Amazon to blame for agency pricing: ABA

Summary:While the Australian Competition and Consumer Commission has said that it will look into any complaints from Australian retailers relating to the US Department of Justice's investigation into price collusion over ebooks, the Australian Booksellers Association said that it would prefer the commission to look into Amazon's "predatory" pricing practices.

While the Australian Competition and Consumer Commission (ACCC) has said that it will look into any complaints from Australian retailers relating to the US Department of Justice's (DoJ) investigation into price collusion over ebooks, the Australian Booksellers Association (ABA) said that it would prefer the commission to look into Amazon's "predatory" pricing practices.

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(Stack of books image by Horia Varlan, CC2.0)

The ebook pricing issue has bubbled to the surface again this week, following the US DoJ suing prominent US publishers and resellers, including Apple, for artificially propping up ebook prices.

The DoJ has accused Hachette, HarperCollins, Macmillan, Penguin and CBS-owned Simon and Schuster of using an "agency model" that sees the publishers set their own prices for ebooks, rather than using the wholesale model wherein stores purchase a book and sell it for their own price. Amazon, for example, uses wholesale pricing, purchasing an ebook for a specific price and reselling it, often at a loss, for approximately US$9.99.

The ACCC has said that it is aware of the ebook pricing matters going on in the US, and that online retail competition is one of its key areas of scrutiny. It wouldn't comment on whether it will also hold an investigation, but said that retailers with concerns should raise them with the ACCC.

The CEO of the ABA appears to have no intentions of doing so, however, saying that Amazon is where the problem lies. He said that the online giant has forced booksellers to adopt agency pricing models due to its monopoly on the cheap ebook market.

"What you have with the Amazon pricing model is that you have predatory pricing of products going on. We have concerns about predatory pricing. You want to have a competitive retail environment, and unfortunately when you have ebooks being sold below cost on an ongoing basis, that is anti-competitive," Joel Becker, CEO of the ABA, told ZDNet Australia today.

"We believe that an agency pricing model does allow a fairness with ebooks when you have predatory pricing going on," he said. He suggested that Amazon's pricing practices and their effect on other booksellers be carefully scrutinised.

Becker went on to defend agency pricing strategies in Australia.

"Agency pricing is nothing new in this country," he said, adding that as long as the agency model doesn't breach anti-price signalling and collusion laws, it is acceptable practice.

"We want businesses to operate within the law, but we don't have an issue with agency model for ebooks at this stage. Amazon has pushed us to it by selling it below cost. They are driving the need to go to agency pricing."

Apple has decided to fight the matter out with the DoJ in the US, saying that its arrival in the ebooks space served to smash Amazon's monopoly on the market. In a statement first reported by AllThingsD, Apple said:

The DoJ's accusation of collusion against Apple is simply not true. The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon's monopolistic grip on the publishing industry. Since then, customers have benefited from ebooks that are more interactive and engaging. Just as we've allowed developers to set prices on the App Store, publishers set prices on the iBookstore.

Disclosure: CBS owns ZDNet Australia and its parent company, CBS Interactive.

Topics: Apple, Amazon, Government, Government : AU, Legal

About

A fresh recruit onto the tech journalism battlefield, Luke Hopewell is eager to see some action. After a tour of duty in the belly of the Telstra beast, he is keen to report big stories on the enterprise beat. Drawing on past experience in radio, print and magazine, he plans to ask all the tough questions you want answered.

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