WILMINGTON, DEL. (CN) – A federal antitrust complaint accuses Universal Studios of trying to squash Redbox Automated Retail, which runs self-serve movie DVD kiosks in grocery stores, by requiring Redbox to delay sale of videos until 45 days after they are released in video stores.
Redbox says Universal threatened to terminate relations with Redbox’s two distributors – VPD and Ingram – unless Redbox agrees to delay renting or selling DVDs and limit the movies it stocks.
Redbox claims Universal is trying “to eliminate the low-cost rental alternative for consumers” which allegedly has “exploded since the company’s inception in 2002.” It claims Universal is doing this “under the guise of a revenue sharing agreement.”
It says Universal is trying to “prohibit Redbox from renting or selling Universal DVDs until after 45 days from when they otherwise become available to the public; limit the number of copies of Universal DVDs that Redbox kiosks can stock; and require that Redbox ultimately destroy all of its copies of Universal DVDs so that previously viewed DVDs cannot be sold at a low price to consumers. To drive home its ‘take it or leave it’ proposition, Defendants will terminate Redbox’s two distributors – VPD and Ingram – if they continue supplying Redbox with Universal DVDs or providing other services to Redbox – unless Redbox forsakes its customers and participates in defendants’ attempts to decrease the supply of copyrighted DVDS, reduce consumer choice in the marketplace, and increase prices that consumers pay during tough economic times.”
Redbox claims Universal is violating antitrust law, tortiously interfering with contracts and abusing copyright. It demands an injunction, damages and costs.
Redbox’s lead counsel is Henry Gallagher Jr. with Connolly Bove Lodge & Hutz.