A class action lawsuit has been filed against Wal-Mart and Netflix, alleging that the 2 companies improperly negotiated Wal-Mart's departure from the online market that previously had only 2 major competitors.
Wal-Mart's presence in the DVD market allegedly drove prices down, such that Netflix experienced a reduction in its profits. Wal-Mart would not have escaped reduced profits either, had Netflix begun selling DVDs. Consequently, the 2 companies entered into an agreement which allegedly violates antitrust laws.
According to the complaint, when Wal-Mart exited the online DVD rental business, it automatically converted its customers' accounts to Netflix. In return, Netflix promoted buying DVDs at Wal-Mart and Walmart.com.
The suit alleges "This antitrust class action arises out of a conspiracy among defendants Netflix, Wal-Mart stores, and Walmart.com to divide the markets for the sales and online rentals of DVDs in the United States in order to avoid competition, monopolize, and illegally restrain trade in at least the online DVD rental market."
