American Booksellers Association et al. v. Barnes and Noble, et al. (Price discrimination)

The Situation

On April 15, 1998 the American Booksellers Association (ABA) and 26 bookstore operators filed an antitrust lawsuit in the Northern District of California against Barnes & Noble and Borders Group. The complaint alleged that the defendant chains received secret discounts and other favorable terms from book publishers and wholesalers that were not available to independent bookstores. They contended that these practices harmed competition in the book industry and violated the Robinson-Patman Act and the California Business and Professional Code. In April of 2001, in the second week of the trial, the parties announced that they had settled the matter under terms that were widely reported to be favorable to the defendant bookselling chains.

NERA's Role

Of the several allegedly discriminatory terms, the largest dollar value was due to the additional discount for books delivered to warehouses operated by multi-location booksellers. Dr. Alan Cox, after reviewing Borders' operations, provided testimony that showed that such discounts were cost-justified. Borders saved publishers more money than the value of the additional discount. His testimony also refuted plaintiffs' expert's calculation of the differential between what independent bookstores and Borders pay for books. Dr. Richard Rapp, in his report, pointed out that differential pricing by sellers is a common occurrence in many industries. These pricing differences reflect differences in the cost of dealing with certain sellers, or a need to remain competitive.

The Result

In summary judgement the Court ruled in part that plaintiffs and their economic expert had failed to show the causation of actual injury to plaintiffs. This and several other parts of the ruling were in agreement with the economic arguments contained in defendants' briefs.