Editorials

SAN FRANCISCO — Two of the nation’s largest book chains, Barnes & Noble Inc. and Borders Group Inc., settled a federal antitrust suit Thursday brought by small, independent bookstores in an accord seen as a victory for the chains. 

The 26 small bookstores, which included Cody’s of Berkeley, were represented by the American Booksellers Association which accused the book giants of using their weight illegally to demand major discounts from book publishers, a move they alleged undermined mom-and-pop bookstores which could not compete. 

But after a variety of unfavorable rulings in federal court here, the ABA dropped the suit during the second week of trial in exchange for Barnes and Borders paying about a quarter of the ABA’s $16 million in legal expenses. 

“This settlement is nothing short of a total vindication for Barnes and Noble,” said Leonard Riggio, Barnes’ chairman. 

Representatives of New York-based Barnes and of Ann Arbor, Mich.-based Borders said the settlement, which prohibits the ABA from suing them again on the same grounds for three years, was cheaper than forging ahead with the suit even if the book giants prevailed. 

The ABA, based in New York, portrayed the settlement as its own victory. 

“The objectives of the litigation have, by and large, been achieved,” the ABA’s board of directors said in a statement. 

But industry analysts don’t view it that way. The independents wanted a level playing field, and to pay the same prices for books as do Barnes and Borders. But the suit does not require publishers to do that. 

And, even if the independents had won the suit, they could not have been awarded damages. Before trial, U.S. District Judge William H. Orrick ruled that the independents were not entitled to damages because it would be impossible to determine how much they were harmed, if at all. 

“Fizzle. Fizzle. Fizzle,” said Stephanie Oda, who publishes Subtext, a Connecticut newsletter covering the bookselling industry. “Business is not fair. This is a capitalistic system.” 

The ABA argued the book giants were violating the Robinson-Patman Act of 1936, enacted to prevent large businesses from using their purchasing power to gain market advantage. The book giants said they were entitled to discounts because of their ability to move large volumes of books. 

Avin Domnitz, the ABA’s chief executive, said his group will continue to press for equal treatment. 

“I want independent booksellers to get a fair deal and get offered to them what’s offered to others,” he said. “I think  

with this settlement we can move toward that mark.” 

It was not the first time the ABA has taken its claims to court. In 1998, it settled a claim with publishing house Penguin USA of New York alleging that it offered illegal secret discounts and payoffs to large book chains and book-buying clubs. 

As major bookstore chains have expanded to new territories in recent years, the number of independent bookstores has declined. From 1994 to 1997, the four largest bookstore chains – Barnes, 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 from its peak of 5,000 five years ago. Barnes and Borders operate 937 and 335 stores, respectively, and are expanding notably in California. 

The case settled Thursday is American Booksellers Association v. Barnes and Noble Inc., C-98-1059.