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TRIAL OVER! Judge Dismisses Antitrust Allegations

27 Jun, 2002 By: Joan Villa

SAN ANTONIO--Cheers exploded among defense attorneys in U.S. District Court as Judge Edward Prado unexpectedly dismissed all price-fixing and conspiracy charges against Blockbuster and five studios just eleven days into trial.

The judge granted defendants' joint motion for judgment as a matter of law entered yesterday at the close of the plaintiffs' case. Entering court just before 9 a.m., Judge Prado said there was "insufficient evidence" presented and entered a directed verdict to dismiss all charges.

An elated Blockbuster CEO John Antioco said the judge's decision was "simply speaking to the facts of the case. [A finding of] no evidence to support claims is consistent with what we've been saying since the beginning."

On the witness stand yesterday, Antioco denied sharing Blockbuster's revenue-sharing terms with other studios and insisted the chain had not targeted independent retailers in its growth plans.

But he acknowledged that "rumors" of a lower Blockbuster price among studios have hounded the nation's largest retailer since entering into output revenue-sharing deals in 1997 and 1998. Blockbuster's terms are "just different ways of getting to the product," he said after the verdict.

For retailers who "cherry-pick" titles instead of revenue-sharing all the output of a studio's product, the current pricing market "is a windfall," he insisted. "Because they were paying $65 a few years ago and are now paying $40. They just got a 30 percent increase in gross profit without doing anything."

Plaintiffs' attorney Jim Moriarty blasted the decision as "outrageous" after a string of studio executives produced what he labeled "evidence of dishonesty, evidence of coercion and evidence the studios banded together to not give their best customers, the independents, the same deals." Such activity is not done "in public view" nor written in business plans, he argued.

"They're cheering because they have the right to sell our customers for $50 a tape and another customer for $25 a tape, and that's outrageous," he contended. "The people cheering in the courthouse are the same people who make billions of dollars from the kinds of people I represent. They cannot compete on a level playing field inside the court or in their businesses."

But jurors leaving the courthouse said they would have reached the same verdict, and some stopped to shake Antioco's hand.

"When we talked about it afterwards, that's the way we were leaning," said juror Chris Peterson. "They didn't prove their case."

Juror Nora Mott echoed the sentiment.

"That's what we would have decided," she said. "There was no evidence of conspiracy."

Prado's ruling ends the trial and could have ramifications for the cases pending in California.

What do you think about the judge's decision to dismiss the independent retailers' antitrust claims against Blockbuster and the studios? What does this mean to the industry? Sound off here!

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