MobileRead Forums - View Single Post - U.S. Justice Dept. to Sue Publishers, Apple, for Price Collusion?

Andrew H. · 03-14-2012, 01:59 AM

1. a. If the publishers got together and agreed to use agency pricing as a cover to raise prices, they have reduced competition. Literally: there is no more retailer competition on pricing.

The same is true of Euro price-maintenance rules - they reduce competition because retailers can no longer compete on price.

The effect of both of these activities is to raise prices for the consumer.

1.b. Low prices for the consumer is not necessarily the ultimate good: to use an extreme example, eliminating child labor also raised prices for the consumer. The idea is that sometimes consumer have to pay more because achieving some other outcome is more important. For the price-fixing euro countries, the goal is to enable small neighborhood-type stores to survive, which happens because big stores can't offer lower prices. (Germany, at least, also has store closing laws which mean that larger stores also can't compete by staying open until 11 every night).

Paying more so that neighborhood businesses survive is almost a tax to live in a certain kind of society. One in which neighborhood businesses survive...and consumers get screwed. You pays your money and you takes your chances!

But I think that's also the kind of argument people who say that this was necessary to fight Amazon are making.

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But there are a lot of unanswered questions about the investigation. It can't be purely about the agency model - that's used in all kinds of areas.

But it could be about the fact that 5 of the publishers joined the agency model all at once, which suggests a concerted action that might be illegal. The MFN clauses have, I think, always been problematic. And maybe there's evidence of some collusion beyond what what know so far - like an agreement to keep the prices above some certain level for certain types of books.

I'm also very curious why Apple is being investigated - they are not a publisher, so whatever their involvement is, it has to be different from the publishers' involvement. Apple sold music, movies, and apps on the agency model long before iBooks existed, so there doesn't seem to be an issue with them having an agency model at all. (And it's not like iBooks is much of a success, either.) My best guess would be that they may have violated an anti-trust provision of some sort by "furthering" the publishers' fight against Amazon. But I'm not sure about that, and I'll be pretty interesting what comes out.

03-14-2012, 01:59 AM	#187
Andrew H. Grand Master of Flowers Posts: 2,201 Karma: 8389072 Join Date: Oct 2010 Location: Naptown Device: Kindle PW, Kindle 3 (aka Keyboard), iPhone, iPad 3 (not for reading)	1. a. If the publishers got together and agreed to use agency pricing as a cover to raise prices, they have reduced competition. Literally: there is no more retailer competition on pricing. The same is true of Euro price-maintenance rules - they reduce competition because retailers can no longer compete on price. The effect of both of these activities is to raise prices for the consumer. 1.b. Low prices for the consumer is not necessarily the ultimate good: to use an extreme example, eliminating child labor also raised prices for the consumer. The idea is that sometimes consumer have to pay more because achieving some other outcome is more important. For the price-fixing euro countries, the goal is to enable small neighborhood-type stores to survive, which happens because big stores can't offer lower prices. (Germany, at least, also has store closing laws which mean that larger stores also can't compete by staying open until 11 every night). Paying more so that neighborhood businesses survive is almost a tax to live in a certain kind of society. One in which neighborhood businesses survive...and consumers get screwed. You pays your money and you takes your chances! But I think that's also the kind of argument people who say that this was necessary to fight Amazon are making. --------------------- But there are a lot of unanswered questions about the investigation. It can't be purely about the agency model - that's used in all kinds of areas. But it could be about the fact that 5 of the publishers joined the agency model all at once, which suggests a concerted action that might be illegal. The MFN clauses have, I think, always been problematic. And maybe there's evidence of some collusion beyond what what know so far - like an agreement to keep the prices above some certain level for certain types of books. I'm also very curious why Apple is being investigated - they are not a publisher, so whatever their involvement is, it has to be different from the publishers' involvement. Apple sold music, movies, and apps on the agency model long before iBooks existed, so there doesn't seem to be an issue with them having an agency model at all. (And it's not like iBooks is much of a success, either.) My best guess would be that they may have violated an anti-trust provision of some sort by "furthering" the publishers' fight against Amazon. But I'm not sure about that, and I'll be pretty interesting what comes out.