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Antitrust



All Reason.com articles with the "Antitrust" tag.



Published: Wed, 20 Sep 2017 00:00:00 -0400

Last Build Date: Wed, 20 Sep 2017 12:43:38 -0400

 



The Commission on Presidential Debate's 15 Percent Polling Criterion Must Go, Argues Lawsuit from Gary Johnson

Fri, 21 Apr 2017 22:10:00 -0400

Electoral politics is like a market, argues Bruce Fein, the lawyer for Gary Johnson (the 2012 and 2016 Libertarian Party candidate for president) and other plaintiffs in an ongoing lawsuit against the Commission on Presidential Debates (CPD), the Republican and Democratic Parties, and 2012 major party candidates Barack Obama and Mitt Romney. The collusive behavior of those defendants against the L.P. and other third parties to keep them out of the electoral politics market amounts to a violation of antitrust law. Fein argued that point, and others, in an hearing this morning at the D.C. Court of Appeals. He appeared before a three-judge panel of Judges Janice Brown, Laurence Silberman, and Cornelia Pillard. (Johnson's loss in district court was reported on last August, and more details about the plaintiffs arguments were explained when the case was filed in 2015.) The CPD itself has officials who brag that its debates are the Super Bowl of politics, so Fein speculates on the value of appearing in it in terms of the value of commercial time bought during a Super Bowl broadcast, estimating that the injurious actions of the CPD and its two-party pals cost his clients up to a possible billion dollars. "When you run for president you have commercial objectives," Fein said in a phone interview this morning after the hearing, giving examples of manipulating the minimum wage, permitting or not permitting pipelines, raising or cutting taxes. And they are trying to actuate those commercial objectives through government action. "If the objective has a commercial goal, then the process by which you get into government or get government to enact economic changes should be subject to antitrust law," Fein says. As argued in Fein's appeals brief, "the concerted actions of Mr. Obama, Mr. Romney and the CPD were intended to cripple or destroy competition in the multi-billion dollar business of campaigning for the presidency....This was to be accomplished by limiting public information about credible presidential candidates through an exclusionary 15% national polling criterion for participation in presidential debates, i.e., an output limitation agreement." The full list of plaintiffs Fein represents in this case also includes Gary Johnson 2012, Inc.; Libertarian National Committee; James P. Gray; Green Party of the United States; Jill Stein; Jill Stein for President; and Cheri Honkala. Fein noted that the CPD's 15 percent criteria (adopted in 2000, and no non-major-party candidate has met it since then, which Fein thinks is exactly the point) remains ill-defined, amounting to a "we know it when we see it standard" impossible to objectively interpret. For example, why shouldn't it apply to face-to-face polls in which a third party candidate was compared only to the incumbent? The appeals brief insists that the polls by which Romney qualified generally pitted him only against Obama. His clients, Fein says, would prefer a truly cut and dried objective criteria: being on enough state ballots to literally win an electoral college majority. That would have resulted in 2016 in four such candidates on the CPD debate stage, "not an unwieldy number." "The other side claims we are arguing for an absolute right for any candidate to participate, which is a misrepresentation." Fein found many aspects of the District Court opinion from Judge Rosemary Collyer dismissing their case troublesome, including what he calls a "catch-22." What's that catch? That Collyer thinks that Johnson and the other parties had no standing to sue the CPD and its co-defendants, since the injury wasn't caused by the criteria imposed by the defendants, but rather by their failure to poll high enough to meet the criteria. And anyone who did meet the polling criteria obviously would have no standing to sue. So to Collyer, as Fein sees it, no one would ever have any standing to sue over the polling criteria. The appeals brief also tried to counter Collyer's insistence that no antitrust issue was implicated in the CPD's behavior toward third party candidates: The District Court.[...]



‘Heavy regulation creates mergers’: Matt Welch on Obama’s Cigna/Anthem Antitrust Action

Tue, 21 Jun 2016 11:34:00 -0400

Yesterday I appeared on Fox Business Network's The Intelligence Report with Trish Regan, Network to talk about the Obama administration's antitrust objections to the proposed $48 billion merger of health care giants Cigna and Anthem, and how that fits with the overall antitrust and regulatory record of the past seven-plus years. The clip is here:

(image)

Reason on antitrust here.




Justice Dept. Attempts to Block Newspaper Sale for the Absurdest of Reasons

Fri, 18 Mar 2016 12:45:00 -0400

Here's how absurd federal antitrust interventions have become: Tribune Publishing Company, owner of the Los Angeles Times and several other newspapers, filed for bankruptcy at the height of the recession in 2008 as a result of a plunge in advertising and high debt. Freedom Communications, owner of the Orange County Register and the Riverside Press-Enterprise in Riverside County, California, has filed for bankruptcy twice, in 2009 and just last year, for similar reasons. It used to be a larger chain, built by noted libertarian R.C. Hoiles, but it has since sold off most of its publications. Freedom Communications' latest bankruptcy has resulted in the company being auctioned off. Tribune Publishing won the bid with a $56 million offer. Not so fast, said the Department of Justice. They're filing suit to stop the purchase because—and try not to laugh at this explanation—they're concerned about the creation of a newspaper monopoly in Orange and Riverside counties and the impact on advertising and subscription rates. In 2016. For real: According to the department's complaint, filed in federal district court in Los Angeles, the Los Angeles Times and the Register together account for 98 percent of newspaper sales in Orange County and the Los Angeles Times and Freedom's newspapers together account for 81 percent of English-language newspaper sales in Riverside County.  Tribune's acquisition of its most significant competitor would give it a monopoly over newspaper sales in each county and allow it to increase subscription prices, raise advertising rates and invest less to maintain the quality of its newspapers. "If this acquisition is allowed to proceed, newspaper competition will be eliminated and readers and advertisers in Orange and Riverside Counties will suffer," said Assistant Attorney General Bill Baer of the Justice Department's Antitrust Division.  "Newspapers continue to play an important role in the dissemination of news and information to readers and remain an important vehicle for advertisers.  The Antitrust Division is committed to ensuring that competition in this important industry is protected."    Wherever will advertisers go if newspapers raise their rates? Wherever they've been going since they stopped going to the newspapers over the past 15 years. Here's what the newspaper advertising revenue market looks like: The Department of Justice is attempting to justify intervening by treating the newspaper market as something separate from the media environment as a whole. This reads like an analysis that came from a mass communications textbook that was published in the 1970s. And that's exactly how the Tribune's spokesperson responded to the L.A. Times: "The Division is living in a time capsule, with a framework that predates the arrival of iPhones, Google, Facebook, and modern media outlets that are killing the traditional newspaper industry," spokeswoman Dana Meyer said in a statement. "It wasn't competition from the L.A. Times that forced the Register into bankruptcy. It was the Internet and related technology." The Times also notes that the Justice Department has said that it doesn't have any issues with Freedom Communications being sold to Tribune's own competitors in the region, so the federal government is actively, intentionally or not, threatening the bottom line of a company that has already gone through bankruptcy once. And now they'll probably have to spend additional money fighting the DOJ. Were Hoiles still around, he's probably be disappointed in the way things played out with his former media empire, but he'd be utterly repulsed at the idea that the federal government would exert the authority to determine who had the "right" to own and operate his newspapers. (Though he might also get a kick out of the generally liberal Times being thwarted by the consequences of government intervention in the economy.) (Full disclosure: Prior to coming to work for Reason, I edited one of Freedom Comm[...]



The Beer Companies Behind Budweiser and Miller Lite Are Merging. There’s No Need for Regulators to Get Involved.

Tue, 13 Oct 2015 10:41:00 -0400

The most unpleasant thing about the just-announced plan to merge the world’s two biggest beer-makers, Anneuser-Busch Inbev (Budweiser, Bud Light, Corona) and SABMiller (Miller Lite), in a $100 billion deal, is not the thought of mixing two foul-tasting watery light beers together (although, eww), but the idea that the deal will, once approved by British regulators, will, as USA Today reports, "likely prompt intense anti-trust reviews in both the U.S. and the European Union." It’s true that, if the sale goes through, it would be an extraordinarily large merger: the biggest beer deal ever, and among the five largest acquisitions in history. The deal would result in the newly merged BudMiller* controlling eight of the world’s 10 biggest beer brands, or about 30 percent of the global beer market. But size alone is no reason for the government to pry into a deal like this. The fact is that the U.S. beer market is incredibly competitive these days. If you’ve been buying beer at a local grocer for the last decade or two, you’ve probably watched as the aisles fill up with an ever larger number of brands and tastes and styles. At bars, taps that were once filled exclusively by Bud and Miller and now packed with regional variants and obscure tastes from across the country. If you love beer (I love beer), this is a great time to be alive. And the biggest reason why is the craft and microbrew explosion, which over the last few decades has gone from basically having no market presence to representing about 10 percent of the U.S. beer market, with roughly $100 billion in sales. In the space of a handful of presidential terms, America went from housing about 50 small breweries to more than 2,500. The current boom started in the 1980s following the end of homebrew ban left over from prohibition. (Thanks, as always, to Jimmy Carter willingness to deregulate.) Which means that Big Beer got big thanks in part to an assist from the government. The corporate beer brands still do big volume, but they have faltered in a world of intense competition. And the next generation of beer drinkers just isn’t interested. Brands like Budweiser have had a difficult time attracting young drinkers, with about 44 percent of 21-27 year old drinkers saying they’ve never tried the stuff. Craft beer and other newfangled options (some made by big beer makers), meanwhile, have made for a nearly 9 percent decline in shipments, according to The Wall Street Journal.  As a result, corporate beer marketers have resorted to hilariously inept measures to promote their offerings as pseudo-craft beers. Leaked marketing documents from Anneuser-Busch, for example, pitched the company's mediocre Shock Top as one of its sub-brand's "big bet in the battle against Micro Craft," a beer designed with a “flavoursome taste to drive Shock Top penetration with Experience Maximizers in the ‘Reward Myself’ need state." Shockingly, this company is having a hard time attracting young drinkers.  Anyway, that’s what this merger is about. Anneuser-Busch wants to buy SABMiller because big beer brands are struggling to compete and bring in new, young customers in wonderfully diverse, incredibly competitive market for beer, and figure the only way to hold their ground is to join forces.   The Big Two may perform better together, but I suspect that the post-merger landscape would look a lot like the current one, with corporate beer continuing to sell a lot of volume while microbrewers that make a product that actually tastes good continue to eat into their sales. A corporate merger isn't going to make Bud Light taste any better. Either way, there’s no reason for regulators to get involved in a market as obviously competitive and innovative (and tasty) as this one. (*I just made this name up.)[...]



Got Baseball Playoff Fever? Watch The Top 5 Pointless Congressional Hearings on Baseball

Sat, 10 Oct 2015 19:00:00 -0400

frameborder="0" src="https://www.youtube.com/embed/meT7vLD2Bfo" height="340" width="560">

It's October and that means the Major League Baseball playoffs are in full swing. Congress has held hearings on baseball throughout the years, which sometimes yield all-time classic moments like:

  1. Joe Biden contradicting himself in the same sentence when he said, "I'm angry that we're even here, having to deal with this is a Congress...but I think we should have hearings on all sports."
  2. Gov. Jesse Ventura (I-MN) calling team owners' claims of poverty "asinine," adding, "These people did not get wealthy by being stupid."
  3. Rep. Tom Davis (R-VA) grilling a witness on the state of Roger Clemens' bloody pants.

To see these classic moments and a few more, watch the Top 5 Pointless Congressional Hearings on Baseball!

Original writeup below:

Congress has no authority over Major League Baseball, but that hasn't stopped them from holding dozens of hearings on the national pastime over the years. Federal legislators have relished the opportunity to show off their populist appeal in front of national TV cameras by talking "inside baseball" jargon, acting as moral scolds, and generally probing in places they don’t belong.

To celebrate Opening Day of the 2015 MLB season, Reason TV presents the Top 5 Pointless Congressional Hearings on Baseball!

Featuring Rafael Palmeiro's infamous fingerwagGeorge Will's defense of socialism in baseball, Sen. Joe Biden (D-DE) threatening to "hold hearings on all sports," a totally TMI investigation of Roger Clemens' bloody dress pants, Sen. Howell Heflin's (D-AL) concern about the rising costs of "basekaball" tickets, and Gov. Jesse Ventura's (I-MN) shocking star turn as the voice of sober and rational government.  

About 5 minutes.

Produced by Anthony L. Fisher.

Music: "Take Me Out to the Ballgame" Kevin MacLeod (incompetech.com) Licensed under Creative Commons: By Attribution 3.0




Are the Airlines Colluding—or Just Careful?

Thu, 09 Jul 2015 00:05:00 -0400

In recent decades, there have been many ways to make money and one virtually infallible formula for losing it: running an airline. At times, it might have made more sense for the major carriers to set up bonfires of cash on tarmacs rather than actually transport people.  Lately, though, they have figured out how to avoid squandering huge sums. Hint: It involves charging more for their services than it costs to provide them. This strange development has set off alarms among people in Congress who think aviation should be a charitable activity.  Sen. Richard Blumenthal, D-Conn., recently charged, "Consumers are paying sky-high fares and are trapped in an uncompetitive market with a history of collusive behavior." He called on the Justice Department to launch an anti-trust investigation, and last week, it said it was doing just that.  The suspicion is that the big airlines have been using winks and nods to limit the number of planes in the sky. When too many seats are available, fares get slashed, profits vanish and, time after time, carriers go bankrupt. When fewer seats are offered, the opposite happens.  The department suspects that when company executives tell Wall Street analysts they have learned their lesson about overexpansion, they are sending a clear nonaggression message to other airlines. A Justice spokesperson said their talk about "discipline" on capacity suggests "potential unlawful coordination."  Yes, it could. And if New Orleans shop owners who got flooded after Katrina respond to a hurricane warning by closing, it could mean they are colluding with each other to maximize price-gouging opportunities after the storm is over. Or it could mean they have enough sense not to repeat ruinous mistakes of the past.  Investors sometimes insist on verifying the sound judgment of those who want their money. "There have been about two years of conference calls in which Wall Street analysts have browbeat airline executives to either have discipline, or they will bust their recommendations on their stock," aviation analyst Robert W. Mann Jr. told The New York Times.  Who can blame them? Those analysts weren't born yesterday, which is about when the domestic industry got flush. Between 2000 and 2009, it lost $54 billion. No wonder investing guru Warren Buffett once groused that when the Wright brothers got their flying machine into the air at Kitty Hawk, someone should have shot it down.  Year after year, American travelers took full advantage of the industry's habit of cutting fares and expanding capacity. But if something is too good to last, it won't. At some point, the airlines' need to make money to stay in business had to prevail, at least temporarily, over passengers' desire for bargains.  Lately, the airlines have managed to make money, mainly by making sure they don't fly so many planes that they can't fill them up. When seats are empty, these carriers know, loss-inducing fare wars ensue. When planes are packed, they can be assured of covering their costs.  The strategy has worked reasonably well. Since 2007, reports The Wall Street Journal, inflation-adjusted fares are up 5 percent—but they are 16.3 percent lower than in 2000. This year, fares are actually shrinking. Profits have reached record levels, thanks in part to higher baggage fees and other irksome charges.  But there is no guarantee the good times will keep rolling. A recession—a surge of growth—could upset the carriers' plans.  Airlines, like other businesses, have to worry about two dangers: having too much capacity, which requires costly discounting, and having too little, which drives customers away. Either mistake can be devastating.  Right now, many big airlines are erring on the side of caution, but they are not cutting back capacity. Total capacity in the third quarter is expected to be up by more than 5 percent, well above the rate of grow[...]



Top 5 Pointless Congressional Hearings on Baseball

Mon, 06 Apr 2015 09:05:00 -0400

Congress has no authority over Major League Baseball, but that hasn't stopped them from holding dozens of hearings on the national pastime over the years. Federal legislators have relished the opportunity to show off their populist appeal in front of national TV cameras by talking "inside baseball" jargon, acting as moral scolds, and generally probing in places they don’t belong.

To celebrate Opening Day of the 2015 MLB season, Reason TV presents the Top 5 Pointless Congressional Hearings on Baseball!

Featuring Rafael Palmeiro's infamous fingerwag, George Will's defense of socialism in baseball, Sen. Joe Biden (D-DE) threatening to "hold hearings on all sports," a totally TMI investigation of Roger Clemens' bloody dress pants, Sen. Howell Heflin's (D-AL) concern about the rising costs of "basekaball" tickets, and Gov. Jesse Ventura's (I-MN) shocking star turn as the voice of sober and rational government.  

About 5 minutes.

Produced by Anthony L. Fisher.

Music: "Take Me Out to the Ballgame" Kevin MacLeod (incompetech.com) Licensed under Creative Commons: By Attribution 3.0




Sci-fi Icon Ursula K. LeGuin Denounces 'Profit' at National Book Awards

Thu, 20 Nov 2014 12:37:00 -0500

(image) I am a fan of Ursula K. LeGuin's The Left Hand of Darkness and her Earthsea novels. At the National Book Awards yesterday evening, LeGuin received an award for her distinguished contributions to American letters. About time! The plain fact is that so-called literary fiction has devolved into an etiolated academic enterprise while the best contemporary novels are now being written by the authors of speculative fiction like LeGuin.

However, in her acceptance speech, LeGuin weighed in on the struggle between the international publishing conglomerate Hachette and on-line retailer Amazon.com. As NPR reports:

Once she was onstage, she pulled no punches in a fiery speech about art and commerce. "We just saw a profiteer try to punish a publisher for disobedience, and writers threatened by corporate fatwa," LeGuin said. "And I see a lot of us, the producers, accepting this — letting commodity profiteers sell us like deodorant!"

She was referring to the recent dispute between Amazon and the publisher Hachette over e-book pricing. The power of capitalism can seem inescapable, LeGuin said, but resistance and change begin in art. And writers should demand their fair share of the proceeds from their work.

"The name of our beautiful reward is not profit. Its name is freedom."

I doubt that LeGuin plans to give away her books for free. (Available at Amazon for $8.99.) With regard to profits, LeGuin somehow failed to note that Hachette's revenues in 2013 were over 2 billion Euros with a profit of $233 million Euros. LeGuin and other authors who want their "fair share" are objecting to Amazon's discounting policy because, well, they feared that it would lower the amount of royalties (ahem, profits) they would receive. Of course, writers, like any other workers, certainly have a right to negotiate for the "beautiful reward" of higher pay. On the other hand, if books are cheaper, authors are likely to attract more readers. 

For an excellent analysis of the dispute between Amazon and Hachette read my colleague Nick Gillespie's article, "Amazon is NOT the 'Putin' of Books."

In any case, the two corporate giants apparently buried the hatchet last week.




Dollar Store Merger Attracts Anti-Trust Regulators. Really?

Mon, 25 Aug 2014 16:30:00 -0400

There’s a dollar store down at the end of the street on which I live. I sometimes shop there. So I’ve been following the three-way corporate merger drama among Dollar General, Family Dollar, and Dollar Tree with more than merely ideological interest.  In case you’ve been away on vacation or skipping the business pages of the newspaper, here’s a quick summary of the state of play: Back in July, Dollar Tree announced a bid to take over Family Dollar for $74.50 a share in cash and stock, or about $8.5 billion. Last week, Family Dollar rejected an all-cash offer from Dollar General at $78.50 a share, or about $9 billion. What strikes me about the whole thing is the role that the U.S. government seems to be playing in depriving the owners of Family Dollar of the extra half-billion dollars (though some of that half-billion would go toward paying a “breakup fee” to Dollar Tree). As a New York Times news article about the situation put it, “Though it may seem strange for a would-be seller to spurn a higher-priced offer,” a sale to Dollar General, the market leader, “would pose serious risk of rejection from antitrust regulators.” The Times went on, “The gap between the two companies may not be unbridgeable. Family Dollar is still demanding stronger protections against antitrust risk from its bigger competitor, according to a person briefed on the matter. Among those may be a so-called hell or high water provision that would compel Dollar General to do whatever is necessary, including divesting more stores, to satisfy regulators.” I chuckled at the concept of a “hell or high water provision.” But as a customer, I laughed, too, at the idea that government antitrust regulators are needed to protect me from a merger of dollar-store parent companies. What am I being protected against? The risk that the dollar store company will use its newly enlarged market clout to negotiate better terms from its suppliers, thus saving customers like me even more money?  Seriously, the risk to consumers in antitrust regulation seems to be that a firm might get so large it could use its monopoly power to charge consumers extortionately high prices. But the stores don’t sell admission for the dollar store experience. They sell merchandise, pretty much all of which is widely available elsewhere. The dollar store at the end of my street sells cleaning supplies — but so do a CVS, a Walgreen’s, and a supermarket within walking distance. The dollar store sells gardening supplies, batteries, and lightbulbs — but so do the hardware store across the street and a Home Depot a couple of miles away. Many of the goods are also available online from Amazon or other retailers, or at Walmart or Costco. One product that the dollar store sells — cigarettes — isn’t available at the CVS a block away only because CVS caved to government pressure to stop tobacco sales at drugstores. And anyway, if the government wanted to reduce cigarette prices, the way to do it wouldn’t be more aggressive antitrust enforcement against retailers, but a rollback of taxes, which can total $7 or $8 a pack. If there is some product that a newly merged and enlarged dollar store firm can jack up the prices on, there’s little to stop some new dollar store firm from entering the market with lower prices. It’s not like cellphones, where there’s a limited amount of spectrum bandwith, or like medicine, where drugs have patent protection. The barriers to entry in the dollar store business are low.  It’s possible that the whole antitrust issue is just a red herring promoted by Family Dollar management, which, Family Dollar shareholder Carl Icahn suggests, has a better shot at a future role in a deal with Dollar Tree than with Dollar General. But if the government is really spending tim[...]



NCAA Loses Ed O'Bannon Video Game Case, Judge and Public Agree Athletes Should Be Paid When Their Likenesses Are Used

Sat, 09 Aug 2014 14:01:00 -0400

Though it can still ding schools for feeding players too much pasta, the NCAA must now compensate student-athletes when their images or likenesses are used to sell merchandise. 

So says a federal court ruling issued Friday in the anti-trust lawsuit brought against the NCAA by former UCLA basketball player Ed O’Bannon. 

The Kansas City Star reports:

A federal judge ruled for student-athletes and against the NCAA on Friday, opening the door for some college players to share in licensing revenue after their careers are over. The ruling by U.S. District judge Claudia Wilken in the Ed O’Bannon lawsuit allows for trust funds to be established for major college football and men’s basketball players, who can cash in, after their eligibility expires, on a portion of the proceeds generated by the use of their images and likenesses.

It appears that public opinion matches the judge's decision. In March, the Reason-Rupe poll asked 1,003 Americans

When a college or company sells a jersey with a college football or basketball player’s number on it, or sells a video game with a player’s likeness in it, do you think that player should receive some of the money from the sale of his likeness or jersey, or should that not be allowed?

Should be allowed................................ 64%

Should not be allowed.......................... 32%

Don’t Know............................................. 4%

Refused.................................................. 1%

USA Today's Nina Mandell notes how attitudes about the NCAA are changing, "Through the trial, Ed O’Bannon and his fellow plaintiffs became heroes who took on an organization that many felt had treated them unfairly. In a matter of only a few years, the narrative swung from athletes being thought of as spoiled jocks to a group of kids who were being unfairly taken advantage of."

The ruling is the latest decision in a string of lawsuits pending against the NCAA and threatens to weaken the institutional power of the collegiate athletic organization. 

In late July, the NCAA agreed to earmark $75 million toward concussion research as part of a settlement in a class-action lawsuit filed by former football players who felt that the association mismanaged head injuries.  

And in March, the Chicago regional office of the National Labor Relations Board ruled that football players at Northwestern University had the right to unionize. 

Nationwide telephone poll conducted March 26-30, 2014 interviewed 1,003 adults on both mobile (503) and landline (500) phones, with a margin of error +/- 3.6%. Princeton Survey Research Associates International executed the nationwide Reason-Rupe survey. Columns may not add up to 100% due to rounding. Sign up for notifications of new releases of the Reason-Rupe poll here.




Amazon Is NOT the 'Putin' of Books!

Wed, 18 Jun 2014 10:30:00 -0400

This article ran at The Daily Beast on June 5, 2014. Can you believe those…those…those…sons of bitches at Amazon? After launching almost 20 years ago and making virtually every book—new, used, dead-tree, electronic, audio, and I’m guessing any day now, olfactory—available to everyone in America at good-to-great prices, the company’s true character now stands revealed. It’s not pretty, folks. Despite a huge market share, Amazon apparentlystill wants books, especially the e-books that everyone agrees are the future of the medium, to be cheaper than what publishers and big-name authors want you to pay for them. Just who the hell does Amazon think it is? Maybe a bare-chested tyrant who used to work for the KGB? Amazon is “like Vladimir Putin mobilizing his troops along the Ukrainian border,” a proprietor of an “e-book discovery site” tells The New York Times. “A bully,” offers Richard Russo, the novelist and president of the Authors Guild (which knows exactly how to bully mere “writers”). Amazon, says author James Patterson, who published 13 detective books last year, is waging “war” and doing unspeakable things for which “the quality of American literature will suffer.” No, wait. That’s all wrong. Amazon isn’t like a Russian despot waging a war, says Dennis Loy, proprietor of the small publisher Melville House. It’s more like “the Mafia.” What Loy calls Amazon’s “extortion” racket is its decision to make it annoying as hell to buy books published by Hachette, a French-based conglomerate whose imprints include Grand Central, Little Brown, Hyperion, and others. If you try to order new Hachette books, including titles from James Patterson and other best-selling authors such as Malcolm Gladwell (who likens Amazon to the biblical Goliath in this interview), the odds are high that Amazon will actually charge the publisher’s cover price and tell you it won’t arrive for several weeks. Even the electronic Kindle version! In other words, kind of what buying books used to be like 30 years ago. It may even recommend you buy a totally different book before you head over to the websites for Barnes & Noble, Hachette, or even Wal-Mart. Yes, that’s exactlyhow the mob works (well, except for the Gold Box Deals and that original miniseries featuring John Goodman as a congressman). Both Amazon and Hachette have signed confidentiality agreements, so the exact nature of the negotiations between the two companies is anybody’s guess. But it’s clear that they are duking it out over the future price of e-books (a market that Amazon, more than any other single company, made viable with its cheap, user-friendly Kindle devices and cross-platform apps). “Inside the publishing world,” reports The New York Times, “the consensus is that Amazon wants to offer deep discounts on Hachette’s electronic books, and that the negotiations are not going well.” Hachette is the first major publisher to be engaged in this sort of wrangling, but it won’t be the last. If you had heard of Hachette before this latest brouhaha, you are either an author with a very good agent or you followed that fascinating federal lawsuit settled a few years ago. You know, the one about how five of the six biggest publishers on the planet conspired with Apple and Steve Jobs to fix e-book prices when the iPad was first coming to market in 2010. Jobs wooed publishers who hated Amazon’s devotion to selling virtually all new e-books at what one executive called “the wretched $9.99 price point.” They were leaving money on the table, kind of like how iTunes does by selling hit songs for the same price as songs that nobody wants. It just didn’t make [...]



Amazon Is NOT the Vladimir Putin of Publishing! Hachette Is Not "Horatius at the Bridge"!

Thu, 05 Jun 2014 10:30:00 -0400

A bold claim, yes, and a necessary one given the way that the New York media world is characterizing the world's biggest bookstore. Amazon is in confidential negotiations with the French-owned publishing conglomerate Hachette over the future pricing of ebooks; the terms of that agreement are expected to set the template for Amazon's relationship with other major publishing houses. While the talks are going on, Amazon has effectively made Hachette titles unavailable to customers, a hardball action that has led observers to liken the retailer to Vladimir Putin and the Mafia. Hachette on the other hand is being depicted as a gentle, delicate flower—a lonely David facing off against an indomitable Goliath. Or in even more overblown comparisons, The New York Times quotes a literary agent likening the head of Hachette to "Horatius at the Bridge,"...referring to the soldier of legend who single-handedly saved ancient Rome by fighting off an invading army. "He is carrying the rest of the industry on his back." That's a real pant-load. In a new column for The Daily Beast, I argue that when it comes to the selling and buying of books over its 20-year history, Amazon has consistently been on the side of the reader/customer. This current fight isn't any different, especially since it pits Amazon against a publisher that, along with Apple and four of the other largest publishers on the planet, recently settled a lawsuit in which they colluded to force Amazon to raise its prices on ebooks. As The Wall Street Journal reported when the price-rigging case was settled in 2012, “The five publishers and Apple hatched an arrangement that lifted the price of many best-selling e-books to $12.99 or $14.99, according to the suit. The publishers then banded together to impose that model on Amazon, the government alleged.” On behalf of authors and publishers, Jobs unveiled what he called his “aikido move,” which would not only change price points but shift to an “agency model,” where the seller gets a commission on each unit sold rather than buying a certain number of units at a fixed price. “We’ll go to the agency model,” Jobs explained, “where you set the price, and we get our 30 percent [commission], and yes, the customer pays a little more, but that’s what you want anyway.” That’s an interesting line that doesn’t seem to make it into all the love being showered on Hachette by its public champions: Yes, the customer pays a little more, but that’s what you want anyway. Read the whole thing, which includes a capsule history of attacks by publishers and writers on the practice of discounting books and how most antitrust actions benefit corporations and not customers. Disclosure: The founder of Amazon, Jeff Bezos, is a supporter of Reason Foundation, the nonprofit that publishes Reason magazine, Reason.com, and Reason TV. I have never had any contact with him or anyone at Amazon except as a customer. Although I greatly admire Amazon as a company and, as a part-time resident of a small town in Ohio, benefit greatly from its services, I am not uncritical of it, either.[...]



Amazon Can't Win When It Comes to Antitrust

Mon, 02 Jun 2014 13:30:00 -0400

Some people wonder why libertarians are skeptical of antitrust. For a hint, you have to look no further than the recent battle between book-selling giant Amazon and the publisher Hachette. Amazon and Hachette are engaged in a pricing dispute. Although the details are unclear, it's been reported that Amazon wants better terms on ebooks as it renegotiates its contract with Hachette. Hachette is holding the line, and Amazon has exercised its "nuclear option" by pulling Hachette's print books off its virtual shelves. Customers who go to Amazon looking for Hachette-published bestsellers from the likes of J.D. Salinger, or new releases from J.K. Rowling or Stephen Colbert, will find that they are not available. The situation is not very different from a blackout when a cable company like Time Warner can't come to terms with a network like CBS. "I'm mad at Amazon and apparently I'm not the only one. Everyone seems to be a little upset," said Leo Laporte last week on his popular This Week in Tech program, reflecting a common sentiment. "We all thought that Amazon was going to change shopping, going to change the experience of book buying. Yeah, they were great until they got a monopoly and now they are just screwing with everybody." And there it is. The "M" word. This is no ordinary pricing dispute, the story goes, because Amazon has significant market power. It accounts for 41 percent of all new books sold, and 67 percent of all ebook sales. But what makes it a monopoly? Can't you just go to any of a hundred other bookstores online and off to get your Hachette books? The answer is that no, Amazon is not a monopoly, but some argue that customers of its Kindle ebook platform are locked in. "While we don't have numbers, it would appear that Kindle sales likely reflect a dominant chunk of ebook sales and, moreover, most of those customers don't really want to buy books on other eReading platforms—either they don't have the device or they don't want to switch apps on the iPad," writes Joshua Gans, a noted management professor at the University of Toronto. For many people, once they get a Kindle e-reader and buy into the ecosystem, Gans says, if Amazon doesn't make a book available for Kindle, it might as well not exist. And Amazon established its dominant position in ebooks by selling them at a loss. Now that it has developed retail power, the theory goes, it's bullying its suppliers. The Author's Guild, never shy to use every legal weapon to protect authors, is ready to pull out the antitrust guns to deal with the situation. Jan Constantine, the Guild's general counsel, told the New York Times last week, "Amazon clearly has substantial market power and is abusing that market power to maintain and increase its dominance, which likely violates Section 2 of the Sherman Antitrust Act." So it is interesting to note that the dispute is happening now because Hachette agreed to renegotiate its contract with Amazon as part of an antitrust settlement with the Department of Justice. That's right. Hachette and four other big publishers were sued along with Apple in 2012 for antitrust violations. Seeing Amazon's growing dominance of the ebook market, the big five publishers had teamed up to help Apple launch its competing iBooks platform in 2009. Apple let them set their own prices for their ebooks and just took a 30 percent cut, but Apple insisted on a "most-favored nation" clause, which meant books couldn't be cheaper anywhere else than the iBooks Store–including Amazon. That was collusion to fix prices, the DOJ argued, and it sued. The publishers settled and Apple lost in court. iBooks has since foundered, the publishers have been scared to back any new market entrant, and Amazon's position has solidified. So, [...]



Google Avoids EU Antitrust Fine

Wed, 05 Feb 2014 11:53:00 -0500

(Reuters) - Google agreed to make concessions on how it displays competitors' links on its website on Wednesday, in a deal with the European Union regulator that ended a three-year antitrust probe and avoided a fine.

The agreement means the world's dominant search engine has avoided a process that could have lead to a fine of up to $5 billion, or 10 percent of its 2012 revenue. It must stick to the deal for the next five years.

However, Google may still face a second EU investigation, this time into its Android operating system for smartphones, with potentially bigger risks for the company.




Apple Battles Justice Department over Federal Monitor

Tue, 31 Dec 2013 14:00:00 -0500

A bitter battle between Apple Inc and a lawyer appointed to monitor its compliance with a court antitrust ruling escalated on Monday, as the U.S. government and the monitor both hit back at Apple.

Over the last two months, Apple has launched a broad legal attack on the monitor, Michael Bromwich, who was appointed by a federal judge after a ruling that the company conspired to fix e-book prices.

Apple has said in court filings that Bromwich overstepped his mandate and that he was causing irreparable harm to the company. Apple has also argued that Bromwich's personal financial interest in investigating the company violated its right to a disinterested prosecutor under the due process clause of the U.S. Constitution.

Apple also asked U.S. District Judge Denise Cote to stay her order requiring a monitor pending its appeals of the price-fixing judgment.