To settle allegations that the Internet video subscription service Netflix and Wal-Mart illegally conspired to inflate prices to rent and buy DVDs, Wal-Mart has agreed to pay $27.5 million to more than 25 million current and former Netflix subscribers, according to the Associated Press (News - Alert). Most people covered by the agreement were notified when the details were sent in mass e-mails late Tuesday, wrote AP reporter Michael Liedtke. As per this report, a federal court judge gave tentative approval of the settlement in early September.

A final hearing on the settlement's merits is scheduled March 14 before U.S. District Judge Phyllis Hamilton in Oakland, Calif. Wal-Mart Stores Inc., the world's largest retailer, is paying for the settlement without acknowledging any wrongdoing, wrote Liedtke.

 The AP report indicates that the proceeds will be offered in cash or Wal-Mart gift cards to Netflix subscribers who subscribed anytime between May 19, 2005 and September 2, 2011. However, those who do not want to be covered by this settlement or be represented in the case against Netflix must notify the court by February 14, Liedtke wrote.

“The individual amounts paid to Netflix's current and former subscribers will depend on how many people decide not to accept the settlement and how much money is left over after attorney fees,” wrote Liedtke.

According to the AP report, the lawyers representing Netflix subscribers are asking for 25 percent, or nearly $6.9 million, of the total settlement, plus as much as $1.7 million to cover their costs. “That means less than $19 million could be left to pay the people covered by that settlement. Assuming everyone eligible participates, it would amount to less than $1 per person,” wrote Liedtke.

As per AP’s explanation, this case resulted from Wal-Mart's decision to abandon the DVD-by-mail rental market in May 2005 and turn its subscribers over to Netflix, which had about 3 million customers at that time. “Netflix, in turn, agreed to promote Wal-Mart as a place to buy DVDs. Wal-Mart's retreat from DVD rentals represented a David-versus-Goliath victory for Netflix,” Liedtke wrote.