Publishers (Again) Object to Apple Antitrust Ruling
Last week US publishers demonstrated that old adage that insanity is doing the same thing over again and expecting a different result.
Publishers Weekly reports that the agency publishers which were part of the 2010 price fixing conspiracy and then settled the antitrust lawsuit out of court are once again objecting to the agreement between Apple and the DOJ.
As you may recall, the 5 publishers settled and agreed to give up retail price maintenance for a period of two years. Apple fought this case in court and lost, and received harsher penalties including staggered negotiations with the 5 major US trade publishers which prevent Apple from renegotiating contracts with two or more publishers at once.
Lawyers from two of the 5 publishers were back n court last week, objecting to the terms of Apple’s settlement. In appeals filed last week, lawyers for Macmillan and S&S argue that Judge Denise Cote’s 2013 final order against Apple made it virtually impossible for the publishers to successfully negotiate new agency model contracts which included retail price maintenance.
With Apple blocked from adopting retail price maintenance, Amazon will be able to keep control of the retail price. And with only a single publisher negotiating a new contract with Apple at any one time, there won’t be enough pressure on Amazon to force the retailer to knuckle under.
The publishers argue that this restriction illegally alters the terms of their settlements.
"The parties bargained for (and the district court approved) a two-year cooling-off period" reads a brief filed by S&S attorneys last week with the Second Circuit. However, the brief continues, S&S must "now wait four years, instead of two, to negotiate discount restrictions with at least one key retailer. And if other retailers insist on the same pricing discretion that [the Apple injunction] bestows on Apple—as Plaintiffs intended—the extension will apply across all of Simon & Schuster’s accounts."
The publishers are effectively arguing from the position of companies which were caught breaking the rules, apologized and got a slap on the wrist, and then object to the lone holdout getting a harsher punishment. It is that simple.
Of course, anyone who follows publishing news already figured that out; this has come up before.
Last year the publishers objected to the proposed terms of Apple’s settlement. In August 2013 they raised much the same objections as they made last week, saying that Apple’s settlement would "effectively eliminate the use of the agency model" for five years with Apple. The arguments didn’t work last year, and something tells me they won’t work this time around. But that didn’t stop the publishers from trying.
image by shane o mac
Chris Meadows July 2, 2014 um 12:47 pm
Once again, I just want to savor the irony inherent in that, when the publishers were committing to their settlement, Apple objected because it felt it was being unfairly punished before it even had its trial.
It’s kind of like bookends.
Nate Hoffelder July 2, 2014 um 12:53 pm
Heh. Yes, that is amusing.
William Ockham July 2, 2014 um 9:20 pm
Why don’t they just take out an ad in the New York Times that begs the DoJ to prosecute them again for price-fixing? Because that would only be slightly more obvious than this.
Chris Meadows July 2, 2014 um 11:43 pm
Well, technically, they have the right to reimpose agency pricing as long as they do it individually. Which they sort of have to given that they can no longer renegotiate their contracts at the same time. In theory, this should either give them pause about doing it (since their competitors will still be on normal pricing for a while) or make it more possible for Amazon to say no. But the DoJ admitted there’s nothing wrong with agency pricing by itself, it was just the act of imposing it simultaneously that was the problem.
William Ockham July 3, 2014 um 6:04 am
Yes, but if they coordinate the negotiations that is collusion. If they all announce in advance that they have the goal of reimposing the same contracts as before and one company leaks the details of Amazon’s negotiating position so the others know what to expect, that will look to the DoJ like collusion. If they complain that the Apple settlement is the only thing standing between them and the ability to raise prices, that looks like collusion. If the CEO who is negotiating with Amazon says that he wishes that they could all negotiate together, that looks like collusion.
The DoJ can use the duck theory to prove collusion (if it walks like a duck and talks like a duck, it is a duck). Most price-fixing colluders don’t announce their intentions to the press the way Jobs did. The evidentiary bar is very low.
Chris Meadows July 3, 2014 um 9:57 am
The thing is, any of those publishers might change their mind down the road once they see sales figures from their competitors who’ve gone to agency pricing. Remember, HarperCollins had to be forced to sign up in the first place by Jobs wheedling James Murdoch into putting pressure on them from above. And Random House was happy as a clam to stay on the wholesale model for a whole year and earn considerably more cash than the other five publishers, and would have kept right on if Jobs hadn’t used keeping them out of the app store as leverage to force them to sign up.
If the publishers genuinely have to negotiate separately, and the one who went first can’t retroactively demand the same deal as the one who went last, it makes it more likely Amazon will be able to finagle better deals.