• January 8, 2009

A group of consumers has accused Netflix and Wal-Mart of allegedly conspiring to stifle competition in the online DVD rental market.

In an antitrust lawsuit filed in federal district court in the northern district of California, the consumers allege that Netflix and Wal-Mart entered into an agreement in 2005 to "divide the markets for the sales and online rentals of DVDs."

The lawsuit alleges that the agreement grew out of a relationship that started with a dinner meeting between the companies' CEOs in January of that year. "By no later than May 19, 2005, Netflix, Wal-Mart Stores, and Walmart.com entered into an agreement by which Walmart.com would stop competing with Netflix in the online DVD rental business and Netflix would promote the sales of new DVDs by Wal-Mart Stores and Walmart.com, and not sell new DVDs in competition with them," the court papers allege.

The consumers argue that this arrangement was anti-competitive and ultimately resulted in higher Netflix subscription prices.--Wendy Davis