Bloomberg News

Netflix Wins Dismissal of Antitrust Case Over Online Rentals

November 28, 2011

Nov. 23 (Bloomberg) -- Netflix Inc., the video-streaming and DVD subscription service, won dismissal of a 2009 consumer lawsuit claiming it conspired with Wal-Mart Stores Inc. to create a monopoly for online video rentals.

U.S. District Judge Phyllis Hamilton in Oakland, California, ruled yesterday that lawyers for consumers failed to show that a 2005 agreement between the two companies was an attempt to constrain competition for online DVD rentals and sales. She also ruled that the plaintiffs didn’t demonstrate that they personally paid higher prices for video rentals because of the agreement.

Wal-Mart, the world’s largest retailer, reached an agreement to close its online rental business and refer customers to Los Gatos, California-based Netflix, which would promote Wal-Mart’s DVD movie sales. The complaint alleged that enabled Netflix to maintain monopoly power over online rentals and led consumers to pay inflated prices.

Wal-Mart, based in Bentonville, Arkansas, agreed to pay $27.2 million to settle the case, according to court filings. The plaintiffs were seeking as much as $650 million in damages from Netflix, according to court filings. Robert Abrams, an attorney for the plaintiffs, didn’t immediately return a voice- mail message seeking comment about the ruling.

The case is In Re Online DVD Rental Antitrust Litigation, 09-2029, U.S. District Court, Northern District of California (Oakland).

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--Editors: Peter Blumberg, Andrew Dunn

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net


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