Apple and Amazon Under Probe for eBook Prices
8/03/2010 02:41:00 PM - 0 comments
The Attorney General for the State of Connecticut has started probe into similar pricing of eBooks by Apple and Amazon. Attorney General Richard Blumenthal argues that the seeming control of eBook prices by these two giants prevents healthy competition.In his July 29 letter to Apple through its General Counsel, Bruce Sewell, Blumenthal requested Apple to explain the matter. He pointed out that he is concerned that Apple’s terms with eBook publishers of not allowing its competitors to sell eBooks at a price lower than what it offers is anti-competition.
The New York Times described this “price guarantee” as “most favored nation” (MFN). An MFN is a promise by a publisher to treat a buyer the same way as it treats its “most favored” customer.
Blumenthal pointed out that: “MFNs are not per se illegal under our antitrust laws. Yet, as I am sure you are aware, MFNs are not per se legal either. MFN clauses - - especially when they are offered to two of the largest e-book retail comprtitors in the United States - - have the potential to impair horizontal competition by encouraging coordinated pricing and discouraging discounting.”
The Attorney General also noted that his concern is not without basis and cited that it has “already manifested itself in the e-book market.” He added that his office “recently conducted an informal survey of e-book prices offered by Apple, Amazon, Borders and Barnes & Noble for a number of the books in the New York Times best seller list, both fiction and non-fiction. Almost uniformly, the prices were identical among all four sellers.”
Blumenthal’s concern with the issue started when he read an article in the New York Times last March about a rift between Amazon and Apple over eBook prices.
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