FTC Dismisses Its Cases Against Six of the Country's Largest Book Publishers

The Federal Trade Commission has dismissed its cases against six of the country's largest book publishers. The Commission did not reach any decision on whether the publishers had violated federal antitrust law -- specifically, the Robinson-Patman Act -- by favoring large bookstore chains with price and promotional discounts that they did not make available to independent book stores. Rather, the Commission found that, for several reasons, the public interest would be best served by terminating the cases now rather than expending the resources needed to pursue consent orders or futher litigation.

The cases dismissed today were filed in 1988 against Harper & Row Publishers, Inc.; Macmillan, Inc.; The Hearst Corporation and William Morrow and Co., Inc.; The Putnam Berkley Group, Inc.; Simon & Schuster, Inc.; and Random House, Inc. The FTC also announced that it has closed its investigation of Bantam Doubleday Dell Publishing Group Inc. regarding similar practices.

The Commission determined not to accept consent orders that had been negotiated in 1992 against the six publishers because, “[a]lthough the proposed consent agreements prohibit most of the practices that led to the complaints, the industry has changed appreciably since the consent agreements were signed.” The FTC explained that "the dynamics and structure of the book distribution industry have evolved in significant ways,” and the companies “generally have replaced the principal forms of alleged price discrimination that prompted the complaints . . ..”

The Commission concluded that further investigation of the matters would "not appear to be a necessary or prudent use of scarce public resources.” Specifically, the Commission noted the extent of the necessary resources; the possibility that new orders might not be effective, in view of the six companies' ability to adopt -- pursuant to the "meeting competition" defense -- the pricing and promotional practices used by other publishers not subject to a Commission order; and the existence of private litigation that already has resulted in settlements with four publishers.

The Commission vote on these matters was 3-1, with Chairman Robert Pitofsky recused and Commissioner Mary L. Azcuenaga dissenting and issuing a statement in which she said: "[A]lmost four years after the matters were removed from adjudication to consider the proposed consent agreements, the Commission has decided to dismiss the complaints. I do not understand and certainly cannot endorse this decision. The most obvious justification . . ., a conclusion that the respondents did not engage in the unlawful price discrimination . . ., is noticeably absent from the Commission’s order." She further observed: "As far as I know, the Commission never before has deemed enforcement of the Robinson-Patman Act fruitless on the ground that a respondent under order could lawfully meet the presumptively lawful practices of its competitors, and it seems a very odd proposition to adopt." She concluded: "The unfortunate choice to dismiss the complaints may indeed save 'scare public resources’. . ., but it is an imprudent waste of the substantial law enforcement resources that this agency already has expended."

Copies of the Commission order dismissing the six complaints, the letter closing the Bantam investigation, and Commissioner Azcuenaga’s full statement are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326- 2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov

(FTC Docket Nos: Harper--9217; Macmillan--9218; Hearst/Morrow--9219; Putnam Berkley-- 9220; Simon & Schuster--9221; Random House--9222; Bantam -- File No. 801 0059)