# American Booksellers Association Antitrust Complaints re: Wal-Mart, Target, Amazon. Viable? **URL:** \ **Category:** Factual Questions\ **Created:** [October 22, 2009, 9:54pm UTC](https://boards.straightdope.com/t/american-booksellers-association-antitrust-complaints-re-wal-mart-target-amazon-viable/514788 "2009-10-22T21:54:28Z")\ **Posts on this page:** 10\ **Page:** 1
**Author:** ![Mr.Slant](https://avatars.discourse-cdn.com/v4/letter/m/c57346/32.png) [@Mr.Slant](https://boards.straightdope.com/u/Mr.Slant)\ **Post date:** [October 22, 2009, 9:54pm UTC](https://boards.straightdope.com/t/american-booksellers-association-antitrust-complaints-re-wal-mart-target-amazon-viable/514788/1 "2009-10-22T21:54:28Z")
I just saw an article indicating that a trade group has complained that pricing policies on the part of 3 major retailers violate anti-trust laws. Here’s the article: [http://www.publishersweekly.com/article/CA6703525.html?desc=topstory](http://www.publishersweekly.com/article/CA6703525.html?desc=topstory) and the complaint itself: [http://www.publishersweekly.com/article/CA6703526.html](http://www.publishersweekly.com/article/CA6703526.html) From which I quote, as this letter is not copy written or confidential: \*Publishers sell these books to retailers at 45%-50% off the suggested list price. For example, a $35 book, such as Mr. King’s Under the Dome, costs a retailer $17.50 or more. News reports suggest that publishers are not offering special terms to these big box retailers, and that the retailers are, in fact, taking orders for these books at prices far below cost. (In the case of Mr. King’s book, these retailers are losing as much as $8.50 on each unit sold.) We believe that [Amazon.com](http://Amazon.com), Wal-Mart, and Target are using these predatory pricing practices to attempt to win control of the market for hardcover bestsellers. \* I had always thought that having 3 large competitors wasn’t an anti-trust situation. I’d envisioned anti-trust as something where there was one monster company in the process of squeezing out all of the competition… that is, the actions of one company might trigger anti-trust concerns, but a number of retailers fighting one another on price is just the free market. It seems like Amazon, Wal-Mart and Target whipping up on one another… I mean, they’re grown-ups, they can take care of themselves. Does the ABA have a leg to stand on here? ---
**Author:** ![unclelem](https://avatars.discourse-cdn.com/v4/letter/u/ac91a4/32.png) [@unclelem](https://boards.straightdope.com/u/unclelem)\ **Post date:** [October 22, 2009, 10:25pm UTC](https://boards.straightdope.com/t/american-booksellers-association-antitrust-complaints-re-wal-mart-target-amazon-viable/514788/2 "2009-10-22T22:25:18Z")
The complaint here is not one of collusion. They are maintaining that the big boxes are selling large quantities of product far below cost in an effort to drive competitors out of the business. (presumably after which they could charge much more than cost and recoup their losses without worrying about pesky competitors). This practice is called “dumping” and is indeed illegal. Whether this is actually happening here is a different question. ---
**Author:** ![Mr.Slant](https://avatars.discourse-cdn.com/v4/letter/m/c57346/32.png) [@Mr.Slant](https://boards.straightdope.com/u/Mr.Slant)\ **Post date:** [October 22, 2009, 11:15pm UTC](https://boards.straightdope.com/t/american-booksellers-association-antitrust-complaints-re-wal-mart-target-amazon-viable/514788/3 "2009-10-22T23:15:53Z")
Does a valid accusation of dumping require intent? ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [October 22, 2009, 11:33pm UTC](https://boards.straightdope.com/t/american-booksellers-association-antitrust-complaints-re-wal-mart-target-amazon-viable/514788/4 "2009-10-22T23:33:58Z")
> [@unclelem](#): > > This practice is called “dumping” and is indeed illegal. [No on both counts](http://en.wikipedia.org/wiki/Dumping_(pricing_policy)). > [@](#): > > In economics, “dumping” can refer to any kind of predatory pricing. However, the word is now generally used only in the context of international trade law, where dumping is defined as the act of a manufacturer in one country exporting a product to another country at a price which is either below the price it charges in its home market or is below its costs of production. … > > A standard technical definition of dumping is the act of charging a lower price for a good in a foreign market than one charges for the same good in a domestic market. This is often referred to as selling at less than “fair value.” Under the World Trade Organization (WTO) Agreement, dumping is condemned (but is not prohibited) if it causes or threatens to cause material injury to a domestic industry in the importing country. The actual complaint is one of [predatory pricing](http://en.wikipedia.org/wiki/Predatory_pricing#United_States). > [@](#): > > Predatory pricing practices may result in antitrust claims of monopolization or attempts to monopolize. Businesses with dominant or substantial market shares are more vulnerable to antitrust claims. However, because the antitrust laws are ultimately intended to benefit consumers, and discounting results in at least short-term net benefit to consumers, the U.S. Supreme Court has set high hurdles to antitrust claims based on a predatory pricing theory. The Court requires plaintiffs to show a likelihood that the pricing practices will affect not only rivals but also competition in the market as a whole, in order to establish that there is a substantial probability of success of the attempt to monopolize.[3] If there is a likelihood that market entrants will prevent the predator from recouping its investment through supra competitive pricing, then there is no probability of success and the antitrust claim would fail. In addition, the Court established that for prices to be predatory, they must be below the seller’s cost. A nine dollar price may indeed be below the seller’s cost. It’s close enough to worth investigating at any rate. ---
**Author:** ![SmackFu](https://avatars.discourse-cdn.com/v4/letter/s/53a042/32.png) [@SmackFu](https://boards.straightdope.com/u/SmackFu)\ **Post date:** [October 23, 2009, 12:53am UTC](https://boards.straightdope.com/t/american-booksellers-association-antitrust-complaints-re-wal-mart-target-amazon-viable/514788/5 "2009-10-23T00:53:47Z")
From what I’ve heard, the cost to the sellers is 50% of list, if they are high volume like the companies involved here. That’s why they normally sell bestsellers at 40%, to make a small margin, and will go down to 50% on something like Harry Potter. That Stephen King book has a list price of $35 for some reason, so $9 is 74% off. If they are paying 50%, they are losing $6 for every copy they sell. ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [October 23, 2009, 1:59am UTC](https://boards.straightdope.com/t/american-booksellers-association-antitrust-complaints-re-wal-mart-target-amazon-viable/514788/6 "2009-10-23T01:59:32Z")
> [@SmackFu](#): > > From what I’ve heard, the cost to the sellers is 50% of list, if they are high volume like the companies involved here. That’s why they normally sell bestsellers at 40%, to make a small margin, and will go down to 50% on something like Harry Potter. > > That Stephen King book has a list price of $35 for some reason, so $9 is 74% off. If they are paying 50%, they are losing $6 for every copy they sell. Or you could just read the OP, which gives the proper numbers. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [October 23, 2009, 2:15am UTC](https://boards.straightdope.com/t/american-booksellers-association-antitrust-complaints-re-wal-mart-target-amazon-viable/514788/7 "2009-10-23T02:15:27Z")
> [@Mr.Slant](#): > > News reports suggest that publishers are not offering special terms to these big box retailers, and that the retailers are, in fact, taking orders for these books at prices far below cost. They are indeed offering “special terms” but special terms anyone can qualify if your order is big enough. For example, on one order, the jobber offers 50/10/2/5, which means 50%, plus the other discounts depending on when paid- if the order was by the pallet full. Net can easily be around 60% off if you pay “cash”. (This is for the gaming industry for things like D&D books, but I expect the figures are about right for books) Amazon orders by the boxcar load, direct from the publisher. They get bigger discounts than Bob’s Books, which orders 4 copies from a wholesaler. This is as it should be. ---
**Author:** ![Mr.Moto](https://avatars.discourse-cdn.com/v4/letter/m/9de0a6/32.png) [@Mr.Moto](https://boards.straightdope.com/u/Mr.Moto)\ **Post date:** [October 23, 2009, 2:51am UTC](https://boards.straightdope.com/t/american-booksellers-association-antitrust-complaints-re-wal-mart-target-amazon-viable/514788/8 "2009-10-23T02:51:56Z")
This is nuts. The publishers complain that they had to cut the cost of hardbacks to compete with ebooks - yet the ebook business is multiplying and they get a cut of every ebook sold. Seems to me like they would want to encourage that trend, as it lowers the cost of entry to authorship and could bring them lots of money in volume sales. It looks like they will be as shortsighted here as the RIAA or the MPAA. ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [October 23, 2009, 3:40am UTC](https://boards.straightdope.com/t/american-booksellers-association-antitrust-complaints-re-wal-mart-target-amazon-viable/514788/9 "2009-10-23T03:40:23Z")
> [@Mr.Moto](#): > > This is nuts. The publishers complain that they had to cut the cost of hardbacks to compete with ebooks - yet the ebook business is multiplying and they get a cut of every ebook sold. Seems to me like they would want to encourage that trend, as it lowers the cost of entry to authorship and could bring them lots of money in volume sales. > > It looks like they will be as shortsighted here as the RIAA or the MPAA. How is this in any way responsive to the factual question asked by the OP? ---
**Author:** ![anson2995](https://avatars.discourse-cdn.com/v4/letter/a/c77e96/32.png) [@anson2995](https://boards.straightdope.com/u/anson2995)\ **Post date:** [October 23, 2009, 4:42pm UTC](https://boards.straightdope.com/t/american-booksellers-association-antitrust-complaints-re-wal-mart-target-amazon-viable/514788/10 "2009-10-23T16:42:31Z")
> [@Mr.Moto](#): > > This is nuts. The publishers complain that they had to cut the cost of hardbacks to compete with ebooks - yet the ebook business is multiplying and they get a cut of every ebook sold. Seems to me like they would want to encourage that trend, as it lowers the cost of entry to authorship and could bring them lots of money in volume sales. > > It looks like they will be as shortsighted here as the RIAA or the MPAA. Nah, it has nothing to do with it at all. Publishers love ebooks. What they don’t like is the power that huge retailers are exerting to monopolize the market for hardcovers.