Magistrate Judge Recommends That E-Books Antitrust Claims Against Amazon Proceed, Says Plaintiffs Validly Allege Anticompetitive Conduct

A recommendation and report from a U.S. magistrate judge says that the harm plaintiffs allege in this case is “plainly” the type of injury antitrust laws were intended to prevent

NEW YORK — Judge Valerie Figueredo has recommended that Amazon’s motion to dismiss claims of monopolization and attempted monopolization of the e-books market be denied, according to attorneys at Hagens Berman.

Learn more about the lawsuit against Amazon for allegedly fixing the prices of e-books.

The nationwide class-action lawsuit against Amazon and the “Big Five” publishing houses, first filed in January 2021, alleges that Amazon and the five largest e-book publishers have anticompetitive agreements that prevent the sale of the publishers’ e-books at lower prices on other retail platforms and that Amazon uses these agreements to maintain its dominance in the market in which Amazon’s Kindle platform competes against other electronic platforms to transact sales between trade eBook publishers and retail consumers. The lawsuit further claims that these anticompetitive agreements allow Amazon to charge a commission on the sale of e-books on its platform that is at least 30% and routinely exceeds 40% and that this commission earns the tech behemoth a return upwards of 300% on e-book sales. According to the lawsuit, these agreements are the only thing that would enable Amazon to earn such supracompetitive profits.

Judge Figueredo’s report and recommendation, which was filed on July 31, 2023, grants a motion to dismiss from the “Big Five” publishers, saying that none of the publishers’ agreements with Amazon could individually have a market-wide effect on the price of trade e-books, and there is not sufficient evidence of horizontal conspiracy between the publishers. Judge Figueredo also recommends dismissal of claims by plaintiffs who purchased e-books from retail sites other than Amazon’s, but sustaining monopoly claims against Amazon by plaintiffs who purchased e-books on its site.

“I recommend that Amazon’s motion to dismiss…be denied as to Plaintiffs who purchased eBooks from Amazon. Those Plaintiffs have antitrust standing and have adequately pled a monopolization and attempted monopolization claim.”

Previously, in August 2022, Judge Figueredo recommended the lawsuit be dismissed because it did not adequately plead that Amazon possessed monopoly power. The proposed class of e-book purchasers, undeterred, filed a second consolidated complaint in November 2022, and Judge Figueredo has now recommended that the monopoly and attempted monopoly claims against Amazon be allowed to proceed. Early in the case the Court appointed Hagens Berman to be the interim lead counsel on behalf of the proposed class.

“We are pleased with Judge Figueredo’s recommendation and will continue fighting to hold Amazon accountable to consumers around the nation,” said Steve Berman, managing partner at Hagens Berman and the attorney leading the case. “This case is a classic David and Goliath story, and it demonstrates what ordinary people can achieve when they band together to stand up to powerful corporate interests.”

The Type of Injury Antitrust Laws Were Intended to Prevent

In the report and recommendation, Judge Figueredo said that “In an attempt to attenuate the casual connection between the alleged overcharge injury and Amazon’s alleged monopolistic conduct, Amazon recasts Plaintiffs’ allegations as a complaint over the payment of commissions for agency services...But Amazon ignores that it is responsible for the commission it charges the Publishers, and that commission forms part of the retail price of eBooks.”

The consumers in the case who purchased e-books from Amazon, said Figueredo, allege a valid injury under antitrust laws, because they allege that they paid higher prices for e-books due to Amazon’s conduct. “The elimination of retail price competition resulting in higher prices borne by consumers is ‘plainly’ the type of injury ‘the antitrust laws were intended to prevent,’” said the report, citing In re DDAVP Direct Purchaser Antitrust Litigation, a case in which consumers were forced to pay supracompetitive prices for prescription medication due to a pharmaceutical company’s anticompetitive conduct.

Find out more about the lawsuit against Amazon for allegedly fixing the prices of e-books.

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About Hagens Berman
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