[The California] Court of Appeal yesterday revived an unfair competition suit against Blockbuster Inc. in which independent video retailers claimed the company negotiated with film studios to obtain secret discounts on the movies it purchased for rental.
The court’s Div. Eight said Los Angeles Superior Court Judge Victoria G. Chaney was right to dismiss the claim by some 250 independent video retailers that the arrangement constituted an illegal conspiracy under the federal Cartwright Act, which bars collusion in restraint of trade. But Justice Paul Boland, writing for the court, said Chaney erred in dismissing claims under California’s Unfair Practices Act, which bans secret rebates, unearned discounts, and the secret extension of special privileges not available to similarly situated purchasers.
The independent retailers sued Blockbuster, Inc., its parent company Viacom Inc., Viacom’s controlling shareholder, Sumner Redstone, and the home-video affiliates of five major Hollywood movie studios, challenging agreements under which Blockbuster obtained videos for rental at a reduced rate in return for agreeing to purchase the studios’ entire output and share rental revenues with them.