During oral arguments on July 27, attorneys for publishers Big Five and Amazon asked a federal court to dismiss a potential class action lawsuit against consumers accusing them of conspiring to fix e-book prices. During nearly five hours of arguments in New York, Amazon and the publishers insisted the alleged conspiracy – in which the five largest American commercial publishers colluded to consolidate Amazon’s monopoly power – did not basically no sense and, above all, that there is no evidence of coordination or agreement between them.
“I submit to your honor that it is absolutely irrational for publishers to engage in a conspiracy to monopolize Amazon in the retail market,” said Amazon attorney John Schmidtlein. , to the court.
Furthermore, not only is there no direct evidence of any coordination, but all of the major publishers were under consent decree in the Apple eBooks case at the time of the alleged collusion. , Schmidtlein noted, meaning the alleged illegal conduct allegedly took place under the noses of the US Department of Justice and a group of state attorneys general, who reviewed the publishers’ contracts.
The e-book complaint was first filed in the Southern District of New York on January 14, 2021 (and later amended) by Seattle-based company Hagens Berman—the first company to sue Apple and Big Five publishers for colluding to fix e-book prices in 2011. The lawsuit alleges that Amazon and the Big Five publishers—Hachette, HarperCollins, Macmillan, Simon & Schuster and Penguin Random House—are co – conspirators in an alleged star-studded scheme with Amazon to keep e-book prices artificially high and to ensure there is no retail price competition, particularly through the use of various forms of most-favoured-nation (MFN) clause.
Following Schimdtlein, Scott Lent, advocating for publishers, insisted that, after Apple, each of the publisher’s agency deals with Amazon were done independently. Such parallel conduct is perfectly legal, Carême said, arguing that without “coherent theory” and evidence showing there was “a convergence of views” among publishers to come to terms with Amazon, there is no not enough to sustain the case.
“There is no direct communication between publishers. There is no allegation that Amazon has moved from publisher to publisher like Apple did in the e-books case” , Lent told the court. “But somehow the publishers, at least according to the plaintiffs, still came to an agreement…and the facts just don’t back it up.”
The lack of direct evidence is a key point. In the Apple case, Schmidtlein noted, Judge Denise Cote held that the use of agency contracts and the use of most-favoured-nation clauses were independently legal. What was not legal in the Apple case was the collusion and coordination between the publishers and Apple. But there is simply no evidence in this case of any collusive coordination.
During the hearing, Judge Valérie Figuereda insisted on several occasions to the plaintiffs on the lack of direct evidence. “You don’t dispute that you still need evidence to lead you to a plausible inference of a conspiracy? You can’t have the agreements alone?” asked the judge at one point.
“We have alleged that the agreements themselves are direct evidence of mutual agreement,” countered plaintiff attorney Barbara Mahoney. “The inference that we draw from the horizontal plan, we believe is a reasonable inference, is that it would have been economically extremely risky and unsound for the publisher to enter into these deals unless there was a tacit agreement or a fairly firm understanding of what the other publishers were going to do,” Mahoney offered, an argument that Figuereda was clearly skeptical of.
In addition to the e-books case, the court also heard defendants’ motion to dismiss another price-fixing action, this one relating to the sale of printed books, also led by Hagens Berman with the bookseller of the ‘Illinois Bookends & Beginnings as named plaintiff. First filed in March 2021, this case also initially centered on Amazon’s use of most-favoured-nation clauses – until it was revealed that Amazon’s printing contracts with editors did not contain MFN clauses. Rather than drop the case, however, the plaintiffs turned to the charge of a Robinson-Patman violation.
Both lawsuits, filed in early 2021, rely heavily on an October 2020 Congressional Subcommittee Report on Digital Marketplace Competition which detailed some of Amazon’s harsh practices regarding e-book pricing. And this week’s closing arguments come after Amazon and the publishers filed separate motions filed last fall asking the court to dismiss the lawsuits against them, describing them as both unsubstantiated and absurd.
“Plaintiffs allege that defendant publishers conspired to do exactly what they resisted for more than a decade: ‘immunize’ Amazon from competition and cement Amazon’s market position,” the publishers explained in their memory.
There is no time limit for decisions on motions.