Amazon's Demand for "Price Parity" Has Dealers in an Uproar

- by Michael Stillman

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Of course, booksellers can simply say "no" and quit Amazon. However, for many, for whom Amazon is a large if not majority part of their business, this may not be a practical solution. They may not be able to survive.

We will leave it for others to decide the ethics of this case. From a strictly legal standpoint, I would bet on Amazon. I am not terribly familiar with European law, but government regulation appears more popular on that side of the Atlantic than in America, so perhaps these booksellers will fare better than I would expect. In America, I see this as a very long shot.

This is not a monopoly case, even if Amazon is a market leader, and even though they also own AbeBooks (which has not instituted such a policy, at least yet). There are still major competitors such as Alibris, Biblio, and eBay, dealers can have their own sites and submit them to Google shopping, and there are still brick and mortar stores. No one is going to be calling for Amazon to be broken up.

It might be argued that this is one of those price maintenance cases, where a manufacturer tries to enforce minimum (or maximum) selling prices for their goods. Usually it's a minimum price, and the manufacturer fears that a discounter selling at a low margin will drive its other retailers out of business. However, while such price fixing was illegal for a century, in 2007 the the U.S. Supreme Court voted 5-4 to overturn the 1911 decision making such demands illegal. Now, these claims are to be considered on a case-by-case basis, following a "rule of reason." Don't look to the Court to find Amazon's reasoning unreasonable. Even if you believe their main purpose is to stifle competition, a court is more likely to accept Amazon's explanation.

Ultimately, this one will have to be resolved by the market, though there may be some heartaches along the way. Nevertheless, if Amazon's fees force prices to be set unnecessarily high, some dealers will offer lower prices on other channels. Some will be new or non-Amazon dealers, others will be ones who migrate from Amazon. If dealers can sell elsewhere for less, some will, and customers will become aware. This move could yet backfire, strengthening rather than destroying Amazon's competitors. Amazon is a mass of "good will," but not much else. They are not the only game in town. Buyers will move in a heartbeat for a better price. If Amazon's fees and demands are unrealistic, sellers will in time find a cheaper way to sell.