A group of some 150 owners of private video stores has sued Blockbuster Inc., claiming the company is monopolizing the video rental market and trying to drive independent stores out of business.
The lawsuit filed in Los Angeles Superior Court on Wednesday claims that because Blockbuster is owned by media giant Viacom Inc., the chain has "substantial market power and influence with the Hollywood studios" and has entered into "secret 'revenue sharing' agreements" with them.
The lawsuit claims that under the alleged secret agreements entered into in late 1997 and early 1998, studios share in rental revenues generated by Blockbuster, and in exchange provide the chain with videos for fractions less than independent stores pay.
The deals were made to increase Blockbuster's market share and drive competitors out of the market, the suit alleges. The plaintiffs, who are seeking class-action status, include the owners of video stores around the country, including California, Hawaii and New Jersey.
Blockbuster, headquartered in Dallas, is the leading video rental chain, with some 7,500 stores worldwide. Company spokesmen did not immediately respond to voice mail messages seeking comment early Thursday.
The claims against Blockbuster are similar to accusations in a federal antitrust lawsuit filed in 1999 against Borders and Barnes & Noble by the American Booksellers Association. That suit alleged an attempt to run independent bookstores out of business by illegally arranging favorable terms from publishers.