In separate filings late last week, lawyers for the Big Five publishers and Amazon asked a federal court to dismiss a lawsuit accusing them of a conspiracy to fix e-book prices.
In their September 17 filings, lawyers for Amazon and the Big Five publishers insist there is no evidence of any coordination or agreement among them to fix e-book prices or otherwise restrain competition. Perhaps more importantly, they argue, the alleged conspiracy—in which the five largest American trade publishers are alleged to have banded together to give Amazon monopoly power over e-books—fundamentally makes no sense.
“If true, Plaintiffs’ conspiracy allegation would mean that the Publisher Defendants got together to create a monopolist retailer with whom they would then have to deal,” the Amazon brief states. “Further reinforcing the implausibility of this theory, this would have happened while still under supervision from the Department of Justice (“DOJ”) after allegedly conspiring with Apple to reduce Amazon’s eBook sales.”
The suit was first filed in the Southern District of New York on January 14 (and later amended) by Seattle-based firm Hagens Berman—the firm that successfully sued Apple and five major publishers for colluding to fix e-book prices in 2011. It alleges that Amazon and the Big Five publishers—Hachette, HarperCollins, Macmillan, Simon & Schuster, and Penguin Random House—are co-conspirators in an alleged scheme to keep e-book prices artificially high—specifically through the use of various forms of a Most Favored Nations clause (MFN).
The complaint draws heavily upon an October, 2020 congressional subcommittee report on competition in the digital market which detailed some of Amazon’s hardball practices surrounding e-book pricing. Further, the suit came after Connecticut state officials revealed in January that they had opened their own investigation into the e-book market in their state.
In their brief, however, the publishers argue that rather than “supporting an inference of conspiracy,” the facts alleged in the complaint at best show only that the publishers, all facing "similar market forces," entered into separate contracts with “similar terms.”
“The allegations simply describe lawful conduct no more remarkable than individual pedestrians putting up their umbrellas in a rainstorm and cannot support an inference of conspiracy,” the publishers' brief states. “They certainly do not support the facially implausible conspiracy Plaintiffs ask the Court to infer—that the Publisher Defendants conspired to insulate Amazon from competition, an objective entirely contrary to the Publisher Defendants’ economic interests, individually and collectively.”
The suit must be tossed, the publishers insist, because it offers no evidence and no “plausible allegations” that the publishers communicated or coordinated "their activities or contractual agreements” with each other.
“Plaintiffs allege that the Publisher Defendants have conspired to do exactly what they have resisted for over a decade—‘immunize’ Amazon from competition and solidify Amazon’s market position," the publisher brief explains, adding that the publishers' previous price-fixing actions in the Apple case is not evidence of any “motive, intent, or meeting of the minds” to conspire with Amazon.
“On the contrary, the purported motive of the Publisher Defendants’ alleged conspiracy with Apple was to counter Amazon’s growing power," the publisher brief states. “[The current suit] does nothing to explain this inconsistency, and it contains no facts indicating how the Publisher Defendants could conceivably benefit from helping Amazon gain market power."
The latest motions come after Amazon and the Big Five publishers earlier this month moved to have a similar suit dismissed—this one filed filed by an indie bookseller on behalf of a potential class (also represented by Hagens Berman) which alleged a conspiracy to restrain price competition in the retail and online print trade book market. In that case, however, Amazon showed that its contracts with publishers did not contain MFN clauses, leaving the case on thin ice and forcing the plaintiffs to amend the case and recast it as illegal price discrimination under the Robinson-Patman Act.
In January, Cleveland Marshall professor of law Chris Sagers, author of the 2019 book United States v. Apple: Competition in America, told PW that while not implausible the case against Amazon and the publishers faced serious challenges—including the lack of direct evidence, and, as the defendants' filings suggest, whether the theory of the case holds water.
“Before a court is willing to find that [Amazon and the publishers] agreed to a conspiracy that harms retail consumers,” Sagers told PW last January, “the court will need to be persuaded that it makes sense for them to agree to such a thing.”