Each semester at colleges across the country, students shell out hundreds of dollars for textbooks, only to repeat the same thing the following semester and the one after that. A handful of companies have a monopoly on that market, according to a newly-initiated antitrust lawsuit, which names McGraw-Hill and Pearson, among others, as defendants, highlighting their allegedly “anticompetitive monopolistic behavior,” which is virtually “unchecked by any competitive market forces.”
In the case, which was filed in a Delaware federal court in late January, independent book sellers Campus Book Company, Inc., CJJ Corporation, CBSKY, Inc., CBSNM, Inc., and RentText.com, Inc. claim that publishers Pearson, Cengage, and McGraw-Hill Education and bookstore chains Barnes and Noble Education and Follett have launched specific online textbook programs as part of a “conspiracy” with the “end goal and result [of] eliminating competitors and raising prices.”
According to the plaintiffs’ complaint, “Amidst trends of market-shifting and revenue decline in the higher education course materials industry, the defendants conspired to protect their historical price increases and stranglehold on the market” and shut out even their most “sophisticated” competitors (i.e., the plaintiffs), who say that by providing students the option to buy used textbooks and to rent textbooks, as well as access other more cost-effective course materials, they serve as “at least some check on [the defendants’] exorbitant prices and relentless price increases.”
The plaintiffs assert that their existence in the market “benefits [both] consumers and competition [as a whole due to their offering of] price competition, personalized service, and innovative programs, such as rentals and robust e-commerce solutions.” The immediate result of such competition? “Lower prices and increased availability of course materials.” An addition result? The publisher defendants have “looked for ways to reduce or eliminate competition and increase their revenues.”
While the case is hardly a fashion-centric one, the potential parallels are notable when it comes to the rise of the resale market for luxury goods. As luxury goods brands have moved beyond their initial aversion to e-commerce sales, they are sharing space online with digitally-native consignment companies that aim to give consumers access to more affordable luxury goods.
This new(ish) eco-system that notoriously controlling luxury goods brands have found themselves to be a part of due to the rise of prominent luxury resale sites like The RealReal, Vestiaire Collective, Fashionphile, and Rebag, among others, has not been without strife. Some brands and retailers – whether it be Burberry and Stella McCartney, which have teamed up with The RealReal, or Neiman Marcus, which took a minority stake in Fashionphile – have welcomed the potential that comes with the resale market, but not all have been quite so welcoming.
Chanel, for instance, has famously hauled a handful of resale sites into court in recent years, with two of those lawsuits – the one it lodged against The RealReal and another against What Comes Around Goes Around – currently pending. In both lawsuits, Chanel asserts that the consignment sites are selling at least some counterfeit goods, while also running afoul of the law in their practice of significantly and routinely leveraging the appeal and esteem of its valuable intellectual property, including its trademark-protected names and famous logos in order to win over consumers.
In many ways, The RealReal’s response to Chanel’s suit mirrors the claims that plaintiffs Campus Book Company, Inc., CJJ Corporation, CBSKY, Inc., CBSNM, Inc., and RentText.com make in their own case. For instance, in much the same way as the book-sellers claim that they serve as an important source of competition in the market, which enables competition in terms of price, The RealReal argued that its business consists of “lawful competition … of used goods at lower prices in the secondary market,” something that it claims that Chanel is trying to stomp out in order to exercise greater control, including control over the prices at which its bags are being offered.
More than that, the indie book sellers claim that the defendants enjoy a “historical [ability to mandate] price increases” and have long maintained “a stranglehold on the market” for their offerings. While not something that The RealReal explicitly asserts, it is certainly true of the luxury goods market, where brands have traditionally had the exclusive ability to control exactly how and where their products were sold, and at what prices. That has changed significantly in light of the digitization of the consignment market and the emerge and domination of marketplaces sites, such as eBay and Amazon.
Ultimately, the positions of the parties are swapped in the Chanel-specific cases versus the textbook-centric case, and the claims, themselves, vary. In the Chanel cases, the luxury brand is suing the resellers on trademark infringement and counterfeiting grounds, whereas in the book case, the indie sellers are suing the publishing and retail behemoths for price discrimination, and conspiracy to monopolize the market for the textbooks at issue and to violate the Sherman Act by way of “agreements to … to fix, raise, maintain, and stabilize prices or terms and conditions of the sale [the text books],” among other things.
However, while it is certainly worth “watching for signs that brands are considering their own resale services” in order to gain “greater control over prices in the secondary market and boost their sustainability credentials with millennial shoppers,” as the Wall Street Journal’s Carol Ryan asserted not too long ago, it is also worth watching this ongoing textbook case, as it sheds light on how another major industry is grappling with the rise of resale – and rentals. (The latter of which is something that is being heavily touted as possibility being an attractive venture for high fashion accessories, in particular, in light of the success of the rental market for more mainstream offerings, such as those of Rent the Runway).
Ultimately, the case provides some very real parallels to high fashion’s oft-rocky – and still very much evolving – co-existence with the growing pool of third-party resellers, and very well might foreshadow what could come in terms of legal fights in the fashion industry should (some) fashion brands continue to exert attempts at greater control.
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