Amazon Faces Class-Action Lawsuit Over Inflated Ebook Pricing

Amazon was slapped with a class-action lawsuit on Thursday accusing the e-commerce giant of inflating the prices of ebooks in collusion with some publishers.

The lawsuit alleges that Amazon and the five largest US publishers, collectively called the “Big Five,” agreed to price restraints that cause consumers to overpay for ebooks purchased from them through a retail platform other than Amazon. The “Big Five” includes Hachette, HarperCollins, Macmillan, Penguin-Random House, and Simon & Schuster.

The lawsuit comes a day after Connecticut said it was investigating Amazon for potential anti-competitive behaviour in its business selling digital books.

Amazon declined to comment.

About 90 percent of ebooks are sold through Amazon, the largest US ebooks seller, the lawsuit claimed.

The case was brought by law firm Hagens Berman and filed in US District Court for the Southern District of New York. The complaint stated that Amazon's co-conspirators were involved in a similar litigation before. In 2011, Hagens Berman filed a similar lawsuit against Apple and the “Big Five” over ebook prices.

Under a scheme of fixing ebook prices at artificially high levels in response to the threat to their profit posed by retailer's discounted pricing of ebooks, the publishers entered into agreements with Apple whereby the publishers all switched from a wholesale model to an agency model.

The successful class action ended in Apple settling for $400 million (roughly Rs. 2,900 crores) and the publishers settling for even more.

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