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McGraw-Hill, Others Face Second Online Textbook Monopoly Suit

NEW JERSEY (News release) -- Barnes & Noble Education Inc., McGraw-Hill Global Education Holdings LLC, and other leading textbook publishers and retailers were sued for a second time, now in New Jersey federal court, over their alleged scheme to drive independent college bookstores out of the market for online course materials.

The antitrust lawsuit also targets Pearson Education Inc., Cengage Learning Inc., and Follett Higher Education Group Inc. McGraw-Hill, Pearson, and Cengage are textbook publishers--McGraw-Hill and Pearson being two of the "big three"--and Barnes & Noble and Follett are major retailers.

Together, the publishers control at least 80% of the $3 billion nationwide market for college course materials, and the retailers operate more than half of on-campus bookstores, according to the complaint.

It accuses the publishers and retailers of reacting to the threat posed by Amazon, which pressured them into reducing prices, by coming up with a scheme involving online course materials that are effectively rented to students semester by semester.

The increasingly indispensable program, "Inclusive Access," is only available through Barnes & Noble and Follett, according to the complaint.

It provides the same course materials that were previously broadly available, but with rights management technology that effectively eliminates competition, the suit says. And there's allegedly no real way for students to opt out.

"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" that they can't resell, the suit says.

It was filed Thursday in the U.S. District Court for the District of New Jersey as a proposed class action on behalf of students who bought course materials through Inclusive Access.

The suit's claims echo a proposed class action filed in Delaware federal court in January on behalf of independent campus bookstores that say they're being squeezed out of the online textbook market. That case also targets the Educational Publishers Enforcement Group, a trade association.

McGraw-Hill senior communications director Tyler Reed said the company believes the case "has no factual or legal merit."

"We believe Inclusive Access benefits students by making our first-class instructional materials available to them at below competitive rates," Reed said.

Pearson's media relations director, Scott Overland, said it was reviewing the complaint.

"Pearson stands by the Inclusive Access model, which offers real benefits to students, instructors, and institutions," Overland said.

Follett communications vice president Tom Kline called the suit baseless and said the company "strongly disagrees" with its claims.

The suit mischaracterizes Inclusive Access, Kline said. Students are free to opt out, and those who do can get the same materials elsewhere online, at a brick-and-mortar bookstore, or "from any source they choose," he added.

Barnes & Noble and Cengage didn't immediately respond to requests for comment Friday.

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