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HIVE EXCLUSIVE: Retailers Win One in Texas Antitrust Suit

20 Sep, 2001 By: Joan Villa

In a victory for three independent retailers waging an antitrust lawsuit in San Antonio, Texas, the U.S. District Court there upheld discriminatory pricing charges against Blockbuster Inc. and seven studios, and denied the defendants' joint motion to dismiss the suit.

“The court has upheld [the] Robinson-Patman [Act], which is the act that protects small retailers against anticompetitive measures,” says John Merchant, owner of 49er Video in Davis, Calif., and one of the plaintiffs in the case. “So as we prepare to go to trial, we're preparing price-fixing charges.”

However, Buena Vista Home Entertainment attorney B. Mills Latham, of the San Antonio firm Soules & Wallace, downplayed the decision's significance as “just one of the rulings the court makes as we go along.” Latham adds that defendant attorneys are “busily getting ready” for the Jan. 14 trial.

"We view this is an insignificant, procedural milestone. Beyond that we don't have additional comments at this time,” a Blockbuster spokesperson adds.

The Sept. 10 decision by Judge Edward Prado denies the argument by the studios and Blockbuster that Robinson-Patman discriminatory pricing claims do not apply in this case because the retailer plaintiffs purchased their movie product through wholesalers and were not direct studio customers. The Robinson-Patman Anti-Discrimination Act is the popular name for several sections added to the U.S. Commerce and Trade code in 1936.

Rather, the ruling affirms that “each studio defendant made two sales: one sale to Blockbuster and a less favorable sale to a video wholesaler.” Further, Judge Prado says that the “clear language” of the Robinson-Patman Act provides a “remedy” if sales of the same product at different prices resulted in damages to the plaintiffs.

While the ruling notes the wording of the statute is not explicit, a law “enacted to prevent discriminatory pricing would not logically permit a defendant to avoid liability by simply explaining that its discriminatory pricing was to a wholesaler or a distributor rather than to a plaintiff,” the judge wrote.

Rather than provide a loophole that would allow sellers to “engage in discriminatory pricing while avoiding liability,” Judge Prado continued, “the statute's language either directly or indirectly seems to anticipate situations such as the one presented by this case.”

While there are currently no other motions for dismissal before the court, Latham says the defendants anticipate filing additional such motions in coming weeks.

“There are other issues related to Robinson-Patman that can be ruled on,” he says. “The central point for the defendants is that none of the things the plaintiffs claimed have ever happened, at least as far as the studios are concerned. None of it has any merit at all.”

The legal action, filed in July 1999, charges the studios and Blockbuster with antitrust violations and price discrimination. The case proceeded with the three plaintiffs when the judge denied class action status in March.

A second case filed by some 200 retailers in California is awaiting that judge's ruling on class action certification based on similar price-fixing charges.

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