Lawsuit and investigations challenge agency pricing

In The Global Indie Author I discuss the history of agency pricing and conclude that in the U.S. a legal challenge to agency pricing is inevitable; it is already under investigation in the UK. Critics maligned this assumption, arguing that what happens in Europe has no bearing on the U.S. This ignores the mechanics of a global economy, and it also ignores how Apple has attempted to circumvent an individual country’s sovereignty to dictate its consumer laws: Apple’s contract forces price parity across international jurisdictions. It comes as no surprise to me, then, that in early December the L.A. Times reported that the U.S Justice Department’s anti-trust division confirmed it was investigating agency pricing, following that of the state attorney general’s office in Connecticut and, it has been rumored, Texas.

A class-action lawsuit has also been launched in the U.S., in the Northern District of California, as reported by ars technical. What the blog post fails to report, however, is that when Amazon sold those $9.99 ebooks at a loss Amazon was in violation of another piece of legislation, this one regarding “predatory pricing,” that is, the act of selling a product at a price lower than its cost to the retailer. The U.S. Supreme Court ruled a long time ago that predatory pricing is illegal; the publishers therefore had another legal avenue open to them to stop Amazon’s pricing of ebooks at $9.99. That the publishers chose not to pursue legal action against Amazon and instead teamed up with Apple in the agency pricing scam, then forced Amazon’s hand, can only strengthen the plaintiff’s allegations of collusion between Apple and the publishers.

It will take some time for the investigations and lawsuits to wind their way through the justice system, but if I were a betting woman I would put my money on agency pricing becoming a short-lived annoyance for indie authors and consumers alike.

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