Wal-Mart May Pay $40 Million To Silence Lawsuit Over Netflix Pact

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Wal-Mart may be denying that its not-so-secret 2005 pact with Netflix was a way to illegally divide up the DVD market, but someone should tell the retailer that agreeing to pay anywhere between $29 million and $40 million to make the accusations go away isn’t the best way to convince people of innocence.

Wal-Mart will offer either cash or a Walmart Gift Card to everyone who has signed up for a Netflix subscription since 2005 if its settlement as part of a class action lawsuit against the company and Netflix is approved by the judge overseeing the case. The lawsuit stems from a 2005 agreement between Wal-Mart and Netflix that Wal-Mart would stop renting DVDs online and Netflix wouldn’t offer DVDs for sale. As a result, the lawsuit alleges, Netflix subscribers have been paying unfair subscription costs due to lack of serious competition.

Netflix, meanwhile, continues to argue that the suit “has no merit and we’re going to continue to defend it.” A trial is expected to begin in January 2012.

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