What's wrong with publishers forcing retailers to set the same price for the same book? You see it all the time in retail.
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Apple to Pay $450 Million to Settle E-Book Price Fixing Case
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What's wrong with publishers forcing retailers to set the same price for the same book? You see it all the time in retail.
You clearly don't understand what price-fixing means. Publishers engaged in something called the agency model. That means that they would set a price and Apple would get a 30% cut of whatever price they set. There is absolutely nothing illegal or unethical about that. That's exactly how the App Store, iTunes Store, and countless other companies' stores work. That is not price-fixing; that is a perfectly legitimate and widespread business model.
Publishers also set something called a most favoured nation clause, meaning that if they were to offer a better price to another company, they would have to match it with Apple. Again, MFN laws are completely legal. And it's important to remember that the MFN clause sets a price ceiling, not a price floor, so the assertion that that's price-fixing is simply incorrect.
You clearly don't know what the case is about, the forced ALL the stores (Google, B&N, Amazon, Sony) the agency model, this is the price fixing thing.
Why don't you read what the case is about before writing such wrong thing and accusing others of not understanding when the one not understanding is you
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Loss leader is not illegal
This settlement simply ties related class action and state litigation to the outcome of the DOJ case. This is not a settlement of the DOJ case. Apple is still appealing the DOJ case, and if they win, they will pay nothing in this settlement.(This settlement was announced a month ago. The only new information is the amount.)
Can you link to a reason that you can't call a company an abusive monopolist without a ruling?
Can you explain how an increase in competition doesn't help competition?
Just wanted to reiterate that Apple only pays damages if they lose the appeal in the DOJ lawsuit.
What part of the judge's statement that agency pricing and MFN are legal alone or in combination don't you get?
Are you trying to claim that selling your product for the same price at different stores constitutes price fixing?
Sorry, but you're talking out of your ass. This case is about the combination of the agency model with the most favoured nation clause. Both agreements are 100% legal, but the DOJ tried to claim that because these agreements resulted in higher prices, that constitutes price fixing.
That is absolutely incorrect. The fact that prices went up does NOT mean that any price fixing was occurring. It simply means that prices were set artificially low because Amazon was a monopolist that was engaging in predatory pricing.
By switching from the wholesale model to the agency model, Amazon lost some of its power as a monopolist, market forces took hold, and prices returned to their natural level. That natural level was higher than Amazon's artificially low prices, so prices increased a little bit for consumers, but that does NOT constitute price fixing in any way.
Are you trying to claim that selling your product for the same price at different stores constitutes price fixing?
Sorry, but you're talking out of your ass
I give up, when someone don't want to inform and prefer to live in ignorance and is repeating the same wrong things it is better to stop.
Didn't bother to read beyond the title, did you?
The settlement is contingent upon the appeals process.
What I find most interesting is that the settlement for Apple is so much higher than the settlement for the actual publishers, who set the prices in the first place. If the combined damages for *all* the publishers was $166 million, how are the damages for Apple $400 million (plus the $50 million *not* earmarked for customers)?
Thank goodness the DOJ went after Apple in order to grant Amazon a virtual monopoly on the ebook markets.
This - you get 12 folks together and you never know what they're going to think/do.
Especially 12 folks from some nice State in the middle of the country, who are potentially dirt poor and they look at Apple and think, hmmmmm.....
What Amazon is doing isnt loss leader it is predatory pricing, which is illegal in many countries including the US. Amazon wasnt paying 1000 Euro a day fine in France for years just because it was fun. This week they seem to have changed tactics, with the new 0.01 Euro shipping but France will strike back I am sure. Amazon's pricing is to put brick and morter book stores out of business, that isnt good for anyone and just makes Amazon's large hold on the book market even larger. A single source for all books isnt a good idea (and would be illegal in the US), but it is basically the goal of Amazon's efforts. That is why their balance sheet looks like they are nonprofit.
-Tig
Any proof of that?
Amazon was not paying 1.000 euro/day because of predatory pricing.
I bet you if Amazon is found using predatory pricing in the EU they won't pay 1.000euro/day.
Clearly not, that is why the quote I used comes from 2/3rd's through the article.
My point is that they are offering up huge contingency sums at the risk of being found guilty for a second time/failed appeal whilst claiming innocence.
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Pathetic abuse of governmental power.
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The government shouldn't be in the business dictating either side or what is 'best for the consumer'. That is what the free market is for.
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The government shouldn't be in the business dictating either side or what is 'best for the consumer'. That is what the free market is for.
Sure. The legal standard is the Areeda-Turner test. It requires 1) a reasonable expectation that Amazon will be able to recoup their losses after establishing a monopoly position and 2) substantial sales were below marginal costs.
Requirement 2 is self evident. Requirement 1 is much more subjective, but it is certainly reasonable to expect Amazon to recoup their losses through either monopoly control of retail prices or using their monopsony control to force lower prices from suppliers.
However, the subjectivity of requirement 1 has made Areeda-Turner into a defendants best friend. It has made it practically impossible to prove a predatory pricing claim in court. Many economist believe that the strict interpretation of Areeda-Turner ignores many long term predatory pricing strategies by ignoring fixed costs and anticompetitive predatory strategies that may even be sustainable. (Coincidentally, exactly the strategy that Amazon is using.)
For more information:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2422120
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Especially considering we went from a situation where one company was dictating pricing for 90% of the market (Amazon) to a situation where pricing power was split among many different publishers with no more than 10% (iirc) of the market.
I think if that happened, there would have been no collusion case.
What pushed the boundaries was that Apple then turned around and made an agreement with the 5 big publishers, who agreed amongst themselves, that no matter what, 9.99 was the price. Would always be the price. And that was the cheapest price.
making deals to best your company isn't illegal.
Making deals in collusion with the industry to force the entire industry towards a specific price isn't.
I believe it was this act that made it illegal.
Now, just because Apple was found guilty of collusion and price fixing, doesn't automatically mean that Amazon is innocent. its not mutually exclusive. The only difference is, so far, the DOJ hasn't (that I'm aware of) investigated Amazon for predatory pricing (which most here accuse them of)
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The pricing going up was not the evidence that there was price fixing.
The fact there were emails, documents and testimony provided by the publishers and even from Apples own files that showed that Apple contacted the pbulishers directly and worked out amongst them all a fixed minimum price that Apple promised to sell at. Then the 5 of them, together with Apple, forced all others retailers to follow the same model and refused to let them sell books for any price other than 9.99 or higher.
That meant, if Barne and Noble wanted to sell you the Great Gatsby at 2.99 on sale. They would be locked out of agreements with All 5 publishers,, effectively destroying business. it meant that competitors to Apple were not free to set their own prices, because of this, pricing was no longer a possible competitive advantage for anyone but Apple.
This is collusion. it's against the law in most countries, including most capitalist ones (including the USA)
The market was more "free" and competitive after Apple entered the market both among retail sellers and pricing competition.
Before Apple:
Retail and Pricing - 90% Amazon 10% Other
After Apple:
Retail - 60% Amazon 20% Apple 20% Other
Pricing - Many retailers and publishers all engaging in price competition
Actually it looks like you do have it wrong. Agency Model isn't illegal, MFN isn't illegal. Both together isn't illegal. Onerous terms on retailers aren't illegal, nor are sky high prices, nor is imposing a mimumum price on retailers, nor is running an entire industry on those models. What's illegal is when multiple supposedly competing suppliers agree with each other to each raise their prices. That is what has been judged to have happened when Apple and the publishers, switched to a different, perfectly legal, business model, ALL AT THE SAME TIME. It's a very murky verdict IMO (IANAL), relying on a lot of interpretation of motives, complex law, and a very slender array of solid facts. Apple's position, is that no collusion was necessary, given the attractiveness of the proposition, and the market conditions at the time. Many people agree with them, that is why Apple are investing in an appeal.
None of that is true. The 9.99 price point was from Amazon. Neither Apple nor the publishers created a minimum price.
Well that never happened, so maybe you'll change your mind!
That was the only evidence against Apple. The DOJ created a backstory to take that one piece of evidence into a price fixing scheme.
None of that is true. There was no price minimum.
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I know that. What you quoted had nothing to do with the agency model.
Just a quick question for you:
Precisely who are you accusing of 'forcing' "ALL the stores... [into] the agency model"?
Apple couldn't have forced Google, B&N, Amazon, or Sony to do so, because Apple wasn't in negotiations with them. Nor were are they the supplier of the e-books to be sold in those other stores.
You should try listening to your own advice some time.
True, but 'dumping', the practice of selling below cost in order to drive your competitors out of the market, is illegal.
youve got wrong facts.
What i've said is exactly why the DOJ went after Apple. those were the terms and agreements that the 5 publishers and Apple colluded to enforce.
(I was wrong on the 9.99 price)
http://online.wsj.com/news/articles/SB10001424052702304444604577337573054615152
this is what the suit was about and what the DOJ found apple guilty of. You can argue that you don't believe they are guilty of it or not, but that was what they were dragged infront of the Jury about, and what they were found by the judges guilty of
Nope. There was no minimum price set. None of your sources support your original claim.
Apple alone couldn't have
Any individual publisher couldn't have
Apple, + 5 of the largest publishers, with backroom deals with eachother could.
The idea was that if retailer didn't want to go Agency model and wanted to sell books at their own price, the other 4 publishers would refuse business with them. You can't really be a book store if you don't have books to sell