Antitrust Lawsuits Filed in Del. and Other States Over Electronic Distribution of College Textbooks
The New Jersey lawsuit targets a distribution model that replaces physical textbooks with course materials that are exclusively sold by campus bookstores in electronic format .
March 06, 2020 at 03:35 PM
4 minute read
The original version of this story was published on New Jersey Law Journal
Antitrust lawyers appear to have picked college textbook publishers as their latest litigation target, as illustrated by a class action filed March 5 in a federal court in Trenton on behalf of students.
The lawsuit targets a distribution model called Inclusive Access, which replaces textbooks with course materials sold by the campus bookstore in electronic format. Critics say the system prevents students from shopping for lower prices at independent bookstores or online. Other suits over the Inclusive Access model are pending in Delaware and South Carolina.
The New Jersey suit targets the three dominant college textbook publishers, Cengage Learning, McGraw-Hill Global Education Holdings and Pearson Education, and the two main operators of campus bookstores, Barnes & Noble College Booksellers and Follett Higher Education Group.
"The Publisher Defendants' and Retailer Defendants' actions in conspiring to create the Inclusive Access system, requiring students to purchase Inclusive Access from only their official on-campus bookstores, and refusing to sell Inclusive Access materials to other retailers, all in order to monopolize the market for textbooks in Inclusive Access classes and thereby raise prices, are actionable violations of the federal antitrust laws," said the New Jersey suit, filed by John Radice of the Radice Law Firm in Princeton.
A McGraw-Hill spokesman, Tyler Reed, said in an email, "We believe Inclusive Access benefits students by making our first-class instructional materials available to them at below competitive rates, and we believe the lawsuit has no factual or legal merit."
A Pearson spokesman, Scott Overland, said in an email, "Pearson is aware of this lawsuit and is reviewing the complaint. Pearson stands by the inclusive access model, which offers real benefits to students, instructors and institutions."
Kristina Massari, a Cengage spokeswoman, said in an email, "Cengage is prepared to defend vigorously against these allegations. Cengage has been and remains a forceful advocate for student and textbook affordability."
Michael Carrier, who teaches antitrust law at Rutgers Law School in Camden, said the legal attack may have merit.
"It seems like there's an agreement between competitors to not offer textbooks in certain formats, with the result that the students are forced to pay higher prices," Carrier said. "The publishers would need to offer a pro-competitive justification for this, which I'm not sure they can do."
The New Jersey suit says the establishment of the Inclusive Access model violates antitrust laws because the defendants colluded to establish the system to restrict the supply of textbooks and monopolize the market in order to raise prices. The suit brings claims for unlawful agreement to restrain trade, monopolization, attempted monopolization and conspiracy to monopolize.
The named plaintiff in the New Jersey case, Martha Barabas, was required to purchase college textbooks and course materials through Inclusive Access directly from one or more of the defendants. The suit says the average college student spends $1,200 per year on textbooks and the high cost of books is a factor in the crisis over student loan debt.
The Delaware lawsuit was filed on behalf of a class of independent businesses that sell or rent textbooks. A trade association, the Educational Publishers Enforcement Group, is also a defendant.
That suit was filed by Phillips, Goldman, McLaughlin & Hall along with Thompson & Knight and Steckler Gresham Cochran. Barnes & Noble is represented in the case by Gibson, Dunn & Crutcher, while Cengage, Pearson and McGraw Hill are represented by Morris, Nichols, Arsht & Tunnell.
The Delaware suit brings claims for conspiracy to restrain trade, monopolization, conspiracy to monopolize and price discrimination.
Named plaintiffs and class representatives in the Delaware suit include the operator of a website, Renttext.com, as well as companies running independent bookstores serving students at schools such as Middle Tennessee State University, Eastern Kentucky University and New Mexico State University.
Trident Technical College in Charleston, South Carolina, was hit with a suit in state court last year over its Inclusive Access program. Filed on behalf of Virginia Pirate Corp., the owner of a second-hand textbook store near the college, the suit names only Trident, a state-supported, two-year technical school, as a defendant. It brings no antitrust claim but raises claims for unfair trade practices, intentional interference with a contractual relationship and intentional interference with prospective advantage.
Other defendants could not be reached or did not respond to requests for comment.
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