Report: Netflix, Wal-Mart sued for allegedly colluding

Class action suit alleges that Wal-Mart agreed in 2005 to exit the online rental business in exchange for Netflix's termination of DVD sales, according to a report.

Netflix, the Web's No. 1 video rental service, and Wal-Mart are being accused in a class-action lawsuit of unfairly setting prices for their rental services.

According to the Web site of Video Business, the suit was filed earlier this week in U.S. District Court, Western District of Arkansas. The lead plaintiff, Marci Badgerow, alleges that Wal-Mart agreed in 2005 to exit the online rental business in exchange for Netflix's termination of DVD sales, according to Video Business.

The plaintiffs argue that the agreement promotes unfair trade and is illegal. They assert that the pact harmed customers because it allowed Netflix to raise its monthly subscription price from $14.99 to $17.99, according to the report. Wal-Mart denied any wrongdoing.

"We made our own independent decision to exit the DVD rental business and our subsequent agreement with Netflix is entirely proper," said Michelle Bradford, a Wal-Mart spokeswoman. "We intend to defend vigorously our decisions regarding the products and services offered to our customers."

A Netflix spokesman declined to comment.

The two companies were accused in a similar suit filed in Northern California earlier this month of conspiring to restrict competition and unfairly control pricing.

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About the author

Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.

 

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