Thursday, April 12, 2012

The Wacky World of Government Antitrust

1. In the case of Apple and five major book publishers, the government claims that collusive behavior led to higher e-book prices for consumers, and the participants are being charged with price-fixing.

2.  In the case of taxi and limousine companies in Nashville, a federal judge has upheld the collusive, price-fixing practices of the established limo and taxi companies that have conspired with the help of local government officials to impose a $45-per-trip minimum fare. The taxi cartel wants to squash the competition from some new, smaller upstart companies who were challenging the cartel with discount fares of $25.  (See recent related CD post.)

3.  In the case of Safeway in California, a lawsuit by the retailer's rivals has been filed accusing Safeway of "unfair business practices" for selling gasoline at prices that are "too low" and "below cost."  If the plaintiffs prevail, a Bay Area judge may force Safeway to raise its gas prices, because "prices below cost" are illegal under the Unfair Practices Act.

So in some cases the government enables incumbent producers like limousine companies to engage in collusive behavior and fix high prices, and in other cases it brings charges against book publishers for collusive behavior and fixing high prices, and in other cases it might find retailers like Safeway guilty of  charging low prices and force them to charge higher prices?  Welcome to the wacky world of antitrust. 

9 Comments:

At 4/12/2012 9:02 AM, Blogger morganovich said...

why do i have this sneaking suspicion that these positions correlate very tightly with the local donors lists?

 
At 4/12/2012 9:32 AM, Blogger Jon Murphy said...

I have a question regarding the Apple lawsuit.

From my understanding, Amazon was charging $9.99 for e-books, a price the publishers said was too low. Some of them teamed up with Apple in an agreement saying the publishers would set their own prices and Apple would get a 30% cut. This, the government said, raised prices and is cartelization. However, Amazon is still charging $9.99 for most e-books. Why, then, don't customers have the choice to buy e-books from Amazon, especially when the Kindle app is free?

 
At 4/12/2012 10:01 AM, Blogger The Patriot said...

Bingo, morganovich!

 
At 4/12/2012 10:05 AM, Blogger Buddy R Pacifico said...

The California Unfair Competition Act (or the Unlawful Business Practices Act) must be a honeypot for litigators. What is unfair is limitless in scope, is it not?

 
At 4/12/2012 10:31 AM, Blogger juandos said...

"why do i have this sneaking suspicion that these positions correlate very tightly with the local donors lists?"...

heh!

Oh morganovich, you're just so cynical...:-)

 
At 4/12/2012 10:50 AM, Blogger Jon Murphy said...

Another question about the Apple suit:

The lawsuit alleges the publishers conspired only to raise the prices of new releases and bestsellers. They claim this because their average prices was $3-5 more than the average of the book market. But aren't those the books you expect to be more expensive? This case just don't make any sense.

 
At 4/12/2012 9:05 PM, Blogger VangelV said...

1. In the case of Apple and five major book publishers, the government claims that collusive behavior led to higher e-book prices for consumers, and the participants are being charged with price-fixing.

Apple and the publishers are colluding to keep prices higher. But who cares? The way that I see it the high prices would move buyers towards Amazon's self-published e-books which provide authors with much better royalty deals than the publishers can. If I write a book that only manages 3,000 hardcover sales and 6,000 e-books at $30 per sale and 10,000 paperbacks at $10 per sale I would not make nearly as much in royalties than I could if I managed to sell 100,000 e-books on Amazon for $5 per book.

The market is not controlled by the producers but by consumers. In the end the buyers will wind up calling the shots and will disproportionately reward the authors who sell reasonably priced e-books.

 
At 4/14/2012 1:34 AM, Blogger OBloodyHell said...

>>> The market is not controlled by the producers but by consumers. In the end the buyers will wind up calling the shots and will disproportionately reward the authors who sell reasonably priced e-books.

I can buy a freaking PAPERBACK BOOK for US$7.99 -- that's an actual physical book, on paper, with manufacturing/publishing costs.

WtF would I even pay $9.99 for a virtual book which costs no one but the author a substantial amount of time, and even the publisher only what it costs to hire a few individuals as proofer, and editor -- both of whom can handle multiple books?

And these greedy ephwits are kvetching because they think THEY aren't getting enough money?

There's a reason piracy occurs -- it's a reaction to the gouging of the fatcat middlemen who stand there with their hands out. They produce nothing, they contributed nothing, they just stand there with their hands out going "gimme gimme gimme" because they have a phalanx of lawyers on retainer and a bevy of politicians in their pockets passing crap like the DMCA and the flat-out blatantly unConstitutional ex-post-facto "Bono Bill" to keep them in control of the whole system.

So piracy exists, and it's never going away, and that's not a bad thing.

 
At 4/17/2012 8:25 AM, Blogger misterjosh said...

aka welcome to the wacky world of crony capitalism.

Yes, let us give more power to our wise leaders - surely they would never abuse it and would always use it to help old people and poor people and sick people.

 

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