DOJ Starts New Inquiry into Publishers’ Negotiations With Amazon

I was waiting for this shoe to drop.

The WSJ reported yesterday that the US Dept of Justice is asking questions of publishers. It seems someone at the DOJ has noticed that 2 years have passed since 3 major US trade publishers settled an antitrust lawsuit over a conspiracy to fix prices, and the DOJ wanted to see if the trio weren't back up to their old tricks.

The inquiries, made in recent weeks by letter to Lagardere SCA's Hachette Book Group, CBS Corp.'s  Simon & Schuster and News Corp's HarperCollins Publishers, have created anxiety in the publishing industry. The inquiries reopened a sensitive and costly issue that publishers thought they had resolved, and raised the possibility of additional constraints on how they do business.

While some might see this as DOJ once again taking the role of Amazon's pawn, I regard the DOJ's letters as merely prudent. Only a fool would believe there's no chance of the publishers conspiring again, and what better way to discourage that possibility than by sending a scary letter?

That letter comes shortly after the 2 year anniversary of the antitrust lawsuit filed by the DOJ and 33 state's attorneys general against Apple and 5 publishers. Apple is of course still fighting the lawsuit in court, but all 5 publishers settled in advance of the trial.

Hachette, S&S, and HarperCollins had the good sense to settle as soon as they knew the lawsuit was coming, and that's why they are being singled out for this letter. One of the requirements of the settlement was that the publishers had to give up any hope of retail price maintenance for a period of 2 years. That period ended in April 2014, right in the middle of the nasty Hachette-Amazon contract dispute (which actually started in November 2013).

So, does anyone think that the DOJ has evidence of a new conspiracy?

It might be unlikely but it's not out of the question.

Thanks, Felix!

14 thoughts on “DOJ Starts New Inquiry into Publishers’ Negotiations With Amazon

  1. Well, now, the DOJ has a long memory and the PR campaign aimed at Amazon is a carbon copy of the one aimed at them two years ago. And they know the other one was coordinated so alarm bells went off when the “usual suspects” started spouting the usual drivel.
    Even mr comic book guy chipped in.
    The only one MIA so far is Turow.

    Let’s not forget: those folks still have to fly any signed contracts by the DOJ for three more years. Minimum. It can easily be extended indefinitely. And the settlement included a no-retaliation clause. If Hachette turns out to be dragging negotiations and/or shipments on purpose…

    Well, things could get interesting.

    For now, they are letting them know they are watching them very, very carefully.

    1. “If Hachette turns out to be dragging negotiations and/or shipments on purpose…”

      Except Amazon’s own blog post confirmed that the reasons for the delayed shipments are because they (Amazon) are choosing not to place orders…

      FUD FUD FUD

      1. And Michael J. Sullivan’s post in DBW says that Hachette is taking approximately two weeks to ship upon receipt of Amazon’s po. I suspect that is longer than it used to be but will admit that I have no first hand knowledge in this matter and I’ll bet those that do aren’t talking. At least not yet.

        1. But again, Amazon *flat out stated* that the delays are due to their reduced orders. It’s not any supposition or “secret sources”, they owned up to it completely.

          Maybe Hachette is taking a little longer than usual to fulfill orders. We don’t know. The only evidence thereof is a blog with no source other than “I heard it through the grapevine”. But we do know that Amazon has stated that their reason for delaying shipments is because of their own actions, so to absolve them is to willfully ignore reality.

          1. Amazon has said that they’re holding less inventory and that is causing shipping delays. Other than the existence of a dispute, neither Amazon nor Hatchette has said *why* Amazon is holding less inventory. Unless we know that, we don’t know who to pin the problem on.

            To take one hypothetical: Suppose Amazon used to get reimbursement of shipping costs for any print books they had to return. Suppose that Hachette stopped that reimbursement at some time during the negotiations. How would that impact Amazon’s inventory of Hachette titles? Whose fault would it be?

            It’s also worth re-iterating the following: Despite repeated claims by many, *including you*, there is absolutely no evidence that Amazon is delaying shipments once they have inventory. And there are several reasons to believe they aren’t: First, Amazon has flatly stated that. Second, it would get them in all sorts of hot water over the Prime program (and I can personally confirm that several Prime-eligible Hachette titles are showing shipping delays). Finally, it would cost them money: Warehouse space isn’t free and neither are delayed order charges (since Amazon, like many other retailers, doesn’t charge before shipping).

            Given how badly your previous claim about the Amazon-Hachette shipping delays has fared (and since that claim is still unretracted so far as I am aware), I think your current claims require piles of salt.

      2. Er, no, Amazon’s official comment noted that it wasn’t stocking for future orders. They can use customer data they have access to to predict how many they’ll likely need and stock their warehouses accordingly. They stopped doing that and began to order based on current, rather than predicted, demand.

        So as I read it, it was more like, usually, Amazon’s like “Nobody’s ordered this yet, but we know ten orders will probably come in, so we’ll order them in advance and hold them to ship when they’re ordered.” Whereas in this situation they decided to say “Nobody’s ordered this yet. Let’s wait until somebody orders it to place the order ourselves.”

        As a retailer, they can choose what to stock and how to order.

  2. But its not a conspiracy if they tell Amazon they individually won’t discount and don’t talk to each other. Question. If one of them publishes the agreement for everyone to see, and the others say, I want the same terms, is that a conspiracy?

      1. But it might be contempt of court under the “no retaliation” rule if they allow anybody else to discount. And that still assumes the no discount contract passes muster.
        Antitrust remedies are very open ended: just ask Microsoft.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>