Can you use a co-op to fight a monopoly

May 28, 2012 2:28 PM

If a bookstore were a co-op, would the exemption provided to co-ops in the Robinson-Patman act allow publishers to offer different sale terms for them than they would to say, Amazon or Barnes and Noble?

The exemption seems to have been included to protect agricultural producers, but could it be used in other areas?

posted by Toekneesan to law & government (7 answers total)

I don't have an answer myself, but you could try asking the Seminary Co-op Bookstore.
posted by bubukaba at 3:02 PM on May 28, 2012

Bubukaba, I know about Seminary Co-op but to my knowledge they are receiving the same terms as any other bookstore. I know, for example, that the publisher I work for treats them exactly the same. I can also understand why in the past publishers may not have wanted to offer them different sales terms than other stores, but in this new environment, there are reasons for wanting to treat physical stores differently than virtual stores. I'm really trying to figure out if using the co-op status is legal cover for doing so under the Robinson-Patman act.
posted by Toekneesan at 8:34 AM on May 29, 2012

I don't think so. Not that there's anything specifically preventing some co-op from trying it, but I don't think publishers would be required or necessarily willing to give co-ops a better discount, especially if they are a small store. For example, a place where this does work, in a sense, is a "membership clubs" like Costco and Sam's. Those stores buy large volumes, get high discounts, and those low prices are only available to their members. Probably not the model you had in mind since co-ops are not national chain stores, but volume seems to be one of the few ways to get higher discount terms. The goal of driving down prices or getting a better discount just isn't one of the cardinal tenets of co-operatives.
posted by mattbucher at 2:32 PM on May 29, 2012

But it would be the publisher who's "trying it" not the bookstore. The risk is with the publisher in a Robertson-Patman issue here, not the retailer. The violation would be with the price the publisher charges the retailer. What I'm trying to figure out is does the co-op exemption carved out in that act allow publishers to offer co-ops better sale terms than Amazon or Barnes and Noble?
posted by Toekneesan at 3:20 PM on May 29, 2012

Mattbucher, another important difference between co-ops and "membership" clubs like Costco and Sams is ownership. Members have zero ownership of those buying clubs. Co-op members are shareholders of their organizations.
posted by Toekneesan at 3:23 PM on May 29, 2012

I still don't understand this. Publishers can offer whatever terms they want to bookstores. Big retailers like Amazon and B&N basically demand a certain discount. Why would a publisher give a co-op bookstore an even greater discount? What's the incentive to the publisher? I don't think there is any law that you have to give B&N a 50% trade discount on trade titles - it's just industry standard.
posted by mattbucher at 2:12 PM on May 31, 2012

Publishers can offer whatever terms they want to bookstores.

Yes, this is true, but technically, each individual publisher has a schedule, typically based on quantity and account type. Publishers can decide price and discount, but they can't offer different terms to the same type of account. All retail-to-consumer accounts have to be treated the same according to the R-P Act. That generally means schedules based on quantity purchased. The law is a terribly written law, and was written to affect change in the grocery business, though the most important recent cases the act has impacted have been in the book industry. But the act also has this borad exemption for co-ops. I suspect that was for producer co-ops, but it may also include seller co-ops. I'm trying to figure out how or if this law has any impact on co-op retail stores, like Seminary Co-Op in Chicago. Can a publisher treat them differently than Amazon or B&N?
posted by Toekneesan at 4:48 PM on May 31, 2012