Two antitrust lawsuits that accused Amazon and five major book publishers of illegally conspiring to fix the prices of traditional and e-books in the United States were dismissed by a federal judge on Thursday.
The five book publishers targeted by the two lawsuits were Macmillan, HarperCollins, Simon & Schuster, Hachette and Penguin Random House. The first lawsuit was an antitrust lawsuit brought by Seattle-based law firm Hagens Berman. It was filed in the Southern District of New York in January last year, and it alleged that major publishers had conspired with Amazon to keep e-book prices artificially inflated and sought to suppress price competition in the retail space.
The five publishers also reportedly signed agreements with Amazon that gave the tech company a 30% fee for each e-book sale and guaranteed Amazon that its prices would not be undercut.
The second lawsuit, filed in March 2021 by Illinois-based bookseller company Bookends & Beginnings, alleged that Amazon obtained a “discriminatory” discount on traditional books, including paperbacks and hardcovers, according to Reuters.
Because of this discount, the bookseller claimed he was forced to pay higher wholesale prices to publishers and suffer low sales.
Amazon would account for 50% of print book sales and 90% of retail eBooks. The five publishers together represent 80% of the two book markets, the plaintiffs claimed.
Last month, US Magistrate Judge Valerie Figueredo dismissed both lawsuits, insisting there was a lack of evidence to prove collusion between publishers and Amazon.
Figueredo questioned why consumers in the lawsuit failed to provide any reasoning as to the book publishers‘ motivation to participate in the alleged conspiracy when such actions only furthered Amazon’s dominance in the e-book market.
On Thursday, U.S. District Judge Gregory Woods in Manhattan accepted Figueredo’s judgment and dismissed both lawsuits without prejudice.
Market dominance and author income
The lawsuit’s dismissal comes as the Department of Justice (DoJ) opposes Penguin Random House’s proposed acquisition of Simon & Schuster. At the heart of the case is a concern over authors’ earnings.
In the court casethe DoJ argues that the “proposed merger would likely result in lower author income for their books.”
Prolific author Stephen King was a witness for the DoJ. In court, he called consolidation a “bad” development for a competitive market.
“When I started in this company, there were literally hundreds of footprints, and some of them were run by people with extremely particular tastes, you might say. These companies were either subsumed one by one , or they’ve gone out of business. I think it’s getting harder and harder for writers to find enough money to live on,” King saidaccording to Publishers Weekly.
The average American author earns about $20,000 a year, which is below federal poverty guidelines, National Book Award finalist Min Jin Lee noted in a Tweeter August 4.
The merger between Penguin and Simon & Schuster will potentially create a large publisher and “likely decrease the number of manuscript buyers”, she warned.