop.org.
The collusion claim in the suit is somewhat puzzling, given that the Association of American Publishers has filed comments with regulators calling out Amazon's dominant role in the marketplace. But while the complaint acknowledges that the Big Five publishers “have indicated a preference to diversify from Amazon, not to become more dependent upon it” it claims the publishers are nevertheless acting “against their own self-interest” and participating in what lawyers portray as a hub-and-spoke conspiracy, coordinated by Amazon, to restrain price competition in the market for print trade books.
“Defendant Amazon participated in and facilitated the horizontal agreement among the Big Five Defendants by coordinating a series of substantially identical agreements with the same anticompetitive terms and making clear to each of the Big Five Defendants that it was offering each of them a similar deal,” the complaint alleges. “The purpose and effect of these agreements is to ensure that Defendants control trade wholesale prices for print trade books and that Amazon faces no competition from other online booksellers.”
Among the relief requested, the suit seeks a declaration that the defendants’ actions are anticompetitive, monetary damages, including penalties and treble damages, and an injunction ordering the defendants to cease their alleged anticompetitive actions.
Bookends & Beginnings owner Nina Barrett told PW she agreed to join the suit because the only way to curb Amazon's power is through collective action.
"Every single independent bookseller goes out every single day and fights a heartfelt battle to sell books, on an unlevel playing field, against a ginormous competitor who has managed to accrue unfair advantages that we don't have, using tactics that are blatantly unfair," Barrett said. "This is a situation that has been building for 20-plus years. We've all seen it happening and nothing effective has been done to restrain it. If there's an opportunity to approach it through class action, that's exactly the reason class action exists. No one bookseller can make a difference in a case like this, but I think this is a step toward collectively exercising power that will, finally, have a dramatic impact."
Hagens Berman was of course the first firm to sue Apple and five of the then six major publishers for e-book price-fixing in 2011, in a case that would eventually draw suits from a number of states and the Department of Justice. The five publishers settled their claims for some $166 million, while Apple lost at trial and paid out some $400 million to consumers.
In January, Hagens Berman filed suit against Amazon and the Big Five publishers alleging a similar conspiracy to restrain price competition in the e-book market. That case has spawned a number of copycats suits, which are now in the process of being consolidated, with Hagens Berman attorneys seeking to be named lead counsel.