In its second-largest acquisition, Amazon buys the company for $970 million.
The American Booksellers Association, which represents independent, bricks-and-mortar bookstores, says the below-cost offers on best-selling titles by Amazon.com, Walmart.com and Target.com constitute illegal predatory pricing.
A trade group representing independent, bricks-and-mortar bookstores is asking the U.S. Department of Justice to investigate the below-cost offers on best-selling titles that are at the center of a price war between Amazon.com, Walmart.com and Target.com.
“We believe that Amazon.com, Walmart.com and Target are using these predatory pricing practices to attempt to win control of the market for hardcover bestsellers,” the board of directors of the American Booksellers Association wrote in a letter to Christine Varney, head of the antitrust division at Justice.
Noting that the three e-commerce sites are selling best-selling, hardcover books at $8.98 to $9.00, well below cost, the trade group says these best-sellers, which are critical revenue-producers for independent bookstores, are being used by the online retailers “as a loss leader to attract customers to buy other, more profitable merchandise. The entire book industry is in danger of becoming collateral damage in this war.”
The letter goes on to say that the ABA believes the online book price war was precipitated by below-cost pricing of digital editions of new hardcover books by Amazon.com, which is offering electronic versions of those books for its Kindle e-book reader, typically for $9.99. “We believe the loss-leader pricing of digital content also bears scrutiny,” the ABA letter says.
The ABA letter asks the Justice Department to investigate these developments and for a meeting in Washington with antirust chief Varney.
The ABA says publishers sell books to retailers for 45-50% off the price printed on the cover of the book, or at least $17.50 for a $35 hardcover book. The letter suggests that the three big online retailers are selling the best sellers at far below cost.
Walmart.com, the e-commerce arm of Wal-Mart Stores Inc., kicked off the price war Oct. 15 when it announced it would take orders for 10 highly anticipated books for $10. After Amazon.com Inc. matched the price, Walmart.com, and then Target Corp.’s Target.com, lowered their prices to $9. Amazon matched the $9 price, and now Walmart.com and Target.com are offering their 10 discounted books at a penny or two below $9.
Amazon is No. 1 in the Internet Retailer Top 500 Guide, Walmart.com No. 13 and Target.com No. 20.