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Fresh complaint filed in US agency model case

23.01.12 | Bookseller Staff

Lawyers acting for the plaintiffs in the case against Apple and major publishers in the US over e-book price fixing have filed an amended complaint with further details on their claims.

The complaint, filed by law firm Hagens Berman on 20th January, limits the suit to Apple, HarperCollins, Penguin, Hachette, Simon & Schuster and Macmillan, calling them the "Agency Five".

The complaint states that Hachette Livre c.e.o. Arnaud Nourry talked with other publishers about what an acceptable price point for e-books would be, and then met with an Amazon executive on 3rd December 2009, telling them that if Amazon raised its e-book prices by $2 or $3 the "problem" of Amazon's e-book price would be alleviated. 

According to Publishers Weekly reports, the complaint states that after Amazon said it had no intention of raising prices in the short-term, the publishers, starting with Hachette, began contacting Amazon to say they were adopting a windowing policy on certain frontlist titles, with the complaint saying none of the four publishers would have "engaged in such a 'radical departure' from traditional business practices unless they knew other houses would go along.

The complaint continues by arguing that Apple did not want to enter the market if it had to compete with Amazon's loss-leading $9.99 price point, and Apple's desire to enter the e-book market on more favourable business terms aligned with the Agency Five's goal of raising e-book prices. The complaint says that in January 2010, at the same time as the iPad launch announcement, the Agency Five publishers said they were switching to the agency model, something the complaint says no individual publisher would have done without knowing other publishers were prepared to do the same.

According to Publishers Weekly, the complaint states: "Eventually Amazon, in order to compete and offer e-books from the Agency Five, agreed to the Agency model. It did so despite its concern that the publishers 'coordinated tactics' to 'force e-books prices higher' in a way that threatens to 'dampen the robust competition that currently exists among different book retailers and e-book platforms'". It continues: "The Agency Five were willing to sacrifice revenue in the short-run in order to undermine Amazon's market position and ability to maintain a low price points for consumers . . . Only by acting collectively could the Agency Five block Amazon's threat to drive down wholesale prices in the future."

The lawsuit, which was filed in August 2011, seeks damages for e-book buyers, an injunction against pricing e-books with the agency model, and forfeiture of the illegal profits received by the defendants as a result of their anti-competitive conduct. The law firm said this could "total tens of millions of dollars". Hagens Berman managing partner Steve W Berman, lead counsel in the case, said: "We intend to show that the big publishers saw the sea change in the delivery of books, and agreed to a price-fixing conspiracy as a last-gasp attempt to maintain profit margins."

• agency model
• amazon
• Apple
• Bookseller Staff
• price fixing
• publishers