Antitrust Investigation of E-Book Companies

Topics: Monopoly, Cartel, Economics Pages: 3 (1143 words) Published: January 22, 2013
Antitrust Investigation Of E-Book Companies
Today’s society is based on ever changing technology. Not only are there computers, cell phones, and gaming systems, but also Androids, I pads, and E-readers are now available. Computers and other devices such as I pads and Androids offered through Apple, and e-readers such as the Nook offered through a company called Barnes and Noble and the Kindle offered through another company, Amazon, can be used to read electronic books, also known as e-books. The e-books are offered through these companies with the help of publishers in an Oligopoly Market Structure, which is when a few companies and, in this case, publishers offer a product like the e-books to consumers, in an imperfect competition. But what happens when one of these companies feels that another company is a natural monopoly or a company is controlling the product and operating in a Monopoly Market Structure?

In December of 2011 (Kanter, 2011, p. 3) the European antitrust authority started an investigation against Apple and five publishing companies for antitrust after receiving several complaints that they were price fixing on their e-books. The publishing companies were Penguin, HarperCollins, Hachette Livre, Simon & Schuster, and Macmillan. These companies were accused of going against the Antitrust Law called the Sherman Act. Apple and the publishing companies were using market power and collusion by working together to provide a raised price with their e-books for their customers who read these books on Apple’s devices. (Kanter, 2011, p. 3) Shortly after the European antitrust authority started their investigation, the U.S. Department of Justice started an investigation as well. (New Zealand Hearold, 2011) Before Apple came out with the I pad, Amazon held the majority of the e-book customers. Amazon was responsible for about 90 percent of the sales of e-books. (New Zealand Herold, 2012) Because the barriers to entry into the market for an...
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