College textbook giants McGraw-Hill, Pearson, and Cengage, as well as book retailers Follett and Barnes & Noble, were sued in Delaware District Court on January 22. The case, a proposed class action brought by independent college bookstores and led by Campus Book Company, alleges a conspiracy in restraint of trade, monopolization, attempted monopolization, price discrimination, unjust enrichment, and various state law claims.
The plaintiffs allege that recent trends in the college textbook industry have shut out the independent bookstore from the marketplace. The case centers specifically around the “inclusive access” or “direct billing” model, whereupon publishers and defendant retailers agree to provide digital versions of course materials that are substantially the same as otherwise available directly and automatically to students, often as a part of their tuition. The defendant publishers “manufacture and sell and/or rent Course Materials and control at least 80%, and reportedly closer to 90%, of the market nationwide. They have been the dominant firms in the market for the last 30 years.”
The inclusive access business model eliminates choice for students as to where they may purchase their textbooks and other course materials, the plaintiffs claim. They say the new business model is a reaction to the downward trend in prices due to secondary markets and online retailers such as Amazon. “As the sale of Course Materials (over the Internet, by Amazon, and through rentals) increased competition and finally began lowering the price and increasing the availability of Course Materials, the Publishers looked for ways to reduce or eliminate competition and increase their revenues.” These methods included delivering course materials with one-time access codes for necessary digital content, to eliminate a secondary market.
Under the inclusive access model, the plaintiffs claim, “Publishers contractually deliver Course Materials only through Defendant Retailers” using exclusive agreements between retailers, universities, and publishers. Moreover, while students are ostensibly given a way to opt out, “there is either no way or no meaningful way to ‘opt out’ of Inclusive Access once it has been designated the material for a class.”
The plaintiffs are represented by Phillips, Goldman, McLaughlin & Hall.
