Falling book prices doom antitrust lawsuit against Amazon and Borders

A customer can't sue two retailers for illegal collusion unless he can show that he suffered actual damages, according an opinion issued this week by the Ninth Circuit.  In Gerlinger v. Amazon.com, Inc., plaintiff challenged an agreement under which the book retailer Borders Group, Inc.'s web site directed shoppers to a site hosted by Amazon.  The books purchased on that site were sold and shipped by Amazon, and Borders received a commission for each sale. 

Plaintiff, a customer of Amazon, claimed that Borders' commitment not to sell books directly on the internet during the term of the agreement amounted to a per se market allocation in violation of federal antitrust law.  The Ninth Circuit never addressed the legality of the agreement, instead affirming summary judgment in favor of defendants on the ground that plaintiff could not show that the prices he paid for books increased as a result of the agreement.  In fact, Amazon offered evidence that book prices declined after the agreement became effective.  Without proof of an "injury-in-fact," the customer could not challenge Borders' agreement to stay out of the on-line market.

Coincidentally, on the same day as the Ninth Circuit's ruling, Borders announced that it was ending its seven-year relationship with Amazon and launching its own e-commerce web site.