Tuesday, March 25, 2014

How to stop corporations from breaking the law

Today, I was surprised to receive the above e-mail from Amazon.com. It seems the publishers Hachette, HarperCollins, Simon & Schuster, Penguin and Macmillan agreed to pay nominal amounts of money to consumers who has purchased their ebooks within a certain period of time. Though they do not admit guilt, they are alleged to have broken antitrust laws and to have conspired to raise the prices of ebooks.

So I am now the proud owner of a $.73 credit to be used for the purchase of any book or ebook purchased through Amazon between now and March 31, 2015! (Amazon is not a party of the suit, but appears to be aiding in the delivery of the compensation. Apple Inc. also stands accused of violating antitrust laws, but that case is ongoing.)

A few things to note:

  • This credit is not likely to effect my future decisions to purchase books, it will just make me slightly less poor after doing so.
  • That said, settlements need not tangibly benefit the consumer or wronged party, as long as they effectively serve as a deterrent. 
  • That said, it's not clear that a $.73 payout per book purchased ($3.17 for NYT Bestsellers, and slightly higher amounts for MI residents) is a significant enough deterrent. 
  • Illegal trusts could easily raise prices greater than $.73 per book, and anyway, the refund should be higher than estimated price inflation. If corporations risk only breaking even, then there's little disincentive to attempting to break the law.
  • Amazon, it seems to me, is a big winner in all this; for people who get higher payouts, the credit may well serve as a de facto subsidy for purchasing more books.
Corporations will always try to break the law like this, if they think they can get away with it. The fact that the publishers settled certainly suggests that they have some guilt (or at least that there's a plausible case against them) but settling out of court very likely means a significantly lower payout. In the short run, this may save the government money (not having to pay for a trial), but in a world with lots of out-of-court settlements, corporations will see law-breaking as less risky. In the end, this means more charges to bring, and more government money spent, before we even consider costs to the consumer.

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