Amazon's the villain, not Apple, book sellers say

The DOJ should be after Amazon for illegal business practices, not Apple and the major book publishers, say many of the people who filed public comments on the issue. Of course, lots of them are bookstore owners.

Not surprisingly, bookstore owners and authors make up a large number of the people who filed comments with the U.S. Department of Justice regarding the government's antitrust case against Apple and e-book publishers.

The DOJ posted copies of the more than 800 comments on its Web site today. In April, the agency announced that it had filed an antitrust suit against Apple and five of the nation's largest book publishers. The government accuses Apple and of conspiring to raise prices and forcing Amazon and other retailers to follow suit.

The government reached a settlement with three of the five publishers accused: Hachette Book Group, HarperCollins Publishers, and Simon & Schuster (owned by CBS, parent company of CNET). As part of that settlement, the three e-book publishers agreed to stop "placing constraints" on retailers' ability to offer discounts to consumers for two years, to stop sharing "competitively sensitive information" with competitors for five years, and to implement an "antitrust compliance program."

The public was invited to file comments about the settlement.

Many book sellers who filed comments say that the government is going after the wrong party, that Amazon is the real culprit. They accuse the Web's No. 1 retail store of predatory pricing, which they allege will force many bookstores out of business.

"The fact that Amazon.com had a 90% market share in e-books prior to the agency model speaks to why they want to see it eliminated," wrote Allison Hill, who said in her comments that she represented a 117-year-old bookstore in Southern California. "I hope the Department of Justice sees beyond one company's agenda and recognizes that the agency model is actually essential to the book industry as a whole -- publishers, independent booksellers, Barnes & Noble, and readers."

Mark Childress, author of such books as "A World Made of Fire" and "Crazy in Alabama," wrote: "I am well aware that Amazon's share of the ebook business has fallen from 90 percent to 60 percent since the agency pricing model was instituted. In any settlement please remember that healthy competition is crucial to maintaining a broad range of literary and political voices in our country."

The Justice Department's complaint says that the publishers and Apple conspired to shift the e-book business model from a wholesale model -- which benefited market leader Amazon.com -- to a so-called agency model, where prices are established by the publishers. "This change in business model would not have occurred without the conspiracy among the defendants," the complaint says.

The lawsuit accuses the defendants of violating the Sherman Act and asks the court to "prohibit the collusive setting of price tiers that can de facto fix prices" and void Apple's e-book contracts with publishers that "impedes the e-book retailer's ability to set" retail prices.

But consumers are the real losers if the DOJ doesn't go after price fixers, said Mark Cooper, research director for the Consumer Federation of America, an advocacy group.

Cooper said in a statement last month: "In order to defend cartel agency pricing the brick and mortar bookstores and celebrity authors have had to concoct a description of the market in which bookstores are squeezed between two much more efficient distribution models -- big box mass marketers on the one side and long-tail e-tailers on the other."

The government also issued a response to those opposed to the antitrust case. "Critical comments," the DOJ wrote, "generally were submitted by those who have an interest in seeing consumers pay more for e-books and hobbling retailers that might want to sell e-books at lower prices."

 

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