Connecticut Attorney General Calls Amazon and Apple 'Anticompetitive"

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Richard Blumenthal, Attorney General of Connecticut, warned Amazon and Apple yesterday that he wants to have a little talk with them about their "anticompetitive" deals in the electronic publishing market.

In his letter , directed to Amazon's General Counsel, L. Michelle Wilson, Blumental warns that "Amazon's demand that the largest e-book publishers agree to provide Amazon with a 'guarantee' that no other competitor will obtain lower prices" is of concern due to its anticimpettive impact. Such price guarantees are sometimes referred to "most favored nation" (MFN) clauses . While not illegal under anti-trust laws, Blumenthal says they're not precisely legal either, and "have the potential to impair horizontal competition by encouraging coordinated pricing and discouraging discounting." was sent to Apple. Both letters ask for a meeting with company executives regarding Blumenthal's concerns.

Under discussion are the MFN clauses Amazon and Apple have obtained with the largest book publishers, including Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster. In March, Apple threatened to stop selling the books of some publishers in order to pressure the publishers to make such arrangements.

In June, the Attorney General of Texas launched an investigation based on similar concerns regarding the MFN clauses.

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Thread opened by flagged the MFN/agency-model worry that later drew national enforcement. What started as state letters and press coverage became a coordinated DOJ/state action: on April 11, 2012 the Department of Justice filed a civil antitrust suit over the publishers’ agency deals and price‑matching clauses, and reached settlements with several major publishers while continuing to litigate against Apple. (DOJ press release — Apr. 11, 2012)

The case went to a bench trial. In July 2013 Judge Denise Cote found Apple liable for participating in a scheme that eliminated retail price competition and raised e-book prices; the court entered an injunction (including limits on MFN-style terms and an external compliance monitor). The Second Circuit affirmed the liability finding in June 2015, and the Supreme Court denied review in March 2016 — a decision that triggered Apple’s consumer‑payment obligations under earlier settlements. (District court opinion (S.D.N.Y., July 10, 2013) • DOJ summary of appeals and cert denial • DOJ on Supreme Court denial and payments)

Practical takeaway: MFN clauses are not per se illegal in every context, but they are legally risky when they function as part of coordinated conduct that limits retail price competition. Regulators studied MFNs closely (FTC/DOJ held a public workshop on MFNs in Sept. 2012), and the Apple litigation shows how quickly scrutiny can escalate. Companies thinking about MFNs should get antitrust counsel, document pro‑competitive justifications, and avoid arrangements that could facilitate coordination. Consumers affected by the e‑book litigation received refunds/credits under the settlements noted above. (FTC/DOJ MFN workshop announcement — Sept. 2012)

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