B & C in the news

Indies Sue Big Guy: Sound Familiar?; This Time, it’s Music Retailers vs. Best Buy

Video Business August 18, 2003

BYLINE: BY PAUL SWEETING

A group of independent music retailers in California have filed a class-action suit against Best Buy, charging the giant electronics chain with violating federal antirust laws by securing exclusive discounts and marketing allowances from the major record companies.

The allegations are reminiscent of the charges brought by independent video retailers against Blockbuster Inc. and the studios in 1999.

The 11-page complaint, filed Aug. 6 U.S. District Court in Los Angeles, also charges Best Buy with violating state fair trading laws by advertising and pricing CD’s below cost.

The plaintiffs—Mad Rhino, Boo Boo Records, Lou’s Records, Dilyn Radakovitz and Rand Foster—are seeking to have two classes of retailers certified: independent retailers who buy directly from the majors and therefore compete directly with Best Buy, and those that buy through one-stops or rackjobbers who are allegedly harmed by Best Buy’s below-cost sales.

"Recently, defense Best Buy has been able to extract from the major record companies an additional 10% discount vis-à-vis other purchases," the complaint says. "Additionally, Best Buy is also reported to have secured from record companies advertising and other allowances that are not generally available to other purchasers."

Best Buy officials were not available for comment.

Unlike the Blockbuster case, the music retailers have not named the record labels as defendants in their action, although the complaint notes that five major distributors account for 80% of the CDs sold in the U.S.

Attorneys for the independent retailer were traveling and unavailable for comment at press time.