Antitrust Trial Against Book Chains Begins

Barnes & Noble Inc. and Borders Group Inc. made illegal, secret arrangements with publishers and book wholesalers to get discounts, a lawyer for independent bookstore owners said Monday, kicking off their antitrust trial against the two leading U.S. book chains.

The American Booksellers Assn. and 26 independent bookstore owners sued in March 1998, saying they’ve lost sales because their larger competitors are misusing market clout. The chains respond that any discounts they’ve received are available to others and not unique to the book industry.

At the end of the trial in federal court in San Francisco, U.S. District Judge William H. Orrick will decide whether to block Barnes & Noble and Borders from entering such arrangements with publishers and distributors. The judge already has said he will not grant any monetary damages in the case.

The plaintiffs are asking Orrick to “ensure that this is and remains a level and competitive playing field in this most vital industry,” said their lawyer, Douglas Young. “This should not be an industry where only a couple of players are allowed to dictate the terms.”

The chains improperly get special discounts, more favorable advertising terms and other benefits in violation of antitrust and business practices laws, the independents say.

In their opening statements, lawyers for Barnes & Noble and Borders told the judge that the independent booksellers’ list of allegations was “inflated, inaccurate and outmoded.”

What’s really going on here is that “people are flocking” to the defendants’ superstores, and “rather than adapt to change, the plaintiffs have elected to file this lawsuit,” said Daniel Petrocelli, Barnes & Noble’s lawyer.

Independent booksellers’ market share has fallen 40% since 1991, they say. Independents now control about 18% of the marketplace, while chains control as much as 28%.

The plaintiffs accuse Borders and Barnes & Noble of negotiating secret, volume-based contracts with wholesaler Ingram Book Co. and others. That conduct violates the California Unfair Competition Law and federal law forbidding what is called “price discrimination,” the independent booksellers say in court documents.