US District Judge Phyllis Hamilton was overseeing a case against the two firms, in which they were alleged to have conspired to dominate the DVD-by-post market. Specifically, the lawsuit alleged that Walmart dropped out of the mail DVD rental market so Netflix could consume its previous customers, and in return, Netflix stopped selling DVDs.
Judge Hamilton disagreed, pointing out that Walmart's mail rental service had just a small 1.5 percent of the market, and that its exit simply would have aided Netflix in any significant way. Furthermore, Netflix's DVD selling business was nowhere near that of the retail giant, and so it's decision to abandon it would not have affected Walmart in any significant way.
The lawsuit was filed against both companies January 2009, and after more plaintiffs joined the case it was eventually granted class action status.
?The court concludes that no reasonable juror could believe that Netflix would have lowered its [rental plan] to $15.99 in response to continued competition from Walmart, whose [comparable plan] was set at $17.49 ? particularly when those facts demonstrate that Netflix chose not to lower its price in the face of Blockbuster's $14.99 price cut, despite the fact that Blockbuster had a higher market share than Walmart,? Hamilton wrote in his decision.
Hamiltion was referring to the fact that Blockbuster at the time had gained a 17 percent stake in the mail rental market.
Written by: James Delahunty @ 28 Nov 2011 5:57