Case 1:21-cv-00351 Document 1 Filed 01/14/21 Page 1 of 66
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`No. 1:21-cv-351
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`CLASS ACTION COMPLAINT
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`DEMAND FOR JURY TRIAL
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`SHANNON FREMGEN, MARY
`CHRISTOPHERSON-JUVE, DENISE
`DELEON, on behalf of themselves and all
`others similarly situated,
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`AMAZON.COM, INC.,
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`Plaintiffs,
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`Defendant.
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`v.
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`I.
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`II.
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`III.
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`IV.
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`Case 1:21-cv-00351 Document 1 Filed 01/14/21 Page 2 of 66
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`TABLE OF CONTENTS
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`Page
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`INTRODUCTION ................................................................................................................ 1
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`JURISDICTION ................................................................................................................. 18
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`VENUE ............................................................................................................................. 20
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`PARTIES ........................................................................................................................... 20
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`A.
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`Plaintiffs ................................................................................................................ 20
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`B.
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`C.
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`1.
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`2.
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`3.
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`Shannon Fremgen ....................................................................................... 20
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`Mary Christopherson-Juve .......................................................................... 21
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`Denise DeLeon ........................................................................................... 23
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`Defendant .............................................................................................................. 23
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`Amazon’s Co-Conspirators ..................................................................................... 24
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`1.
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`2.
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`3.
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`4.
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`5.
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`Hachette .................................................................................................... 24
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`HarperCollins ............................................................................................. 24
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`Macmillan .................................................................................................. 25
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`Penguin ..................................................................................................... 25
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`Simon & Schuster ....................................................................................... 26
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`V.
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`STATEMENT OF FACT .................................................................................................... 26
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`A.
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`B.
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`C.
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`D.
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`E.
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`The Big Five’s dominance in trade books. ................................................................ 26
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`Amazon’s dominance over its rival booksellers. ....................................................... 32
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`EBooks’ arrival disturbed the trade publishing industry. ............................................ 34
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`As a trade publisher, Amazon benefits from the Big Five’s inflated
`eBook prices. ......................................................................................................... 44
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`As an Ebook retailer, Amazon employs anticompetitive restraints to
`immunize its platform from the negative effects of the Big Five’s inflated
`eBook prices. ......................................................................................................... 46
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`F.
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`Amazon is the subject of a government investigation for possible
`antitrust violations, including whether it uses its relationship with its
`third-party sellers to harm competition. .................................................................... 47
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`VI.
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`INTERSTATE TRADE AND COMMERCE ....................................................................... 49
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`VII.
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`RELEVANT MARKET ...................................................................................................... 49
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`VIII. CLASS ACTION ALLEGATIONS ..................................................................................... 52
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`IX.
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`X.
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`ANTITRUST INJURY ....................................................................................................... 55
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`CAUSES OF ACTION ....................................................................................................... 57
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`VIOLATION OF THE SHERMAN ACT ......................................................................................... 57
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`FIRST CAUSE OF ACTION VIOLATION OF 15 U.S.C. § 1 ............................................... 57
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`SECOND CAUSE OF ACTION VIOLATION OF THE SHERMAN ACT –
`MONOPOLIZATION (15 U.S.C. § 2) ..................................................................... 59
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`JURY TRIAL DEMANDED ........................................................................................................... 61
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`PRAYER FOR RELIEF .................................................................................................................. 61
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`Plaintiffs allege the following upon personal knowledge as to themselves and their own
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`acts, and as to all other matters upon information and belief, based upon the investigation made
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`by and through their attorneys.
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`I.
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`INTRODUCTION
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`1.
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`Defendant Amazon.com, Inc. (“Amazon”) operates the Amazon.com retail
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`platform, which is the largest retail eBooks seller in the United States. It sells over half of all
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`books purchased at retail in the United States.1 Almost 90% of all eBooks are sold through its
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`online retail platform.2
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`2.
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`Defendant’s Co-conspirators Hachette Book Group (“Hachette”); HarperCollins
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`Publishers L.L.C. (“HarperCollins”); Macmillan Publishing Group, LLC
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`(“Macmillan”); Penguin Random House LLC (“Penguin”); Simon & Schuster, Inc.; and Simon
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`& Schuster Digital Sales, Inc. (collectively “Simon & Schuster”) are the five largest publishers in
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`the United States, otherwise known collectively as the “Big Five.” The Big Five produce “trade
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`books,” a term of art referring to “general interest fiction and non-fiction books,” as
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`“distinguished from ‘non-trade’ books such as academic textbooks, reference materials, and
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`1 House Judiciary Committee, Investigation of Competition in Digital Markets, Oct. 5, 2020
`at 295,
`https://judiciary.house.gov/uploadedfiles/investigation_of_competition_in_digital_markets_majo
`rity_staff_report_and_recommendations.pdf (“House Report”).
`2 Matt Day and Jackie Gu, The Enormous Numbers Behind Amazon’s Market Reach,
`Bloomberg (Mar. 27, 2019), https://www.bloomberg.com/graphics/2019-amazon-reach-across-
`markets/ (estimating that Amazon controls 88.9% of the eBooks market).
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`other texts.”3 Collectively, the Big Five’s books account for about 80% of the trade books sold in
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`the United States.4
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`3.
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`Plaintiffs are consumers and direct purchaser plaintiffs from several states who
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`frequently shop for electronic books (“eBooks”) published by the Big Five. The Big Five
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`typically sell their eBooks to consumers through booksellers’ online retail platforms, like
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`Amazon, Barnes & Noble, Kobo, and Apple Books. Co-conspirator HarpersCollins also sells
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`eBooks to consumers through its own website. When selling eBooks through an online retail
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`platform, the Big Five typically rely on the agency model.5 Under that model, the sales
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`transaction occurs directly between the publisher and the retail consumer, while the eBook
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`retailer serves merely as the publisher’s sales agent in the transaction and takes a commission on
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`every book sold.6 Plaintiffs purchased one or more eBooks directly from the Big Five through a
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`retail platform other than Amazon.com.
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`3 United States v. Apple Inc., 952 F. Supp. 2d 638, 648 n.4 (S.D.N.Y. 2013).
`4 Constance Grady, Milo Yiannopoulos’s book deal with Simon & Schuster, explained, Vox
`(Jan. 3, 2017), https://www.vox.com/culture/2017/1/3/14119080/milo-yiannopoulos-book-deal-
`simon-schuster-dangerous-boycott.
`5 Constance Grady, The 2010s were supposed to bring the ebook revolution, Vox (Dec. 23,
`2019), https://www.vox.com/culture/2019/12/23/20991659/ebook-amazon-kindle-ereader-
`department-of-justice-publishing-lawsuit-apple-ipad; For the Big Five, Agency Now Holds Sway
`Across the Board, Author’s Guild (Sep. 9, 2015), https://www.authorsguild.org/industry-
`advocacy/for-the-big-five-agency-now-holds-sway-across-the-board/; Amazon, HarperCollins
`reach multi-year publishing deal, First Post (Apr. 14, 2015),
`https://www.firstpost.com/tech/news-analysis/amazon-harpercollins-reach-multi-year-
`publishing-deal-report-3666709.html; Laura Owen, Macmillan, too, returns to agency pricing
`with Amazon, Gigaom (Dec. 18, 2014), https://gigaom.com/2014/12/18/macmillan-too-returns-
`to-agency-pricing-with-amazon/.
`6 Grady; CASE AT.40153 EBook MFNs and related matters (Amazon),
`https://ec.europa.eu/competition/antitrust/cases/dec_docs/40153/40153_4392_3.pdf (“5.4.2017
`EU Commission Decision”) at 8.
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`4.
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`Plaintiffs allege that Amazon and the Big Five agreed to price restraints that cause
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`Plaintiffs and other consumers to overpay for eBooks purchased from the Big Five through a
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`retail platform other than Amazon.com. Plaintiffs seek to represent a Class of consumers, who
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`likewise purchased eBooks from the Big Five through an online bookseller other than Amazon
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`and suffered similar overcharges.
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`5.
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`EBook prices have been the continuous subject of antitrust investigations in the
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`United States and Europe since 2011. The European Commission in the European Union (“EU
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`Commission”) first opened proceedings in December 2011 against the Big Five and Apple to
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`determine whether they colluded in raising retail prices of eBooks.7 The Department of Justice
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`(“DOJ”) and Attorneys General (AGs) from 33 states followed with their own lawsuit in this
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`District in early 2012.8 Both the U.S. District Court presiding over the DOJ and AGs’ lawsuit
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`and the EU Commission found that the Big Five had colluded with Apple to raise prices.9 They
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`achieved this goal by jointly switching on a global basis from a wholesale model of selling
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`eBooks (where the eBook retailer determines retail prices) to an agency model (where the
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`publisher determines retail prices and the eBook retailer acts merely as its agent).10 As part of
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`their conspiracy, the Big Five agreed to a most favored nations clause (“MFN”) with Apple to
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`ensure that the Big Five sold their eBooks at the same prices through Apple’s online store as
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`through all other eBook retailers, including Amazon.11
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`7 5.4.2017 EU Commission Decision at 8.
`8 House Report at 333; 5.4.2017 EU Commission Decision at 8.
`9 United States v. Apple Inc., 952 F. Supp. 2d 638, 648 (S.D.N.Y. 2013); 5.4.2017 EU
`Commission Decision at 8.
`10 Id.
`11 Id.
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`6.
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`The U.S. District Court entered consent decrees in 2012 and 2013 against the Big
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`Five.12 The Big Five also reached settlements with the EU Commission on December 12, 2012,
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`and July 25, 2013.13 Both the consent decrees entered in the United States and the EU
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`Commission settlements reached in Europe required the Big Five to cease colluding with each
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`other, to refrain from employing an MFN in any of their agreements with eBook retailers for five
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`years, and for two years to permit eBook retailers to add their own discounts to the retail prices
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`of the Big Five’s eBooks sold through the retailer’s platform.14
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`7.
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`As the following chart shows,15 the Big Five’s eBook prices decreased
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`substantially from 2013-2014, as long as the consent decrees prevented the Big Five from
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`interfering with retailer discounts, but they immediately increased their prices again in 2015 after
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`renegotiating their agency agreements with Amazon and have continued to maintain
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`12 See U.S. v. Apple, Inc., et al., Department of Justice, https://www.justice.gov/atr/case/us-v-
`apple-inc-et-al.
`13 5.4.2017 EU Commission Decision at 8.
`14 5.4.2017 EU Commission Decision at 8; see, e.g., Final Judgment as to Defendants The
`Penguin Group, a Division of Pearson PLC, and Penguin Group (USA), United States v. Apple,
`Case No. 12-cv-02826-DLC (S.D.N.Y.), Docket No. 259 (“Final Judgment Penguin”) at 8-9,
`https://www.justice.gov/atr/case-document/final-judgment-defendants-penguin-group-division-
`pearson-plc-and-penguin-group-usa.
`14 Id. at 11 and 18.
`15 The chart represents the weighted average price of eBooks price for the Big Five
`Defendants with prices adjusted for inflation. It draws from a data sample consisting of New
`York Times bestsellers starting from February 13, 2011, when the first eBooks appeared on the
`NYT list, to December 1, 2020.
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`supracompetitive prices:
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`8.
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`Although Amazon claimed publicly that it was negotiating with the Big Five to
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`ensure that it would continue to discount their eBook prices beyond the two-year period required
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`under the consent decree, this did not happen. The week after announcing their respective agency
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`contracts with Defendant Amazon, Co-conspirator Penguin increased its eBook prices by 30.4%,
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`Co-conspirator HarperCollins by 29.3%, Co-conspirator Simon & Schuster by 15.8%, Co-
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`conspirator Hachette Book Group by 8.3%, and Co-conspirator Macmillan by 10.7%.
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`9.
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`As the following chart illustrates, Amazon’s Co-conspirators raised prices by
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`increasing the price point for new releases and by consolidating eBook prices to fewer price
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`buckets. During the Apple conspiracy in 2011-12, the Big Five priced 80% of their eBooks
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`within just four price buckets. This roughly doubled in 2013 through 2014, when DOJ ensured
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`competitive eBook pricing by enforcing the consent decrees entered against the Big Five Co-
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`conspirators. After entering into their agreements with Amazon in 2015, the Big Five gradually
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`reverted to using three or four price buckets by 2018 and through the present:
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`10.
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`During the DOJ enforcement of the consent decrees, the Big Five eBook prices
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`had the greatest price diversity in 2014. After adjusting for inflation, eBook prices for books
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`clustered around $12 and only about 5% of titles sold for about $15, whereas in 2020, which
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`represents greater price conformity, 55% of titles sold for about $15 and less than 5% sold
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`around $12:
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`11.
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`Had Amazon and its Co-conspirators only raised prices on Amazon.com,
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`consumers would be free to shop for lower-priced eBooks on other retailer sites. Instead,
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`Amazon and its Co-conspirators agreed to a price restraint that prevents lower eBook prices on
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`other eBook retailer sites.
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`12.
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`In June 2015, the EU Commission again investigated anticompetitive conduct in
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`the eBooks market and found that Defendant Amazon employed MFNs with eBook publishers
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`and similar provisions in its agreements with the Big Five (who were at that time prevented by
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`their settlements with the EU Commission from employing MFNs in their contracts).16 The EU
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`Commission found that the MFNs and analogous provisions found in the Big Five contracts had
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`probable anticompetitive effects.17 Amazon and the EU Commission reached a settlement in
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`2017 that prohibited Amazon from enforcing its MFNs and similar provisions for a five-year
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`period in the European Economic Area.18 Amazon’s settlement with the EU Commission had no
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`effect on Amazon’s and the Big Five’s practices in the United States.
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`13.
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`The House Judiciary Committee began investigating Amazon in 2019 as part of a
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`broader investigation of competition in the digital markets, led by the Subcommittee on
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`Antitrust, Commercial, and Administrative Law.19 After a 16-month investigation, the House
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`Judiciary Committee issued a report and recommendations. Among its findings, the Committee
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`determined that Amazon’s use of MFN provisions in its agreements with book publishers harms
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`competition in the retail book market, including the eBook market.20
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`14.
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`In comparison to physical books, publishers sell eBooks at high prices, and
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`consumers do not actually benefit from the cost reduction that comes from low printing and
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`16 5.4.2017 EU Commission Decision at 4-5.
`17 5.4.2017 EU Commission Decision at 20-38, 43.
`18 Id. at 39, 41-42.
`19 House Report at 6.
`20 Id. at 295.
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`distribution expenses.21 Amazon charges high commissions and other costs to publishers,
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`including the Big Five, which in turn significantly increases the retail price of the eBooks they
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`sell on Amazon.com.22 One way that Amazon increases the cost of selling eBooks is by tying its
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`distribution services, i.e., helping customers find and purchase eBooks on the Amazon platform,
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`collect payment, and deliver the book electronically, with its advertising services, which are
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`designed to maximize the placement of advertisements to consumers at various points of the
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`search and purchase experience.23 Amazon drives up the Big Five’s cost of doing business on
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`Amazon.com by manipulating the “discovery tools to make a publisher’s books difficult to find
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`without the purchase of advertising or refuses distribution unless the publisher also purchases
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`advertising.”24
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`15.
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`In a competitive market, the Big Five could sell eBooks at a lower price on their
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`own websites or through Amazon’s retail competitors that offer lower commissions and fees, but
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`the Big Five agree not to sell their eBooks at a price lower than the price they sell on
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`Amazon.com. This contractual “stranglehold” prevents Amazon’s current eBook retail
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`competitors from expanding their market share and reduces the incentive of potential eBook
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`retail competitors from entering the market.25 The anticompetitive agreements between
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`21 Analyst opinion, https://www.statista.com/outlook/213/109/ebooks/united-states#market-
`users.
`22 Letter from Maria A. Pallante, Pres. & CEO, Ass’n of Am. Publishers, Mary E.
`Rasenberger, Exec. Dir., Authors Guild, Allison K. Hill, CEO, Am. Booksellers Ass’n, to Hon.
`David. N. Cicilline, Chairman, Subcomm. on Antitrust, Commercial and Admin. Law of the H.
`Comm. on the Judiciary, 3 (Aug. 17, 2020),
`https://publishers.org/wpcontent/uploads/2020/08/Joint-Letter-to-Rep-Cicilline-081720.pdf.
`23 Id.
`24 Id.
`25 House Report at 295.
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`Defendant Amazon and the Big Five Co-conspirators have the intent and effect of injuring
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`consumers by eliminating the price competition that Amazon.com would otherwise face and by
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`raising eBook prices sold through Amazon’s retail rivals above the price that the eBooks would
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`be sold in the absence of this restraint.
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`16.
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`Because Amazon and its Co-conspirators have not made the terms of their
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`agreements public, Plaintiffs rely on public disclosures, including news reports, submissions to
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`the House Judiciary Committee and the findings of the EU Commission and House Judiciary
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`Committee. These reports describe the contractual devices that Amazon employs in its
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`agreements with publishers to fix book prices and prevent competition from rival booksellers.
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`17.
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`In general, MFNs entitle the buyer to the lowest price or best terms that the
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`supplier offers to any other buyer, but that is not how the MFN operates in Amazon’s contracts
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`with the Big Five Co-conspirators. The Big Five rely on the agency model to sell their eBooks,
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`which means that Amazon is not a buyer and the Big Five are not its suppliers. “Amazon,” the
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`House Judiciary Committee observes, “has a history of using MFN clauses to ensure that none of
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`its suppliers or third-party sellers can collaborate with an existing or potential competitor to
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`make lower-priced or innovative product offerings available to consumers.”26 Although Amazon
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`changed the name and specific mechanisms over the years, the Committee found that Amazon
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`has continuously imposed contract provisions that effectively function as MFNs on book
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`publishers.27 Amazon uses these provisions to prevent “publishers from partnering with any of
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`Amazon’s competitors” and to reinforce “Amazon’s ‘stranglehold’ and ‘control’ over book
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`26 Id.
`27 Id.
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`distribution.”28 Because of Amazon’s market power in the retail eBook market, these contractual
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`requirements prevent Amazon’s actual and potential retail rivals from introducing different
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`business models, offering promotional advantages, or offering customers lower prices on their
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`own.29 The House Judiciary Committee’s findings echo the conclusions of the EU Commission a
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`few years earlier.30
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`18.
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`Business model parity: The EU Commission reports that Amazon employs the
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`“Business model parity clause” in its contracts with the Big Five and other eBook publishers.31
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`This clause requires the Big Five Co-conspirators to notify Amazon of the distribution of their
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`eBooks through alternative business models and offer to Amazon the same material terms and
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`conditions as any other eBook retailer, even if the retailer operates under a different business
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`model.32 Examples of alternative business models include subscriptions, streaming, rentals, book
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`clubs, bundling of eBooks with the sale of print books, and reduced prices for partial
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`downloads.33 This clause is anticompetitive because it creates a disincentive for the Big Five Co-
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`conspirators to support and invest in alternative new and innovative business models.34 This, in
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`turn, reduces Amazon’s eBook retail competitors’ ability and incentive to develop alternative
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`business models and differentiate their eBook offerings through these innovations.35 It likewise
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`deters the entry of new eBook retail rivals or the expansion of Amazon’s existing retail rivals,
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`28 Id.
`29 Id. at 295-96.
`30 5.4.2017 EU Commission Decision.
`31 Id. at 9 and 12.
`32 Id. at 9.
`33 Id.
`34 Id. at 22.
`35 Id.
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`which collectively weakens competition in the eBook retail market and strengthens Amazon’s
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`already-dominant position in that market.36
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`19.
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`Selection parity: Because of Amazon’s eBook market dominance, its retail
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`competitors need to provide additional value to consumers, for example in the form of
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`differentiated content or early releases of eBooks because even temporarily offering content that
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`is unavailable on Amazon would increase competition in the retail distribution of eBooks.37 In a
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`competitive market, the Big Five Co-conspirators would have a financial incentive to incur the
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`added investment cost of developing innovative products for exclusive release by Amazon’s
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`retail competitors or to offer them exclusive early releases, so that Amazon’s competitors would
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`gain market share and weaken Amazon’s bargaining power over the Big Five.38 But Amazon
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`includes a selection parity provision in all its contracts with publishers, including the Big Five,
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`which requires them to provide their eBooks for sale on Amazon.com at the earliest date
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`available to other eBook retailers and include all the same features as eBooks available through
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`Amazon’s retail competitors.39 It also requires that a publisher intending to sell an eBook
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`anywhere in the marketplace that is not primarily text (e.g., contain illustrations, graphics, or
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`additional content) must notify Amazon and provide all assistance and materials that would be
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`reasonably required for Amazon to create an equivalent eBook of that title. This global
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`requirement of compatibility with Amazon’s eBook readers effectively eliminates any economic
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`incentive the Big Five Co-conspirators have to develop innovative eBooks that might be read on
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`36 Id.
`37 Id. at 30.
`38 Id. at 29-30.
`39 Id. at 10, 27.
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`a more technologically savvy platform.40 Amazon’s selection parity clause hurts consumers by
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`inducing publishers to keep their eBook functionalities simple, which eliminates the more
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`interactive and advanced functions that might otherwise be available through Amazon’s eBook
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`retail competitors.41 It harms the retail competition because it forecloses a significant avenue for
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`retailers to compete with Amazon by differentiating the product or making it available earlier.42
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`20.
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`Notification provisions: When the Big Five renegotiated their contracts with
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`Amazon in approximately 2015, the consent decrees prevented them from having MFNs in their
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`eBook contracts. Until about 2017, while they were still subject to this prohibition, Amazon and
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`the Big Five agreed to notification provisions that served the same function as the prohibited
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`MFN provisions (i.e., Amazon’s agency price parity, promotion price parity, discount pool,
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`wholesale price parity and agency commission parity provisions discussed below).
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`21.
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`In this interim period, the Co-conspirators’ retail price notification clauses
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`required each of the Big Five to notify Amazon if their agency price on Amazon is higher than
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`the retail price charged via any competing eBook retailer.43 The Co-conspirators’ promotion
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`notification provision likewise obliged the Big Five to notify Amazon if they offer any
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`promotional agency price or promotional content to an eBook retailer competing with Amazon
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`and that the Big Five publisher does not also offer to Amazon.44 These clauses functioned like an
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`MFN in that they allowed Amazon to prevent other retail platforms from undercutting the Big
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`40 Id.
`41 Id.
`42 Id. at 31.
`43 5.4.2017 EU Commission Decision at 11.
`44 Id.
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`Case 1:21-cv-00351 Document 1 Filed 01/14/21 Page 17 of 66
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`Five’s eBook prices on Amazon.com.45 Once notified of the availability of its Co-conspirators’
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`eBooks at lower prices, Amazon typically “requested” that the same low retail price or
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`promotional agency price charged on the platform of the competing eBook retailer would also be
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`offered on Amazon.com.46 If the publisher did not comply with Amazon’s “request,” Amazon
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`retaliated or threatened to retaliate by removing the buy button for one or several of publisher’s
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`eBooks on its platform, by excluding the publisher’s eBooks from all promotional activity, by
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`removing the pre-order buttons or by prominently displaying banners for alternative eBooks in
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`an attempt to dissuade potential buyers from purchasing its Co-conspirator’s eBook.47
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`Eventually, the Big Five stopped resisting and began turning down promotions proposed by
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`Amazon’s retail competitors because they would need to provide the same terms to Amazon.48
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`These notification provisions are anticompetitive because they eliminated any incentive for the
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`Big Five to offer lower prices or better terms to any of Amazon’s competitors or new entrants.49
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`22.
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`From about 2017 through the present, the consent decrees no longer prohibited
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`MFNs in the Big Five contracts. Rather than relying on the notification provisions, it is believed
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`that Amazon and the Big Five agreed to some or all of Amazon’s MFN provisions (i.e.,
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`Amazon’s agency price parity, promotion price parity, discount pool provision, wholesale price
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`parity and agency commission parity provisions discussed below).50
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`45 Id. at 36.
`46 Id.
`47 Id. and n.55.
`48 Id. at 37.
`49 Id.
`50 See House Report at 295 (“Although Amazon has changed the name and specific
`mechanisms over the years, it appears that the company continues to impose contract provisions
`that effectively function as MFNs on book publishers.”).
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`23.
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`Agency price parity: Currently and since at least 2015, in the United States, the
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`Big Five have agency agreements with Amazon.51 The EU Commission reports that Amazon’s
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`contracts with publishers that operate under the agency model include an agency price parity
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`provision.52 The agency price is the price the Big Five publisher sets or, if discounting is
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`permitted, the discounted price charged by an eBook retailer for the sale of an eBook to a
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`consumer under an agency agreement.53 The agency price parity provision requires the Big Five
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`to set the eBook price for books they sell through Amazon no higher than the eBook price
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`charged on eBook retail platforms that compete with Amazon.com. This clause harms consumers
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`by increasing Amazon’s dominance as the platform for the Big Five’s eBook sales and raising
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`the Big Five’s eBook prices. If this clause did not exist, the Big Five would have a financial
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`incentive to lower their eBook prices on rival platforms that charge lower commissions than
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`Amazon and steer more sales to those platforms, thereby increasing the publishers’ overall
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`revenues and profits and evading Amazon’s “stranglehold” over them.54 The Big Five Co-
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`conspirators also have an agency commission parity clause that requires the Big Five to provide
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`Amazon a commission that is equal to or greater than the commission the Big Five pay to
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`Amazon’s retail competitors, so conversely the Big Five cannot diversify their distribution
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`channels by offering Amazon’s competitors a better commission.55
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`24.
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`Promotion price parity: Agency agreements also include a promotion price
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`parity clause that requires the Big Five to provide Amazon any promotional agency price,
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`51 See infra n.5.
`52 5.4.2017 EU Commission Decision at 32.
`53 Id. at 10 n.17.
`54 Id. at 34; House Report at 295.
`55 Id. at 11.
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`promotional wholesale price, or promotional content that they offer to any other eBook retailer.
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`The clause is anticompetitive because it gives the Big Five an incentive to prohibit Amazon’s
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`retail rivals from offering promotional eBook prices.56
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`25.
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`Discount pool: The discount pool clause provides Amazon yet another way to
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`enforce its MFN, whenever a competing eBook retailer offers a lower retail price than the
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`publisher price on Amazon.com.57 The clause relates to a “pool” of credits that Amazon may use
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`at its discretion. If any eBook the publisher sells triggers this clause, Amazon may discount the
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`agency price for that title or any other eBook title the publisher sells on Amazon.com.58
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`Defendant calculates the pool based on the differences between the agency prices the Big Five
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`charge for their eBooks on Amazon.com and any lower prices available through any other eBook
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`retailer.59 It then multiplies the difference in price by the number of units sold through Amazon
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`for the duration of the time that the price on Amazon exceeded the competitor’s price.60 This
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`clause is anticompetitive because it prevents Amazon’s retail rivals from competing on price and
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`eliminates the discounts that would otherwise be available to consumers.
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`26.
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`At the conclusion of the European Commission’s two-year investigation