SDNY Judge Stands by Magistrate’s Ruling in Favor of Amazon and ‘Big Five’ Publishers in Book Seller’s Antitrust Class Action

On Thursday, the district judge presiding over an antitrust conspiracy case brought by an Illinois book seller against the “big five” publishing houses and online retailer Amazon dismissed the allegations. The decision upholds the “thoughtful and well-reasoned” opinion authored by Magistrate Judge Valerie Figueredo in mid-August in the suit against Amazon, Hachette Book Group Inc., HarperCollins Publishers LLC, Macmillan Publishing Group LLC, Penguin Random House LLC, and Simon & Schuster Inc.  

The case shifted to the Southern District of New York in April. The plaintiff, on behalf of similarly situated retail and online booksellers, alleged that the defendants acted collectively to control wholesale prices of print trade books. The publishers knowingly entered into price discrimination agreements with Amazon, the main retailer through which they sell their trade books, the plaintiff claimed.

The July-filed complaint brought a Robinson-Patman Act claim alleging discriminatory pricing agreements, and Sherman Act claims for conspiracy to monopolize the market of trade print books, monopoly as to Amazon only, and illegal restraint of trade. The bookseller said the practices caused it as well as consumers to pay higher prices for print trade books and were without procompetitive justification.

Judge Figueredo ruled that the conspiracy claim failed for want of direct or circumstantial evidence. Among other reasons, the court cited a lack of action against self-interest. By contrast, the court found that the plaintiff’s allegations “provide ample reasons why a Publisher would want to distribute its print books through [Amazon], a retailer that accounts for 90% of online print sales.”

The opinion concluded that the plaintiff did not “describe the existence of an environment that required collective action for the Publishers and Amazon to fulfill their respective goals.”

Examining the monopolization claim against Amazon, that it used its market power to force the publishers to engage in a horizontal price-fixing conspiracy, the court said that without a conspiracy, the Section 2 claim also had to fall. As a secondary holding, Judge Figueredo found that the plaintiff did not show antitrust injury and therefore had no standing.

The court then turned to the price-discrimination claim, which argued that Amazon received a better wholesale price from the publishers that was not equally available to the plaintiff and other booksellers. Judge Figueredo recommended dismissal of the claim for the dual reasons of lack of antitrust standing and because the plaintiff did not allege facts “from which to plausibly infer that the lower price offered to Amazon was not the result of a functional discount or based on materially different terms of contract.”

In this week’s decision by the district court, the judge denied the defendants’ request to dismiss with prejudice. The short opinion said that the court could not conclude that a further amendment would be futile, while noting that the plaintiff had not yet had the opportunity to amend with the benefit of a ruling from the bench. 

The bookseller is represented by Hagens Berman Sobol Shapiro LLP and Sperling & Slater P.C. 

Amazon is represented by Perkins Coie LLP, Hachette by Freshfields Bruckhaus Deringer US LLP, HarperCollins and Penguin Random House by Arnold & Porter Kaye Scholer LLP,  Macmillan by Cadwaller, Wickersham & Taft LLP, and Simon & Schuster by Weil, Gotshal & Manges LLP.