Barnes & Noble Education Inc., McGraw-Hill Global Education Holdings LLC, and other leading textbook publishers and retailers were hit with an antitrust lawsuit in Delaware federal court Thursday claiming they’re trying to drive independent college bookstores out of the market for online course materials.
“They disguised their anti-competitive actions as technological advancements, but that was not their true purpose or effect,” the suit says. “The conspiracy’s end goal and result is eliminating competitors and raising prices.”
The proposed class action was filed in the U.S. District Court for the District of Delaware by a group of independent off-campus bookstores.
The lawsuit also targets Pearson Education Inc., Cengage Learning Inc., Follett Higher Education Group Inc., and the Educational Publishers Enforcement Group, a trade association.
McGraw-Hill, Pearson, and Cengage are textbook publishers—McGraw-Hill and Pearson being two of the “big three”—and Barnes & Noble and Follett are major retailers. Together, the publishers control at least 80% of the $3 billion nationwide market for college course materials, and the retailers operate more than half of on-campus bookstores, according to the 102-page complaint.
The publishers sold textbooks and online course materials to both chain and independent retailers for years, the suit says. But as pressure from Amazon pushed prices down, they allegedly came up with a scheme involving online course materials that are effectively rented to students semester by semester.
The increasingly indispensable program—“ironically called Inclusive Access”—is only available through Barnes & Noble and Follett, the suit says. It provides the same course materials that were previously broadly available, but with a new “access limitation element that eliminates competition,” the suit says. And there’s allegedly “no meaningful way” for students to opt out.
“Every student enrolled at each college or university must purchase course materials in a single format—Inclusive Access—from a single source—the defendant retailers—dictated by a single group—the publishers,” the suit says.
Pearson is reviewing the complaint, media relations director Scott Overland told Bloomberg Law on Thursday. “Pearson stands by the inclusive access model, which offers real benefits to students, instructors and institutions,” he said.
McGraw-Hill declined to comment. The other publishers and EPEG didn’t immediately respond to requests for comment.
Cause of Action: Sections 1 and 2 of the Sherman Act; section 16 of the Clayton Act; the Robinson-Patman Act; various state antitrust, unjust enrichment, unfair competition, and price discrimination laws.
Relief: Class certification, an injunction, treble damages, costs, fees, and interest.
Potential Class Size: An unknown number of independent off-campus bookstores.
Attorneys: The bookstores are represented by Phillips Goldman McLaughlin & Hall PA, Thompson & Knight LLP, and Steckler Gresham Cochran PLLC.
The case is Campus Book Co. v. McGraw-Hill Glob. Educ. Holdings, LLC, D. Del., No. 20-cv-102, complaint filed 1/23/20.
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