Third lawsuit filed against Netflix and Wal-Mart

Louisiana, February 6: Netflix Inc. and Wal-Mart Stores Inc. will have to face court as class action lawsuits have been filed against the two companies alleging anti-trust collusive behavior between the two at the time of Wal-Mart's exit from the online video market in 2005.

The third lawsuit filed in Louisiana has charged the two companies of improper negotiations, thereby illegally benefiting themselves. The lawsuit contends that the companies connived to create a cartel for online video rentals. Prior to this identical suits had been filed in Arkansas and Northern California.

"There's a giant investigation by a number of law firms throughout the country regarding anti-trust collusive behavior between these companies," said lawyer Daniel Becnel of Reserve, L.A. Akin to the other two suits, the Louisiana suit seeks damages, injunctive relief and court fees.

The content of the suit is as thus, “This antitrust class action arises out of a conspiracy among defendants Netflix, Wal-Mart stores, and Walmart.com to divide the markets for the sales and online rentals of DVDs in the United States in order to avoid competition, monopolize, and illegally restrain trade in at least the online DVD rental market.”

Wal-Mart vehemently opposed the charges. Its spokesperson Michelle Bradford said, "We made our own independent decision to exit the DVD rental business and our subsequent agreement with Netflix is entirely proper.” Netflix declined to comment on the subject.

He further added, "We intend to defend vigorously our decisions regarding the products and services offered to our customers."

Wal-Mart started the business of renting out DVDs online in 2003. Initially the rents ranged between $15.54 and $21.94 monthly, depending on the number of videos rented at one time. At the time exiting the business in 2005, Wal-Mart converted its customers' accounts to Netflix accounts which began to charge between $13.95 and $39.95 from the customers.

Becnel has alleged that the prevailing rates are more than they would have been if Wal-Mart had not quit the online DVD business. Becnel warned the companies "Don't conspire to artificially raise the price to the consumer."