SAN FRANCISCO — A federal judge heard arguments Tuesday in a lingering antitrust suit filed against two major bookstore chains by independent booksellers who allege their competition receives illegal preferential treatment from publishers for secret deals and steep discounts.
Attorneys representing the American Booksellers Association argued before U.S. District Judge William Orrick that the suit against Barnes & Noble Inc. and Borders Group Inc. should proceed to trial.
Orrick did not rule Tuesday. The case is set for trial beginning April 9.
The case was filed in 1998 and the plaintiffs have since tried to pry information about distribution and marketing deals they say publishers give exclusively to the major chains. The 26 plaintiffs claim the growth of large bookstore chains has cost them millions of dollars they are unable to recoup without the same discounts.
“These are secret deals. They were withheld from the plaintiffs,” said David DeBruin, an attorney for the ABA.
If secret, such deals would violate the Robinson-Patman Act of 1936 enacted to prevent large businesses from using their purchasing power to gain market advantage.
Both Borders and Barnes & Noble have declined to comment on the case.
One Berkeley bookstore owner says his business has declined steadily since Borders and Barnes & Noble outlets popped up in the neighborhoods and cities around him.
Andy Ross has owned Cody’s Books since 1977. Chain stores stifle variety and diversity in American literary culture, Ross said.
“The thing about independent stores is they’re all different,” he said. “It’s important that the flow of ideas not be controlled by one or two corporations.”
Ross said his store was one of the few to continue selling Salman Rushdie’s “The Satanic Verses” in 1989, even after Iran’s late leader, Ayatollah Ruhollah Khomeini, issued an edict against the author and ordered Muslims to kill him for insulting Islam. This is not the first time ABA members have sued over alleged industry favoritism. The trade group sued several major publishers in 1994, making similar claims of secret deals between book houses and major retail chains.
That case was settled when the publishers entered into a consent order which Barnes & Noble and Borders attorneys argue should prevent the current case from going to trial. Full terms of that settlement have not been released.
From 1994 to 1997, the four largest bookstore chains – Barnes & Noble, Borders, Crown Books and Books-A-Million – expanded their collective market share from 35 percent to 45 percent, the ABA said.
The association has about 3,000 members, down considerably from its peak membership of about 5,000 just five years ago. Barnes & Noble and Borders operate 937 and 335 stores, respectively, and are expanding notably in California.
Susan Novotny, owner of The Book House of Stuyvesant Plaza in Albany, N.Y. said chain stores have sapped profits from her business as well. Her 6,000-square-foot store is within two miles of both Borders and Barnes & Noble.
“I’ve been up against two of the chain stores in my area since 1993,” Novotny said. “The early years were profoundly depressing. We hemorrhaged a lot of revenue.”
She’s also concerned that major bookstore chains too often give prominent store placement to best sellers and ignore emerging writers.
“You don’t need a Danielle Steele (novel) every six months,” Novotny said.