Price Fixing Is Ok As Long As It’s The Right Sort Of Price Fixing

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The Obama administration is taking Apple and a group of book publishers to court, accusing them of price fixing:

WASHINGTON — Former Apple Inc. Chief Executive Steve Jobs was a key player in a conspiracy with five major book publishers to drive up the price of digital books, federal and state officials said in antitrust lawsuits filed against the companies.

Jobs helped orchestrate a complex price-fixing plan that cost consumers tens of millions of dollars over the last two years by boosting the price of many new releases and bestsellers by $3 to $5 each, federal investigators said. Apple even proudly described the maneuver — which gave the iPad maker a guaranteed 30% commission on each e-book sold through its online marketplace — as an “aikido move,” referring to the Japanese martial art, according to the lawsuit.

“The customer pays a little more, but that’s what you want anyway,” Jobs told the publishers at one point, said Sharis Pozen, the acting head of the Justice Department’s antitrust division.

“We allege that these executives knew full well what they were doing. That is, taking steps to make sure the prices consumers paid for e-books were higher,” she said Wednesday in announcing the federal suit, which some analysts said could lead to lower e-book prices.

Business people working together to increase profits? How shocking!

Sarcasm aside, why is this criminal? If content suppliers want to charge more for their content, why can’t they do that? It’s their content. Are we suggesting that the public has a right to purchase that content at a certain price? It seems to me that producers of books or anything else ought to be able to choose who they will sell to, and for what prices. Consumers, on the other hand, can either accept that price or seek a better one somewhere else. It’s not like Apple and these book publishers don’t have any competition. There’s Amazon and the Kindle, for one, plus actual hard copy books.

But setting that aside, if that sort of price collusion on the part of Apple is illegal, then why have the federal courts upheld government-mandated price fixing in other instances? Like Nashville, for instance, where a federal judge has upheld the local city council’s ordinance keeping some taxi/limo companies from charging lower rates than their competitors:

“Affordable car service” companies in Nashville will have to abide by a $45 minimum fare ordinance — and its enforcement — for the time being after a federal judge struck down an injunction request on Monday.

Metro Livery, which provides cut-rate sedan rides, asked U.S. District Judge Kevin Sharp to halt the Metro Transportation Licensing Commission from enforcing the ordinance, claiming it unfairly limited its business.

Sharp ruled Monday that the process by which the ordinance was passed was legal and that “ ‘even foolish and misdirected provisions are generally valid’ under the rational basis standard of review.”

Sharp also mentions in his memorandum that lower fares would “undoubtedly” benefit Nashville citizens and tourists, but that it’s up to the Metro Council to make those determinations.

So Apple and a group of book publishers, private companies all, voluntarily getting together to increase prices for books in a brand new medium (the ebook) is illegal, but the government mandating a minimum price for taxi/limo service is legal?

Maybe the government should just tell businesses what their prices should be. I say that sarcastically, government price-fixing would be a disaster ending in widespread shortages and economic depression, but it’s what some people seem to want.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • Econwarrior

    No one was ever forced to pay that price; they chose to pay it.  This is just more fascism from this administration.

  • Bat One

    Obama and the Democrats are going after Apple, the world’s largest corporation by market cap, because Apple is sitting on cash reserves of over $100 billion, and the liberals want to get their hands on as much of the money as possible.  Simple, leftwing, Chicago-style politics as usual.

    • http://sayanythingblog.com Rob

      So they think suing the company is going to make them invest more? That’s silly. Let Apple profit (or not profit) from e-book sales and the invest (or not invest) the proceeds in additional enterprises.

      • Bat One

        Its a civil suit.  They’ll settle for several hundred million, which will, in turn, find its way into Democrat coffers.  In Chicago, you can buy an awful lot of dead people”s votes with that kind of cash.

    • Econwarrior

      True that; you can always rely on the greed of the Democrats.  It’s their first priority.

  • DopeyDem

    And all these so called honest politicians that got together and wrote up Obamacare isn’t the same thing as price fixing? In the case of Apple, no one is forced to buy an ebook. Wait until they set the price for insurance. It will be so low that they will drive out all the private insurers.

  • Davoarid

    There has to be a better objection to this than: “They’re hypocrites!”

    • http://sayanythingblog.com Rob

      I think my argument was much more detailed than that, not that an internet troll is going to acknowledge that sort of nuance.

  • EatThis

    Ha, you are a funny guy:

    “If content suppliers want to charge more for their content, why can’t they do that? It’s their content.”

    “It seems to me that producers of books or anything else ought to be able to choose who they will sell to, and for what prices.”

    Oh, you are serious? But you have a beef with a content supplier such as KFYR not wanting you take their content for free? You are somehow entitled to use it for nothing, even if they don’t approve?

    If “…producers of books or anything else ought to be able to choose who they will sell to, and for what prices,” then you’ve changed your tune and will no longer copy/paste content from content producers onto this blog? Right, but you did that in this post. So you ARE joking. Okay. I’m confused…

    I mostly agree with what you are saying here. And what about laws that prohibit cellphone companies for example from pricing their services too low?

    That said, your support of content providers and their rights is bogus.

    • http://sayanythingblog.com Rob

      Oh, you are serious? But you have a beef with a content supplier such as KFYR not wanting you take their content for free? You are somehow entitled to use it for nothing, even if they don’t approve?

      Referencing KFYR stories in original reporting about KFYR is not stealing their content.

      You, clearly, have no idea what you’re talking about.

      • EatThis

        Probably not, but this is SayAnythingBlog.com where I can make wild accusations without all of the facts and without being an expert in the field. I’m no attorney, but I’m still going to throw out the idea that you are violating the LA Times Terms of Service by pasting the article referenced above. Maybe I am too by pasting this.

        Excerpt from the LA Times Terms of Service:

        “You may use the Content online only, and solely for your personal,
        non-commercial use, and you may download or print a single copy of any
        portion of the Content solely for your personal, non-commercial use,
        provided you do not remove any trademark, copyright or other notice from
        such Content. If you operate a Web site and wish to link to
        latimes.com, you may do so provided you agree to cease such link upon
        request from latimes.com. No other use is permitted without prior
        written permission of latimes.com. The permitted use described in this
        Paragraph is contingent on your compliance at all times with these Terms
        of Service.

        You may not republish any portion of the Content on any Internet,
        Intranet or extranet site or incorporate the Content in any database,
        compilation, archive or cache. You may not distribute any Content to
        others, whether or not for payment or other consideration, and you may
        not archive, modify, copy, frame, cache, reproduce, sell, publish,
        transmit, display or otherwise use any portion of the Content. You may
        not scrape or otherwise copy our Content without permission. You agree
        not to decompile, reverse engineer or disassemble any software or other
        products or processes accessible through latimes.com, not to insert any
        code or product or manipulate the content of latimes.com in any way that
        affects the user’s experience, and not to use any data mining, data
        gathering or extraction method.”

        SAB seems to be a commercial site to me.

        You’ve got a link to the article cleverly hidden in the dateline, but the original content provider is not apparent.

        Maybe you received permission.

        You’re code is definitely modifying the content by placing inline ads in the text.

        You are using data mining on this site, you privacy policy specifically states that you are in order to serve us relevant ads.

        Oh, and to save everyone the trouble: Yes, I must be a “lib” and I work for Heidi Hi.

        • http://sayanythingblog.com Rob

          The LA Times is certainly free to think that they can request that people not link to their content, but they’re living in a fantasy world.

          As are you. I’m sorry you’re upset that we wrote truthful things that cast people at Dickinson State University in an unflattering light, but becoming an internet troll as a result is hardly a constructive way to respond.

  • Lemming

    Rob,

    I believe the problem is that the agreement between Apple and the publishers was that no other book seller could undercut the price Apple was charging for the book.  Even though consumers could opt to buy the book from Amazon, it would not be able to get it any cheaper.

    • http://sayanythingblog.com Rob

      Perhaps, but then again, why is that the problem? The content belongs to the book publishers, and if they want to agree to a minimum price, that’s their prerogative.

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