Lawsuit Against Agency Model Balloons

[Greg Anos]

Originally Posted by rhadin

In America, the fiction is that a company is supposed to act in the interests of its shareholders. The realities that the courts adhere to is that they act on behalf of entrenched management regardless of whether that is in the best interests of shareholders or citizens.

I think a more general view is that corporation are free to work in the interests of their shareholders, within the limits of the current (constitutional) law. Price fixing was part of the 1890 Sherman Anti-Trust act, under which the Supreme Court broke up Standard Oil in 1911.

Frankly, given the lawyer in the US, I'm surprised it took this long for the suits....

[Rob Lister]

Originally Posted by Ralph Sir Edward

I think a more general view is that corporation are free to work in the interests of their shareholders, within the limits of the current (constitutional) law. Price fixing was part of the 1890 Sherman Anti-Trust act, under which the Supreme Court broke up Standard Oil in 1911.

Frankly, given the lawyer in the US, I'm surprised it took this long for the suits....

i'm surprised the DOJ hasn't filed a criminal suit.

[fjtorres]

Originally Posted by Hellmark

if they worked together to do so, then yes.

Correct.
Competition is legally deemed good and collusion and conspiracy, concerted action to benefit a group of companies to the detriment of consumers and/or other competitors is legally deemed bad. Some of the laws and precedents go back a century and more.

Note that the suits in question are civil suits; the various state AGs and the feds have yet to act on the criminal front. Among the many dangers facing the pricefixers is that the civil discovery process could uncover evidence that greases action on the criminal front, where penalties could theoretically get very personal. If the term RICO comes into play things could get very interesting very fast.

But so far all that is at risk is shareholder value so the pricefixers aee not personally liable.
Yet.

[HarryT]

So it would not be an offence for one publisher to say to Amazon, "I'm only going to let you sell my books if you agree to act as an agent, rather than a retailer", right? It's the fact that that five publishers did so jointly?

[HomeInMyShoes]

Originally Posted by HarryT

So it would not be an offence for one publisher to say to Amazon, "I'm only going to let you sell my books if you agree to act as an agent, rather than a retailer", right? It's the fact that that five publishers did so jointly?

Jointly means collusion which is generally a bad word in North America for businesses.

I think the publishers need to realize that many people buy most of my books in e-format now (I did personally get a few paper ones when I got a gift card recently) and I haven't bought an e-book since August 23rd now. Most of the books I'm looking at have fallen under the evil umbrella and are all $10. Which is too much when I can cruise the bargains of physical books and find reasonable options for $5. Now I've started to use the library like a demon again.

My comment to the publishers is: if you don't want to sell books, that's your choice.

[jgaiser]

Originally Posted by fjtorres

If the term RICO comes into play things could get very interesting very fast.

RICO for non-USAians:

http://en.wikipedia.org/wiki/Rackete...anizations_Act

[Andrew H.]

Originally Posted by HarryT

So it would not be an offence for one publisher to say to Amazon, "I'm only going to let you sell my books if you agree to act as an agent, rather than a retailer", right? It's the fact that that five publishers did so jointly?

I don't think the real issue in the suit will be agency pricing itself, whether the publishers agreed or not. There's no reason to believe that that, by itself, is price fixing.

The real issue is that the agency pricing agreements with the publishers and the retailers prohibit the publisher from charging one retailer less than another. I.e., Amazon is acting as an agent for HC, but HC is prohibited from selling its books through B&N for less than it does through Amazon. This is an agreement between competitors wrt prices and looks a lot like classic price fixing. The agency model doesn't.

[fjtorres]

Originally Posted by ilovejedd

Don't see why Amazon is included in the lawsuit when they were against agency pricing in the first place. It just so happened they couldn't do anything but comply with the publishers' edict.

That is Amazon's public position and likely would be their in-court position, but the case can be made that the price fix benefits them by increasing their BPH content margins, allowing them (as well as Kobo and B&N) to prosper by applying that added revenue to expand in other areas. There's no telling how compelling such a case might be in court, but it *can* be made and, as I pointed out above, in today's anti-business, class-warfare populist climate every succesful company is guilty until proven innocent and often not even then.

[CWatkinsNash]

Originally Posted by ilovejedd

Don't see why Amazon is included in the lawsuit when they were against agency pricing in the first place. It just so happened they couldn't do anything but comply with the publishers' edict.

Originally Posted by fjtorres

That is Amazon's public position and likely would be their in-court position, but the case can be made that the price fix benefits them by increasing their BPH content margins, allowing them (as well as Kobo and B&N) to prosper by applying that added revenue to expand in other areas. There's no telling how compelling such a case might be in court, but it *can* be made and, as I pointed out above, in today's anti-business, class-warfare populist climate every succesful company is guilty until proven innocent and often not even then.

I'm inclined to believe that it's more about discovery of needed evidence. Yes, the case can be made that the gains they stood to make from the arrangement caused them to go in with the Agency 6 on the scheme, but they have at least one attempted stand-off on their side. (Was in MacMillan? I don't remember right this second.) In addition, Amazon worked with Overdrive to bring library books to Kindle users. While this doesn't apply directly to the case, it DOES add another level of separation between Amazon's intent and the will of the publishers, giving Amazon a boost in perception in the populist climate.

There is a distinction between being in cahoots with price fixing, and making decisions in the best interest of a company. All it would take is evidence of threats of, or even allusions to, publishers pulling their content from Amazon to paint Amazon as a company under duress to comply for the sake of remaining competitive, rather than a company in collusion with the publishers.

Any case that Amazon was complicit would almost have to hinge on the fact that Amazon is so huge that its actions made it possible for the scheme to succeed, and that gains made my doing so were greater than losses that would have occurred otherwise.

Now, if the discovery process brings to light evidence that Amazon was an active or even cooperating party to the collusion, all of this goes out the window.

[Greg Anos]

Originally Posted by HarryT

So it would not be an offence for one publisher to say to Amazon, "I'm only going to let you sell my books if you agree to act as an agent, rather than a retailer", right? It's the fact that that five publishers did so jointly?

Correct.

[fjtorres]

Originally Posted by CWatkinsNash

I'm inclined to believe that it's more about discovery of needed evidence.
There is a distinction between being in cahoots with price fixing, and making decisions in the best interest of a company. All it would take is evidence of threats of, or even allusions to, publishers pulling their content from Amazon to paint Amazon as a company under duress to comply for the sake of remaining competitive, rather than a company in collusion with the publishers.

Agreed on both counts.
The coertion aspect is where the racketeering exposure could come in, btw.
Extortion and/or bribery are RICO-enablers.

(Random House was the last to join the cabal in the US but they were in on the discussions from day one and they joined in soon enough.)

[Andrew H.]

Originally Posted by fjtorres

Agreed on both counts.
The coertion aspect is where the racketeering exposure could come in, btw.
Extortion and/or bribery are RICO-enablers.

(Random House was the last to join the cabal in the US but they were in on the discussions from day one and they joined in soon enough.)

What coercion? Did they threaten to break Bezos's legs? It's not coercion to change the terms and conditions of a sale and let people take it or leave it.

[rhadin]

Originally Posted by HarryT

So it would not be an offence for one publisher to say to Amazon, "I'm only going to let you sell my books if you agree to act as an agent, rather than a retailer", right? It's the fact that that five publishers did so jointly?

Yes, Harry, that is correct. It is also not a problem if the 5 acted wholly independent of each other. The fact that it occurred simultaneoulsy is circumstantial evidence of collusion, but not conclusive proof. It is sufficient proof in a civil suit if the defendants do not counter it. The question really boils down to "what other inference could a reasonable person draw?"

[Phogg]

Originally Posted by rhadin

In America, the fiction is that a company is supposed to act in the interests of its shareholders. The realities that the courts adhere to is that they act on behalf of entrenched management regardless of whether that is in the best interests of shareholders or citizens.

Karma for you.

[Fbone]

If the courts decided agency pricing must end, what stops the publishers from raising their wholesale prices or delaying ebook availability?