Amazon Accused Of Price-Fixing Conspiracy By Evanston Bookstore

EVANSTON, IL — An independent Evanston bookstore has filed a federal class action lawsuit against Amazon, accusing the dominant online retailer of conspiring with the nation's largest publishers to monopolize the market for books.

Bookends & Beginnings, 1712 Sherman Ave., is the lead plaintiff in the suit filed Thursday in the Southern District of New York. It alleges that Amazon colluded with the "Big Five" publishers — Hachette, HarperCollins, MacMillan, Penguin and Simon & Schuster — in an illegal price-fixing scheme.

According to the complaint, the five publishers named as defendants produce 80 percent of the non-textbook, non-reference books sold in the United States, and Amazon now accounts for more than half of all retail print book sales, including about 90 percent of those sold online.

Since the mid-1990s, the number of independent bookstores has fallen from about 4,000 to fewer than 2,000 today, according to statistics cited in the suit.

Bookends & Beginnings owner Nina Barrett, who opened the shop in 2014 following the closure of Bookman's Alley in the same location, said independent bookstores provide communities with much more than Amazon.

“Most independent bookstores are deeply embedded in the communities they serve. They match readers with books that enrich their lives,” Barrett said, in a statement announcing the suit. “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.”

Amazon's alleged scheme relies in part on a series of agreements with publishers that include "most favored nation," or MFN, provisions. According to the lawsuit, the clauses ensure Amazon gets the lowest price and best terms available, which prevents anyone from competing with the multinational firm on price or availability.

"Authorities in the United States and Europe have launched multiple investigations into [Amazon and the Big Five's] conduct in book sales and have found their agency agreements with MFNs to be anticompetitive," according to the suit. "The House Antitrust Commission and the [European Commission's Directorate General for Competition] also found at the the conclusion of their respective investigations into Amazon's MFN and similar anticompetitive provisions in its agreements with the Big Five, that Amazon's agreements harm consumers and competition in the retail sale of books."

The suit argues that it would be in the best interests of major publishers to have the option of offering exclusive early releases or lower wholesale prices to competitors of Amazon. That would allow smaller booksellers to gain market share and increase and increase the publishers' distribution, it said. But instead, the contracts prevent any retailer from competing with Amazon on book price or other promotions.

“I’ve been involved in bookselling since the early 1990s, and I’ve watched Amazon grow into the juggernaut it’s become,” Barrett said. “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.”

"We've had a lot of great feedback from customers who are rooting for us, and from other bookstores who are signing up to be part of the class action," Barrett told Patch in an email. "For people who are wondering how they can support us and our fellow bookstores, it's by deciding to buy all your books from a local store you love. Those dollars make all the difference for us, and also have a great ripple effect in your local community!"

The Bookends & Beginnings owner said 67 percent of money spent at a local store remains in that community, and every dollar spent at a small business leads to an additional 50 cents in local business activity. She said every independent bookstore in the country faces the same challenge from the giant online retailer.

"We know that individually, there’s really nothing we can do about it," she said in the store's April newsletter. "It needs to be a collective action, led by exceptional legal firepower."

Barrett is represented by two firms with extensive antitrust experience and a track record of taking on Amazon: Seattle-based Hagens Berman and Chicago-based Sperling & Slater, where the lead attorneys are Joseph Vanek and Eamon Kelly, Evanston's Democratic Party committeperson.

“I am proud to represent Nina and her great store in this important case,” Kelly told Patch in an email.

“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 at Hagens Berman and one of Barrett's attorneys, announcing the suit. “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.”

Berman and his firm sued Apple and the five dominant publishers in 2011 over the price of e-books. The class action suit went to the U.S. Supreme Court and resulted in a $400 million settlement from Apple and millions more from the publishers. Jointly litigated by the U.S. Justice Department and the attorneys general of 33 states or territories, the case represented one of the most successful recoveries of damages from an antitrust suit in U.S. history, according to the firm.

And earlier this year, Hagens Berman filed another class action suit against Amazon and the same group of publishers alleging continuing price-fixing in the e-book market. The lead plaintiffs in that case include residents of Arizona, Iowa, Florida, New York and Texas who have purchased e-books from Apple Books and Barnes & Noble.

Patch has requested comment from Amazon representatives. Any response received will be added here.

The 48-page class action complaint asks a judge to certify retail and online booksellers as classes, to find that Amazon and the publishers violated the Sherman Antitrust Act through monopolization and unlawful restraints of trade and to order them to stop their "abusive, unlawful, and anti-competitive practices." It also seeks damages, penalties and legal fees.