Class Action Says Textbook Publishers’ ‘Inclusive Access’ Product Harms Independent Booksellers, Raises Prices for Students [UPDATE]
by Erin Shaak
Last Updated on July 21, 2022
September 7, 2021 – Judge Dismisses Multidistrict Litigation
The lawsuits detailed on this page, which were consolidated as part of multidistrict litigation (MDL) on August 11, have been dismissed after the judge overseeing the litigation ruled that the plaintiffs—students and college textbook resellers—lacked standing to sue.
The plaintiffs’ claims were dismissed in two June 14 orders that separately addressed the students’ and the textbook resellers' allegations.
U.S. District Judge Denise Cote found that the textbook resellers had failed to demonstrate that the injury they claim to have suffered, i.e., a decline in textbook sales due to their exclusion from the Inclusive Access market, was a result of any anticompetitive activity on the part of the defendants. Rather, the order stated, it was universities and colleges who decided to adopt digital textbooks and manage their digital program through on-campus bookstores, and this shift to digital course materials is what led to the resellers’ decline in sales.
“The harm to the plaintiffs’ revenue and profits, therefore, is not due to any anticompetitive harm that this lawsuit challenges,” the judge wrote.
Moreover, the publishers’ decisions to develop digital textbooks were likely “independent responses to common stimuli” amid the digital revolution and do not suggest that the companies conspired with each other, the order stated. Likewise, the retailers’ agreements to serve as on-campus bookstores were “very much in [their] independent financial interest[s]” and offer no evidence of a conspiracy, Judge Cote ruled.
In the order addressing the students’ claims, the judge wrote that the plaintiffs lack standing to sue the publisher defendants because the students are indirect purchasers, and not direct purchasers, of the Inclusive Access product, which is sold by the publishers to retailers.
Though the judge noted that the plaintiffs do have standing to sue the retailer defendants, they have nevertheless failed to show that the retailers conspired to suppress competition and raise the prices of course materials, according to the order. As stated above, it was in the retailers’ independent financial interest to agree to become universities’ exclusive on-campus booksellers, and this arrangement does not necessitate a conspiracy, the judge wrote.
Both orders stated that because the plaintiffs had failed to establish standing under the Sherman Act, their claims under state antitrust statutes must also be dismissed.
July 23, 2020 – Three Students File Suit in New Jersey
Another proposed class action has been filed in New Jersey against the three major textbook publishers, two college bookstore retailers, and trade association named in previous antitrust suits detailed on this page.
According to the case, the defendants have conspired to raise the prices of college course materials through the implementation of the publishers’ Inclusive Access products, which the suit claims restricted students’ access to course materials and ultimately suppressed competition in the college textbook market to the defendants’ benefit.
“Defendants collectively promoted and implemented Inclusive Access for the specific purpose of destroying competition, limiting supply, and controlling and raising prices for Inclusive Access Materials,” the complaint reads. “Rather than competing and taking market share from one another, Defendants worked toward a common goal of monopolizing the market, which has allowed them to charge students higher prices for Course Materials with no procompetitive justifications for their collusive conduct.”
The full complaint can be read here.
June 15, 2020 – Another Class Action Filed by Student
Another class action lawsuit has been filed in New Jersey by a student who claims the publishers and book retailers in the suits detailed on this page have conspired to raise the price of course materials.
“Defendants’ conspiracy has suppressed competition, reduced student-consumer choice, and raised prices for course materials, resulting in antitrust injury to Plaintiff and the proposed Class in the form of overcharge damages,” the complaint states.
The lawsuit also names trade association Educational Publishers Enforcement Group (EPEG) as an additional defendant.
Read the full complaint here.
May 21, 2020 – College Textbook Publishers, Retailers Face Claims Over Alleged Inclusive Access “Conspiracy”
Barnes & Noble, Cengage Learning, Follett Higher Education Group, McGraw Hill and Pearson Education face another proposed class action lawsuit that details an alleged conspiracy among the companies to monopolize the market for the sale of course materials at Inclusive Access-participating colleges.
The plaintiff, a Miami resident, claims the defendants’ coordinated conduct has allowed the companies to charge higher prices for college course materials “with no legitimate justification,” harming students financially while eliminating competition—and therefore choice—within the market. As a result of the defendants’ conspiracy, the lawsuit alleges, college students have been left with no choice but to buy Inclusive Access materials through their official on-campus bookstores.
Echoing prior complaints, the suit argues the defendants’ Inclusive Access program is far from accessible for students and their professors. From the complaint:
“Inclusive Access does not have any advantages for students. Students pay higher prices, are forced to purchase electronic materials even if they prefer print, and they receive access to online materials with an expiration date as opposed to being able to save course materials for future reference or sell them for money after the class is over. Instructors have to waste class time explaining how to use the online materials, and technical problems or broken Internet connections can result in students losing access to the materials.”
Filed in New Jersey federal court, the antitrust lawsuit can be found here.
Update – April 22, 2020 – New Case Seeks Relief for Students
Another proposed class action has been filed over the alleged Inclusive Access conspiracy, this time on behalf of college and graduate students who the case claims were forced to pay higher prices for course materials as a result of the product’s rollout.
Check out our write-up of the case here.
A group of independent college bookstores alleges in a proposed class action that a new program offered by major players in the textbook industry is part of a broader scheme to eliminate competition and “protect their historical price increases and stranglehold on the market.”
According to the 102-page lawsuit, the three leading higher-education publishers—McGraw-Hill Global Education Holdings, LLC; Pearson Education, Inc.; and Cengage Learning, Inc.—have conspired with retailers Barnes & Noble and Follett to capture the college textbook market by offering a product called “Inclusive Access.”
While the defendants purport that Inclusive Access affords students lower prices and greater access to course materials, the lawsuit claims the program has eliminated the option for many students to buy or rent used textbooks and more cost-effective course materials from other retailers, effectively putting independent bookstores like the plaintiffs out of business.
The Publishers collectively devised and agreed on a plan to force upon the market a product that must be purchased anew from the Publishers by every single student every single semester, thereby eliminating all substitute products, including the significant secondary market for Course Materials.”
All told, the suit claims Inclusive Access has allowed the defendant publishers and retailers to line their pockets “at the expense of financially-vulnerable college students and the Plaintiff Retailers.”
The Secondary Textbook Market
The lawsuit explains that, in the past, students have had many options for buying textbooks, e-textbooks, and other course materials. Retailers would purchase from publishers the course materials required or suggested by educators and then sell the products to students at competitive prices. Independent college bookstores such as the plaintiffs could offer students even lower rates by selling or renting out used textbooks and even buying back the books from students at the end of the semester for re-sale, the suit adds.
As the secondary textbook market flourished, publishers became concerned that more and more students were buying or renting used books instead of paying full price for brand new materials, the case explains. In response to declining revenue caused by this trend, the publisher defendants, the lawsuit says, began to offer “custom” textbooks or course material packages that the plaintiffs claim “hindered or made it impossible to acquire the Course Materials in a used or second-hand format.” Yet even with this workaround, independent, off-campus bookstores could still obtain access to course materials at the same price as other retailers and could continue to compete, the lawsuit explains.
Threatened by the competition, big publishers allegedly began devising a plan to eliminate the secondary textbook market by forcing students to buy new products each semester. The result, according to the case, is a program dubbed “Inclusive Access” that the plaintiffs claim does not live up to its name.
Inclusive Access Is Anything But, Suit Says
According to the complaint, the Inclusive Access program affords every student enrolled in a given course time-limited, online access to the course’s materials, which are provided by the publisher to the university. Each student, the case explains, is automatically charged for Inclusive Access materials, usually in the form of a “course fee” added to their tuition bill, and must visit the university’s exclusive on-campus retailer (either Follett or Barnes & Noble) to have their account “turned on.”
The lawsuit argues that although the content offered through Inclusive Access is “exactly the same” as what the publishers used to sell in print or digital format, the sole difference is an added limitation on access, as students have no way of retaining the materials after the course is over and can only purchase Inclusive Access from one retailer on campus.
According to the case, the publisher defendants have entered into exclusivity agreements with Barnes & Noble and Follett to only sell Inclusive Access through their on-campus stores. Similarly, the two retailers allegedly pay “millions of dollars” for exclusivity arrangements with the universities that allow the companies to operate as the only official on-campus bookstore at each school.
The result of this arrangement is that students have only one option when it comes to purchasing course materials, the case says. Although publishers claim that students can opt out of using Inclusive Access materials, the process to do so, according to the suit, is either nonexistent or “opaque, confusing, and difficult if not impossible to execute.”
Despite its name, the Inclusive Access product serves to limit students’ choices and completely shut out all other retailers besides Follett and Barnes & Noble, the plaintiffs argue.
“In reality, it should be called ‘Exclusive Access’ as there is nothing inclusive about it,” the case scathes. “Designed by collusion and agreement, the product specifically limits access to higher education course materials and is exclusive to the conspiracy’s members, resulting in the elimination of competition, the elimination of access to materials, universities, and students, and higher prices, among other anticompetitive effects.”
Case Claims Inclusive Access Yields Less Competition, Higher Prices
Although the defendants have convinced schools to adopt Inclusive Access by claiming it costs less for students, the lawsuit argues that this is a misrepresentation.
According to the case, publishers have compared the cost of Inclusive Access to their own baseline prices for textbooks instead of market pricing, which the suit says is often much cheaper. In truth, the suit argues, the defendants’ elimination of competition from independent bookstores will only give rise to increased costs for course materials.
Citing a recent study, the complaint claims the destruction of the secondary market will allow publishers to “enjoy profits 42% higher than under current conditions.” From the complaint:
The Publishers and the Defendant Retailers claim (and have in some cases convinced the Universities) that Inclusive Access will make Course Materials more affordable for all. But in fact, Inclusive Access has and will continue to raise prices and limit supply and access. The Defendants are actually implementing a collusive scheme to maintain their stranglehold on the industry while disguising it as reform. If the Defendants are not stopped soon, there will be no players left in the industry to reverse the damage they have caused.”
Who Does the Case Look to Cover?
The lawsuit looks to cover a proposed class of off-campus retailers in the U.S. who sold course materials to students at universities or online at any time since January 1, 2015.
The lawsuit can be read below.
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