Amazon Sidesteps Antitrust Case; Trump Goes to SCOTUS

all anti trust cases are. They are so um. First of all, it's a class action which, as you know, is brought on behalf of a lot of people, and this is brought on behalf of buyers of e books against Amazon and five Age your book publishers. So that's presumably a lot of the books a lot of money writing on this. Damages in these cases are not just what the consumers might have paid over what they should have paid the overcharge, which is what they're alleging, but

it's that trebled, so damages are three times that. So a lot of buyers the book publishers published almost of the books published in the United States, and of course we've heard of Amazon, an interesting little factoy. They sell more books than any other single retail outlet in history, in history, you know, I'm not sure how far back that goes, but they have tremendous power in this industry.

Is it a monopoly, Well, that's a great question, and it's a question the Federal Trade Commission has been investigating. They've been assigned the task, I guess you could say, of investigating Amazon for men balizing conduct. It's not a violation of US law just to be a monopoly. They have to do byad things to keep their monopoly or to have gotten it. And so they are under investigation. They've always been under a lot of fire. They're under fire here, they're under fire in Europe, in Asia, I

mean everywhere. And you know, instinctively we know they've got tremendous power over the book publishers. They do some publishing of books, but they haven't really made a go of it, and their powers mainly as the distributor, the retailer that has great power in the change of distribution, so very powerful, and you know, the book publishers aren't not powerful. Without them, we don't have books. So these are parties on both

sides with a lot of market power. So the problem in this case, the reason why the buyers are bringing is they allege that the five publishers and Amazon have conspired to fix the prices of e books roughly I guess from twenty onward and raise the price above what it would be in a competitive market without this agreement. So how did they do it? And this is where, of course it gets complicated, because you know, the planiffs have to prove that they actually agreed. So each of

the publishers has an agreement with Amazon. They have these agreements individually with Amazon for how their books are sold. The arrangement is something that they call the agency model. So you know, if you if you sell your house, then you have a real estate agent. The real estate agent doesn't own your house and then sell its m for more money or less money, whatever they can get. They just act on your behalf and you tell them

how much you want, what price do you want. That's an agency model, and that's the model they took with e books. Of course, e books aren't physical, they're US zeroes and ones. They're just computer code. But the fiction is well, Amazon's their agents. They don't really own the books, not that there are books, they don't own the files. I guess you could say they're just the agent. And each publisher tells Amazon what to sell the book at and then Amazon takes a cut. The cut is I

think thirty of the sale price. Is that high? It sounds high. I think it's This has been the standards, thanks frankly to Steve Jobs. But we'll get to that in a minute, because that's behind all of this. So each agreed to this agency model, and when they did, individually, they issued press releases or letters to their authors, you know, explaining what that they were doing this, but each individually.

And there's another wrinkle to this, which is often referred to as a price parody, cause not paro d as amusing, but equal so um in these agreements required each publisher to tell Amazon if their books were available through a different retailer at a lower price, So to inform them if let's say that they were allowing Barnes and Noble to sell the book at a lower retail price, and then Amazon could react and could say we want the same price, which is, you know, what they would do

and what they did and This included not just the same price, but promotional deals, whatever sorts of things they worked out. They gave other retailers a little better deal they had to tell Amazon about and Amazon would tell them where we want that deal. Now, if the publisher's ball, then Amazon could retaliate for threatened to retaliate, and they had lots of ways to do that, some of which

had become public. I mean, they sell a lot of physical books, so they can retaliate against the physical book division, and they threatened to st with that at one point, you know, to force these publishers who in the end, I mean, they need Amazon to distribute their books. So the allegation is that the price parity clause, for the price informational parity clause that combined with the agreement, you know, the agency model, was an agreement that effectively fixed the

price and prevented discounting. And the plaintiffs back this up with. You know that they all had these press releases sort of telling everyone in the world, including their competitors, what they did. And the week after these agency agreements were signed, everyone increased their e book prices, some by quite a bit, Penguin, for example, by so that they argue the PLANETFS argue shows it was an agreement to fix prices. Now for

the background in a prior case involving Steve Jobs. Now I said, there's background in this, and the background is what makes it more interesting is that it's not the first time we've seen a problem with price fixing of e books. And the first time actually involved litigation with the Justice Department and the States and the European Union actually,

and it involved Apple. And this dated back to two thousand seven, believe it or not, when the Kindle came out and Amazon releases the Kindle with a low e book price of At that time, publishers distributed e books like they distributed hardcover books wholesale, so they would sell them to the retailer and then the retailer can sell whatever price they wanted. So they were selling books e books to Amazon for roughly nine dollars or something close to and Amazon wasn't taking very much of a profit.

They were giving the consumer a great deal in part to get the Kindle to be adopted, and the publishers were just they hated this. So they actually started meeting together. And that's a key difference so far between the case. We're talking about the current class action and the old case.

So the publishers met quite a bit, including a well known meeting at a very fancy restaurant where they had a private room to themselves, restaurant called p Sholeen on the Upper East Side, and you know, they met and they decided to approach Steve Jobs, who was coming out with his own you know, the Eye Books, the Eye

Book Store on the iPad. So they agreed, and Jobs didn't want a still, he wanted to get a lot more money, so they agreed with him on this agency model that's they came up with and said, Okay, we'll give you the thirty cut, you can have a higher price, and we'll work out of the all. We can go into the mechanics if you want to how we're basically going to force Amazon and all of us to move from the sole sale model to the agency model where we can dictate the price and we're gonna push it

up past point. So they constructed this agreement, which eventually resulted in their being sued. All the publishers settled that case with consent agreements, except for Apple, which litigated to the Court of Appeals and lost. So this case that we're talking about comes about once the remedies that were imposed in the earlier case expired. So under the earlier case,

the publishers were not permitted to stop retail discounting. Once that expired, they entered into new agreements with Amazon that effectively, they say, ended the discounting. So this is round two, and this is the case that actually the district court just throw out. Yeah, so it sounds like what they're doing is an agreement and it's driving prices up. So why did the court throw it out? You asked the

perfect question. This is the kicker, and this is one of the really hard legal issues for anti trust's law. So in the first case, remember I mentioned something about meeting in a private restaurant, and there was a lot of communication there were there were a lot of emails, phone calls back and forth among the publishers. None of

that apparently exists in this case. So in the first case, when competitors get together on the same level of production distribution, their agreement is called a horizontal agreement, and the horizontal agreement on prices is considered the absolute worst thing in any trust illegal per se in and of itself. No defense. People often go to jail for it. So if it's horizontal,

it's a big problem. But there's no clear proof in this case that they agreed, and the plaintiffs try to argue, you can infer they agreed by some of their behavior, there must be an agreement. He announced. On the same day. Three of the five CEOs were around for the prior case. They know how this goes, you know. Now they're better counsel and they're listening to their lawyers. Apparently they did

not the last time, and they're much more cautious. But there aren't that many players, and they know what's happening, and they all come up with the same deal. So the argument goes, a jury could infer that they agreed, but the court said, no, you haven't pleaded enough. We won't allow a jury. It's what we have is consistent with individual action, as it is with conspiracy. And there's the Supreme Court decision that says that's not good enough

for you know, in any trust conspiracy. And so that's why the basically why the district court rejected the complaint. Oor at a very early stage. This is just really the initial stage of this litigation. They filed their complaint. That's all that's been done. They haven't you know, had a chance to you know, go through the emails to do discovery, um, all sorts of things. So it's very early stage. But this is a problem. Competitors often announced

things and others say, hey, okay, we'll do that. To think airlines for raising prices, and the other airlines do it. So do you think the next step is to refile the complaint? The court gave them permission. Sometimes courts don't give permission to replead the case, but this district court judge did. But unless they have some new allegations of

some kind of behavior, it's hard to know. It seems to me that it's more on a legal point at this point, unless they come up with other factual allegations, you know, unless they do, they don't have the opportunity to look further and do discovery of documents, particularly emails, things like that that ended up thinking the parties in the first case. So I'm not certain how they're going

to do this. They may just decide to appeal directly to the Court of Appeals, but it's going to be difficult because courts have become more and more cautious about allowing plaintiffs to go forward and discoveries expensive. And you know, Supreme Court's taken a somewhat negative view of just allowing plaintiffs to, as they view it, I think, go on some sort of fishing expedition through gigabytes of data. So

I guess we'll see. I'm I'm sure that they will try to move the case ahead, but it does I think rest on this key point about whether they have enough evidence from which a jury or the judge could infer that the party soul agreed. So we'll be watching this to see whether the plaintiffs refile they're complaint or perhaps taken appeal. Thanks so much as always, Harry. That's

Professor Harry First of n y U Law School. Former President Donald Trump is asking the Supreme Court to intervene in the seemingly never ending legal fight over government papers seized at his Moral Logo home. He now wants the justices to appoint a court ordered special master to review one documents with classified markings. I'm joined by Bloomberg News Supreme Court reporter Greg Store. Former President hump is back at the Supreme Court asking the Court to intervene in

the fight over government documents seized at mar Lago. What exactly is he asking them? Well, in some ways, June, it's a very narrow request. All that he's asking is that the court appointed special master who's going through all these documents that were retrieved from our lago, that that special master be allowed to review these or so documents that have classified markings on them. Right now, the judge

is not not allowed to review those documents. Are Trump's lawyers making a jurisdictional argument about whether the Eleventh Circuit had jurisdiction? Yeah, that's exactly it. Essentially, they say that the Eleventh Circuit the appointment of a special Master is the kind of thing and the special master's duties is the kind of thing that can't be immediately appealed. And so they say that the Eleventh Circuit never should have even entertained the request to restrict what sorts of things

the special Master could do in the lower court. Trump's lawyers make these arguments about Trump's role or a president's role in classifying documents and broad arguments. We've heard Trump even say that, you know, he can just say it, he can even think it, and declassify arguments. Are they still making that argument here? They're not, And in fact, they completely stay away from that subject. That's what they

didn't the lawyers did in the lower courts too. They stay away from declaring that the president actually did something, actually declassified these documents, even as they argue that he would have had sweeping authority to do that. So, just to set the stage, this is an appeal from an eleven Circuit panel that had to Trump appointees on it. It is, and it was an opinion that came out very quickly and was very definitive about essentially letting this

investigation go forward. Uh. One other thing the Elevens did was to say that the Justice Department and National Security personnel could go ahead and start looking at these documents, start using them. And that is not something that Trump is asking the Supreme Court to intervene on. It's only asking the court to do that rather narrow thing of letting the Special Master look at them to see if

some sort of privilege claim with these classified documents. Not clear what that what that might be, but there's some sort of privilege claim there. This is an emergency appeal, But where's the emergency Yeah, it's a good question. The former president waited more than two weeks to go up to the Supreme Court with this, and Justice Thomas, who's the justice who handles emergency matters out of the eleven Circuit,

also didn't suggest there was any massive rush. He gave the government a week to respond to it, so I wouldn't expect anything coming out of the Supreme Court for at least the week. Yeah. So does that signal that Justice Thomas doesn't think this is much of an emergency either, that he's giving the Justice Department so long to respond in an emergency matter? Yeah, I think that much is.

I wouldn't want to go any further than that and suggest it says anning about Justice Thomas's views on the matter. But in terms of the timing of it, and that makes sense, there's not you know, sometimes you see an emergency request and and and a party says, you know, we need something by you know, ex date or something some particular bad things going to happen. There was nothing like that in the Trump filing, and in fact, it was rather unclear as to exactly what the particular urgency

was for for the former president. The eleven Circuit yesterday approved an expedited appeal of the appointment of the Special Master to review the documents. Will that play in it all here? That now, that's on an expedited track, that

is certainly possible. You know, the Supreme Court when it gets the government's response, the government may probably will mention that and and sort of suggests, Hey, there's there's even less reason for the Supreme Court to get involved here because the Eleventh Circuit is moving quickly to get all this stuff resolved. Hard to say exactly how all those things will intersect, and no doubt will have various other developments happening between now and the time the Supreme Court rules.

Trump's record at the Supreme Court is not that great, despite his three appointees. Remind us of some of his past endeavors. Yeah, well, he's of course had those big fights about subpoenas for his financial records that the Supreme Court ruled on and didn't give him nearly everything he

was seeking. And then, perhaps more relevant to the current controversy, there was the issue of whether papers we're going to be turned over to the committee investigating the January six attack on the Capitol and the Supreme Court rejected Trump's effort to try to block records from being turned over from the Archives to the Committee, and only just as Clarence Thomas dissented there. How long do you think this is going to take? A matter of days? Weeks? The

Court will wait until they get that response. Normally, the court then waits to give the applying party a chance to follow a reply brief. That will probably take a couple of days. Then it could be any time after that. Thanks so much for being on the show. That's Bloomberg News Supreme Court Reporter Greg Store and that's it for this edition of the Bloomberg Law Show. Remember you can always get the latest legal news on our Bloomberg Law podcast.

You can find them on Apple Podcasts, Spotify, and at www dot Bloomberg dot com, slash podcast, Slash Law, and remember to tune in to The Bloomberg Law Show every week night at ten pm Wall Street Time. I'm June Grosso, and you're listening to Bloomberg