Connecticut Attorney General Richard Blumenthal said his office is investigating deals struck between the largest U.S. e-book publishers and two of the top sellers — Amazon.com, Inc. and Apple, Inc. — that may block competitors from offering cheaper prices on the same e-books.
Describing the e-book market as one ready to explode, Blumenthal said he is concerned that the agreements with publishers will ultimately deprive consumers of competitive prices.
The probe’s focus is on contract provisions struck by Amazon and Apple with the publishers that are known as “most favored nation” – or MFN clauses. They effectively ensure that both Amazon and Apple will receive the best prices for e-books over any competitors.
In letters to both Amazon and Apple, Blumenthal is asking for company representatives to meet with his staff to “address these concerns.”
Publishers that have reached such agreements with Amazon and Apple include Macmillan, Simon & Schuster, Hachette, HarperCollins and Penguin.
The agreements “appear to have already resulted in uniform prices for many of the most popular e-books — potentially depriving consumers of competitive prices,” Blumenthal said. “The e-book market is set to explode — with analysts predicting that e-book readers will be among the holiday season’s biggest electronic gifts — warranting prompt review of the potential anti-consumer impacts.”
In the letters, Blumenthal said he understands that MFNs are “not per se illegal under our antitrust laws.”
But he adds that the deals struck with Amazon and Apple “have the potential to impair horizontal competition by encouraging coordinated pricing and discouraging discounting.”
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