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Antitrust lawsuit against accuses defendants of intentionally inflating prices and controlling book sales

One of Evanston’s independent bookstores, Bookends & Beginnings, is the lead plaintiff in a federal class action lawsuit filed last week in the Southern District of New York.

The lawsuit alleges a massive price-fixing scheme to intentionally constrain the bookselling market and inflate the wholesale price of print books, according to Hagens Berman and its co-counsel Sperling & Slater P.C. Evanston resident Eamon Kelly is one of the attorneys representing Bookends & Beginnings.

In a class action lawsuit, there is at least one lead plaintiff that represents others who allegedly suffered the same wrongs at the hands of the same defendants.

In this case, Bookends and Beginnings is the lead, or name, plaintiff. The suit alleges that Amazon colluded with the “Big Five” U.S. book publishers – Hachette, HarperCollins, Macmillan, Penguin Random House, and Simon & Schuster – “to restrain competition in the sale of print trade books, or non-academic texts such as fiction and non-fiction material.”

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The Big Five publishers control 80% of the trade book market, and Amazon accounts for about half of all books sold, including 90% of all print books sold online, the lawsuit says.

Nina Barrett, owner of Bookends and Beginnings, 1712 Sherman Ave., said,“Most independent bookstores are deeply embedded in the communities they serve. They match readers with books that enrich their lives. They help teach kids to love reading. They build communities around talking about books and ideas. They give gift cards to local fundraisers and reach out to populations where just owning a book might be a luxury. And they do it because they care, not because they’re trying to sell you a commodity.

“I’ve been involved in bookselling since the early 1990s, and I’ve watched Amazon grow into the juggernaut it’s become,” Ms. Barrett added. “I’ve experienced first-hand the devastation to publishing, bookselling, and to local brick-and-mortar shopping that’s resulted. Indie bookstores like mine battle every day to survive on a commercial playing field that is anything but level, and I’m proud to do whatever I can to help remedy that.”

One aspect of the lawsuit is the MFN, or “most favored nation,” provision in many of the distribution agreements. The lawsuit alleges that MFNs entitle the buyer to the lowest price or best terms that the supplier offers to any other buyer and that these anticompetitive provisions fix the wholesale price of books and prevent Amazon’s competitors from competing on price or product availability.

These MFNs thus stifle competition, the lawsuit alleges, stating “Amazon’s contracts with publishers cover practically all the potential avenues a competing bookseller may attempt to use in order to differentiate itself against Amazon. … To control wholesale prices, the Big Five agree to anticompetitive restraints that prevent Plaintiff and other booksellers from competing with Amazon.”

“We believe we have uncovered a classic antitrust price-fixing scheme akin to exactly what Amazon and the Big Five book publishers have been accused of in the past,” said Steve Berman, managing partner of Hagens Berman and attorney representing the proposed class of booksellers. “The Big Five and Amazon have sought to squeeze every penny they can from online and retail booksellers through a complex and restrictive set of agreements, and we intend to put an end to this anticompetitive behavior.”

In a Q&A sent to customers on March 29, Ms. Barrett says she is suing the defendants because of their “unfair business practices.” She says a class action suit is necessary, “because our daily struggle to run a sustainable brick-and-mortar bookstore in the heart of your community is shared by every other independent bookstore in the country, and anywhere else in the world where Amazon does business. We know that individually, there’s really nothing we can do about it. It needs to be a collective action, led by exceptional legal firepower. … To be clear, all we ask is that you be willing to pay the full price printed on a book jacket (which is determined by the publisher, not by us) in order to sustain all the extra value we add to your community by staying in business.”

Ms. Barrett’s letter also notes that Bookends & Beginnings is “an actual place” and stresses the economic value to the community: “67 cents of every dollar spent at a local store stays in your community, and every dollar spent at small businesses creates an additional 50 cents in local business activity as a result of employee spending and businesses purchasing local goods and services.”

 

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