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Class Action Against Amazon Alleging it Illegally Spiked Its Competitors’ Prices of E-Books

Publications / Jan 31, 2021

Article written by Haim Ravia, Dotan Hammer and Adi Shoval

A class action asserted against Amazon in a federal district court in New York alleges that it spurred an increase in e-books’ prices for its competitors in violation of U.S. antitrust law.

According to the claim, Amazon, which controls about 90 percent of the digital-book market, reached an agreement with five major publishers, according to which they will not offer their e-books at lower prices than the prices offered on Amazon. This is a contractual clause also known as the “most favored nation” (MFN). Amazon charges high commissions and other costs to publishers, which in turn drives publishers to significantly increases the retail price of the eBooks they sell on Amazon.com. Because of the MFN clause, the arrangement also caused a price increase in competing eBook sellers, even though they charge much lower commission and could have offered the books at lower retail prices.

The lawsuit demands that Amazon cease to include these MFN clauses in its publishing agreements and that it refund consumers for the price gap, which the plaintiffs allege is as high as 30% of the e-book’s listed price.

This is not the first time Amazon is accused of anti-competitive practices for using similar contractual terms. In 2015, the EU Council found that Amazon violated EU antitrust law and banned Amazon from including and enforcing such contractual terms in agreements with digital-book publishers in the EU for five years.

CLICK HERE to read the claims made against Amazon in Shannon Fremgen v. Amazon.com, Inc., case No.  1:21-cv-351.

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