Wasn't this the Plot of "You've Got Mail"?

Last week, Walmart announced that it would pre-sell ten hardcover books (expected to be best sellers) at the rock bottom price of $9.99. Within hours, Amazon matched; Walmart responded by lowering its price to $8.99; Amazon followed suit; and Target woke up from its afternoon nap and matched. Walmart, not to be outdone, lowered its price to $8.98. (Yesterday, Sears unveiled its Keep America Reading Program to take advantage of the price war, a piece of pure marketing genius.)

Thoughtful readers may think they can just wait another week or so and let one of the big boxes pay them to buy these titles. But, it looks like the race to the bottom might hit a road block.

Today, the American Booksellers Association sent the Justice Department a letter, asking the Antitrust Division to investigate this price war, which it called "illegal predatory pricing that is damaging to the book industry and harmful to consumers."

It'll be interesting to see what comes of this. According to this NYT

piece, the publishing industry as a whole is concerned about the possible ramifications; but it seems to us that most of the impact is sure to be felt by independent bookstores.

Would the Antitrust Division actually define the marketplace in such a way that Walmart and Politics and Prose (for example) would be deemed competitors?

Judging a Digitized Book Settlement by its Cover

We've followed the brouhaha surrounding the proposed settlement of the Google digitized books class action with some interest. (A pdf of the 2005 complaint filed by the Authors Guild can be found at eff.org.)

A Washington Post editorial has good summary of the settlement here.

Earlier, this month, the William Morris Agency advised its clients to object to the proposed settlement, and a flurry of letters, rebuttals, and rebuttals of rebuttals flew between William Morris and the Authors Guild. See coverage here, here, here, and here.

It's no real surprise that literary agents, publishers, and authors have concerns about the potential effect of the settlement. The dueling correspondence between Willaim Morris and the Authors Guild focuses on protecting the rights of authors.

It's not even a surprise that the Justice Department is investigating the settlement, citing possible antitrust concerns.

To us, the surprise was the news that Microsoft, Amazon, and Yahoo plan to join the Open Book Alliance, a coalition of nonprofits, individual authors, and libraries that is forming to oppose the settlement.

Oh, Baby

It's been several weeks since we've posted. What can we say? Work, summer weather, and a lack of interesting (to us, at least) news have conspired against us.

Today we finally were moved to post after reading the Honorable Anita Brody's (E.D. Pa) decision granting class certification in McDonough v. Toys "R" Us.

Judge Brody's decision is of interest because the subclasses it certifies allege that Babies "R" Us (of which Toys "R" Us is the parent) conspired with makers of pricy baby products to restrict competition in violation of federal antitrust laws. In certifying the class, the court applied Leegan Creative Leather Products, the 2007 Supreme Court case that held vertical price restraints are not per se illegal but must be evaluated by the court under the "rule of reason."

Also interesting is that the court relied on testimony of economic experts to determine that the plaintiffs satisfied their Rule 23 burden under In re: Hydrogen Peroxide Antitrust Litigation, a fairly recent Third Circuit decision that clarified that more than a threshold showing is required for certification.

The nature of the claims, the costs of the products at issue (Peg Perego and Maclaren strollers, Britax carseats, the BabyBjorn carrier, Medela breastpumps, and Kidsline bedding), and the potential size of the class lead us to believe this case bears watching.