The National Law Journal has run an article recounting the history of the legal battle currently being waged between Redbox and several Hollywood studios. The article goes into some detail discussing recent developments in Redbox’s antitrust suits, and outlines what Redbox will have to accomplish in order to carry the day in court:
“To successfully sue under Section 1 of the Sherman Act in a distributor case, Redbox has to do four things: define the relevant market at issue, prove that the defendant has substantial power in that market, outline why the defendant’s acts aren’t reasonable business decisions and demonstrate the detrimental effect those acts have had on the market.”
Unfortunately for Redbox, recent U.S. Supreme Court precedents “have really put limits on the ability of distributors to make these kinds of complaints,” according to attorney Daniel Swanson, who is the Los Angeles-based co-chairman of the antitrust practice group at the firm of Gibson, Dunn & Crutcher. Swanson summed up his opinon of how Redbox’s case will proceed thusly:
“If I were a betting man, I’d bet they’re not going to be in court all that long,”
Corey Watson of Kirkland & Ellis, who is one of the attorneys representing Fox, is also quoted in the article. He had the following to say about Redbox’s litigation:
“The real complaint is Fox won’t sell DVDs to Redbox on the terms Redbox demands, and that is not in our view an antitrust violation. . . There’s nothing in the law, antitrust or otherwise, that says a seller must sell its product at the price that the buyer demands on the date the buyer demands and through the distribution channel that the buyer demands.”
While it’s not surprising an attorney for one of the defendants would dismiss the merits of Redbox’s case, Swanson’s opinion could be slightly more troubling for the kiosk operator, and contrasts with analyst Eric Wold’s recent comments. To the comments, Insiders, and let us know which way you think the wind is blowing in this fight.
[via The National Law Journal]
I’ve never thought Redbox had a strong case, but it all depends on what the demands are. And if those demands are more or less equivalent to the terms other large buyers get then Redbox’s case gets stronger. But how much stronger it needs to be is the question, and may well hinge on technicalities of the law and precedents.
Noone really knows what Redbox’s demands are, all we’ve heard on that front is from the guys on this site whose credibility has been proven to be very low. However, the fact that some of the studios have made deals with Redbox lends credence to the idea the Redbox is willing to negotiate and isn’t actually making unreasonable demands.
The point isn’t that Fox and friends won’t sell DVDs on Redbox’s terms. That isn’t the point at all. The point is that Redbox is trying to buy DVDs from the studios, and the studios are creating restrictions against sales to Redbox.
In other words, this is NOT:
John goes to a grocery store to buy bread. The price tag on fresh bread is $1 a loaf. John demands that the store sell him all the loaves of bread that come out of the oven for $0.50 a loaf.
This IS:
John goes to a grocery store to buy bread. The price tag on fresh bread is $1 a loaf. The store demands that John pay $1.50 a loaf and he can’t buy the fresh bread, only because he buys too much bread.
Big difference there.
Your are dead wrong on this FF.
Video rentailers can either pay the wholesale cost (plus a little markup if you get it from a distributor) or pay a revenue sharing fee (usually 40-50 of the cost of the rental with a minimum of around $1.50).
Redbox refused to pay full wholesale cost.
Redbox refuses to pay proper revenue sharing.
They want to charge $1.00 for a rental instead. In order to do that, they need deals outside of what ANY other rentailers in North America is getting.
Is Redbox being shut out? Not at all. They are perfectly within their rights to buy product from Wal-Mart or Best Buy (just as those retailers are within their right to limit the number of copies a Redbox Rep can buy from each store).
In fact, buying from Wal-Mart or Best Buy on the day of release means they are getting a price that is better than most rentailers would get from their distributor. So what is the problem other than the fact that the price they would have to pay is still too high for them to make a profit?
Redbox wants special treatment. They want cheaper prices than Blockbuster (who buys more product than Redbox). They want cheaper prices than Wal-Mart (who buys more product than Redbox). This simply is not going to happen.
This court case is going no where and will cost Redbox/Coinstar a lot of money in legal costs.
Going backwards…
4. Damage caused = The movies suck lately. Redbox competitors (B&M stores) are using the delay to their advantage with a marketing campaign “get it here first”. People naturally want it now, the damage is pretty obvious. Kiosk operators are NOT paying a fair price if they get a different deal than all the other rental companies.
3. Stupid decision, the only reason to do this is to try to put Kiosk operators out of business. They are targeting only Kiosk operators, unfair practice.
2. Obvious, they are the movie studios.
1. DVD market.
“The Court is convinced that Plaintiff sufficiently pleaded that Universal has induced or otherwise convinced others to boycott Redbox in distribution of Universal DVDs, producing anti-competitive effects, specifically Redbox’s inability to compete in the DVD rental and sales markets of Universal DVDs,” he wrote. “Further, the Court finds that Plaintiff has sufficiently pleaded the illegality of Universal’s actions, and that those acts are the proximate cause of economic and other injuries to Plaintiff.”
Interesting…
“According to court documents, Redbox gets its movies from two distributors, Ingram Entertainment Inc. in La Vergne, Tenn., and Video Product Distribution, or VPD, in Folsom, Calif.”
“In its suit against Universal, filed on Oct. 10, 2008, Redbox said that the studio’s representatives approached the retailer with an offer: Under a “revenue sharing agreement,” Redbox could deal directly with the studio but would not be allowed to rent out Universal DVDs until 45 days after their release. When Redbox refused the offer, VPD and Ingram, under direction from Universal, refused to fill Redbox’s orders for Universal DVDs on Dec. 1, according to court papers. Redbox claims that Universal then expanded its campaign into a “group boycott” that now includes other wholesalers and retailers, such as Best Buy Co. Inc. and Wal-Mart. Some of these companies have canceled orders or limited the number of DVD copies they provide to Redbox. ”
http://www.law.com/jsp/article.jsp?id=1202434752365