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> Amazon, which became the biggest force in bookselling by discounting so heavily it often lost money IANAL, but this sounds like a potential anti-trust case t

by n00b101 13y ago

> Amazon, which became the biggest force in bookselling by discounting so heavily it often lost money IANAL, but this sounds like a potential anti-trust case to me. "Predatory pricing practices may result in antitrust claims of monopolization or attempts to monopolize. Businesses with dominant or substantial market shares are more vulnerable to antitrust claims. However, because the antitrust laws are ultimately intended to benefit consumers, and discounting results in at least short-term net benefit to consumers, the U.S. Supreme Court has set high hurdles to antitrust claims based on a predatory pricing theory. The Court requires plaintiffs to show a likelihood that the pricing practices will affect not only rivals but also competition in the market as a whole, in order to establish that there is a substantial probability of success of the attempt to monopolize." (http://bit.ly/12pG6gq http://bit.ly/12pG6gq)

crdoconnor 13y ago
It's definitely an anti-trust issue, but there is not a good record of proving predatory pricing in the courts (even when it's pretty obvious that's what's going on).
dangrossman 13y ago
Amazon's sales are just 29% of the book selling market (2012 share, even after Borders was out of the picture for over a year). B&N's are 20%. If their discount pricing hasn't even gotten them 1/3rd of the market after all these years, it'd be hard to prove that they're soon going to monopolize it.
- adventured 13y ago
  I agree with your overall premise, but anti-trust law is far broader in scope than monopolization. Indeed, there's nothing about anti-trust law that forbids a monopoly, and there's no specific market share requirement. Market share is but one market-power consideration when the government looks at whether a company has caused harm. There are several angles to anti-trust, such as collusion and predatory pricing, that can matter even at modest market share points, if the government can prove consumer harm.
  - peterwiese 13y ago
    That is mostly correct. Though I would argue that anti trust law is not primarily concerned with protecting consumer interest (for this purpose serves unfair competition law), but with protecting competition as an institution. Consumer interest is but one measure amongst many to assess the existence of a functioning competition in a certain market.
lettergram 13y ago
There is no direct evidence to support Amazon did so because it always made "pocket change" as the article pointed out. So as long as Amazon broke even/made a slight profit it would be hard to push an anti-trust case.
ryanpardieck 13y ago
Honestly the more I read about predatory pricing, the more it seems like a complete fiction. One of those things that seems to make sense in theory, and maybe makes for a good political screed every now and then. If low prices drove the competitors out, then high prices will surely see them flood back in. Any firm that gains monopoly power and hikes the prices without inviting fresh competition probably worked out some sweetheart deal with the government--and even then, they're better off keeping margins fairly low, since a govt-approved monopoly is easier to justify when the firm is not obscenely profitable. Ultimately I don't think a business born out of deep discounts is suited well to massive price hikes. It destroys the identity they've built with consumers and if they weren't in the game to be deep discounters over the long haul, then I'd say they'll die. They would be better off maintaining the discounts while improving their cost structure.
- makomk 13y ago
  > If low prices drove the competitors out, then high prices will surely see them flood back in. Why? The business of selling books is, like most businesses, capital-intensive and risky. On the other hand, if anyone does go back into the business Amazon just has to change a few lines in their database and the new competitors are out of business with a whole bunch of stock they can't shift and a huge loss for investors.

by n00b101 13y ago

crdoconnor 13y ago

It's definitely an anti-trust issue, but there is not a good record of proving predatory pricing in the courts (even when it's pretty obvious that's what's going on).

dangrossman 13y ago

Amazon's sales are just 29% of the book selling market (2012 share, even after Borders was out of the picture for over a year). B&N's are 20%. If their discount pricing hasn't even gotten them 1/3rd of the market after all these years, it'd be hard to prove that they're soon going to monopolize it.

adventured 13y ago
I agree with your overall premise, but anti-trust law is far broader in scope than monopolization. Indeed, there's nothing about anti-trust law that forbids a monopoly, and there's no specific market share requirement. Market share is but one market-power consideration when the government looks at whether a company has caused harm. There are several angles to anti-trust, such as collusion and predatory pricing, that can matter even at modest market share points, if the government can prove consumer harm.
- peterwiese 13y ago
  That is mostly correct. Though I would argue that anti trust law is not primarily concerned with protecting consumer interest (for this purpose serves unfair competition law), but with protecting competition as an institution. Consumer interest is but one measure amongst many to assess the existence of a functioning competition in a certain market.

lettergram 13y ago

There is no direct evidence to support Amazon did so because it always made "pocket change" as the article pointed out. So as long as Amazon broke even/made a slight profit it would be hard to push an anti-trust case.

ryanpardieck 13y ago

Honestly the more I read about predatory pricing, the more it seems like a complete fiction. One of those things that seems to make sense in theory, and maybe makes for a good political screed every now and then. If low prices drove the competitors out, then high prices will surely see them flood back in. Any firm that gains monopoly power and hikes the prices without inviting fresh competition probably worked out some sweetheart deal with the government--and even then, they're better off keeping margins fairly low, since a govt-approved monopoly is easier to justify when the firm is not obscenely profitable. Ultimately I don't think a business born out of deep discounts is suited well to massive price hikes. It destroys the identity they've built with consumers and if they weren't in the game to be deep discounters over the long haul, then I'd say they'll die. They would be better off maintaining the discounts while improving their cost structure.

makomk 13y ago
> If low prices drove the competitors out, then high prices will surely see them flood back in. Why? The business of selling books is, like most businesses, capital-intensive and risky. On the other hand, if anyone does go back into the business Amazon just has to change a few lines in their database and the new competitors are out of business with a whole bunch of stock they can't shift and a huge loss for investors.