Barnes & Noble, Borders Settle Indie Bookstores' Suit

19 Apr, 2001 By: Hive News

Barnes & Noble Inc. and Borders Group Inc., two of the nation's largest book chains, settled a federalantitrust suit Thursday brought by small, independent bookstores, according to the Associated Press.

The small bookstores, represented by the American Booksellers Association, accused the book giants of using their size illegally todemand major discounts from publishers, a move they alleged undermined mom-and-pop stores that could not compete.

But after unfavorable rulings in federal court here, the ABA dropped the suit in exchange for Barnes and Borders paying about a quarterof the ABA's $16 million in legal expenses.

"This settlement is nothing short of a total vindication for Barnes and Noble," said Leonard Riggio, Barnes' chairman.

Representatives of two book giants said the settlement, which prohibits the ABA from suing them again on the same grounds for three years, was cheaper than battling the lawsuit.

The ABA, based in New York, portrayed the settlement as its own victory.

"The objectives of the litigation have, by and large, been achieved," the ABA's board of directors said in a statement.

The independents had wanted to pay the same prices for books as do Barnes and Borders, but the settlement does not require publishers to do that. U.S. DistrictJudge William H. Orrick hadearlier ruled that the independents were not entitled to damages because it would be impossible to determine how much they were harmed, if at all.

Said Stephanie Oda, who publishes Subtext, a Connecticut newslettercovering the bookselling industry, "Business is not fair. This is a capitalistic system."

The ABA argued the book giants were violating the Robinson-Patman Act of 1936, enacted to prevent large businesses from using their purchasing power to gainmarket advantage. The bookgiants said they were entitled to discounts because of their ability to move large volumes of books.

It was not the first time the ABA has taken its claims to court. In 1998, it settled a claim with publishing house Penguin USA of New York alleging that it offeredillegal secret discounts andpayoffs to large book chains and book-buying clubs.

As major bookstore chains have expanded to new territories in recent years, the number of independent bookstores has declined. From 1994 to 1997, the fourlargest bookstore chains -- Barnes, Borders, Crown Books and Books-A-Million -- expanded their collective market share from 35% to 45%, the ABA said.

The association has about 3,000 members, down from its peak of 5,000 five years ago.

Barnes and Borders operate 937 and 335 stores, respectively, and areexpanding notably in California.

(Source: Associated Press)