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Warner, Fox Seek Dismissals in Redbox Suits

29 Dec, 2009 By: Chris Tribbey

In the latest legal wrangling between DVD kiosk operator Redbox and the studios, both Warner Home Video and 20th Century Fox Home Entertainment have asked for dismissals of the suits against them.

Filed in U.S. District Court in Delaware during Christmas week, Warner and Fox both responded to Redbox’s amended complaints, filed Nov. 30, that added allegations of unfair competition and interference with prospective business opportunities. Redbox’s original complaints against the studios alleged antitrust injuries and interference with contracts, after those studios, along with Universal Studios Home Entertainment, sought to keep new-release DVDs out of Redbox kiosks for 28 to 45 days, and ordered wholesalers Ingram Entertainment and Video Product Distributors to stop selling to Redbox.

“Plain and simple, this is a business dispute between Redbox and Warner; a dispute about Warner’s terms of sale, and a dispute about a decades-old policy of Warner exercising its unilateral right to release its product at different times in ‘windows,’” Warner’s filing reads. “By transforming a business negotiation into an antitrust suit, Redbox hopes that this court will give it leverage at the bargaining table.”

Warner’s filing notes that antitrust laws are not intended to “protect any particular merchant’s margins or input costs” and that “Redbox remains unable to point to any fact or reality-based allegation supporting the argument that competition as a whole has been or will be injured as a result of Warner’s policy.”

Warner also notes that since Redbox first filed its first suit against Universal in late 2008, the kiosk operator has done very well, nearly doubling its kiosk presence, and signing distribution deals with Sony Pictures Home Entertainment, Paramount Home Entertainment, Lionsgate, Summit Entertainment and others.

“Equally and independently fatal for Redbox is its lack of plausible allegations that there have been or will be anticompetitive effects resulting from Warner’s actions,” the filing reads.

Warner also says Redbox has failed to prove the studio interfered with the kiosk operator’s ability to purchase DVDs from retail outlets. In its amended complaints Redbox accused Warner and Fox of telling Wal-Mart, Target and Best Buy to limit the sale of new-release DVDs to Redbox representatives to three per title.

“Redbox does not allege the ‘who,’ ‘what,’ ‘when,’ or ‘where’ of these alleged contacts,” the filing reads. Warner also notes that Redbox’s agreements with VPD and Ingram do not require the wholesalers to provide Warner DVDs.

Fox’s motion for dismissal reads similar, noting that “not only has Redbox failed to cure the deficiencies in its original claims (or to drop those claims), but Redbox has added new counts alleging tortuous interference with prospective business opportunity and unfair competition. Neither of these new counts meets applicable pleading requirements.”

“Redbox does not identify any unlawful agreement between Fox and its distributors or Fox and DVD retailers; Redbox does not allege harm to inter-brand competition; Redbox’s allegations of harm to intra-brand competition are inadequate to demonstrate marketwide injury to competition; and Redbox does not allege a plausible antitrust market,” the studio’s filing reads in response to antitrust allegations.

As for allegations of retailer interference, Fox slams Redbox’s claims, saying “Redbox has no reasonable expectation that Wal-Mart, Best Buy or Target wish to transform themselves from national retailers into Redbox’s DVD distributor.”

Redbox president Mitch Lowe responded to the filings, saying "We remain confident in our case and we are steadfast in our commitment to protect consumers’ right to convenient, affordable access to new release DVDs at redbox locations nationwide.”

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