Monday, April 29, 2013

Advertisers Expanding Case Against News America to Become a Class Action


An antitrust lawsuit brought by Dial Corporation and Heinz against News America Marketing is being expanded to include as Plaintiffs a proposed class of all domestic entities that purchased in-store promotions from News America.

Last December, I reported that News America Marketing had been sued for monopolization and tying by Dial Corporation.  Heinz joined the suit as a Plaintiff shortly thereafter.  Dial and Heinz alleged that News America engaged in a variety of exclusionary practices that allowed News America to create a monopoly and artificially inflate its prices.  Plaintiffs’ allegations about News America’s conduct included a number of allegations that were the subject of previous lawsuits against News America brought by its main in-store competitors -- Floorgraphics, Valassis, and Insignia -- that resulted in aggregate settlements totaling over $650 million.

For example, Plaintiffs allege that News America hacked into Floorgraphics’ password-protected computer system, made false disparaging statements about its competitors, improperly removed competitors’ ads, secured long-term deals with retailers and staggered the expiration dates to prevent any competitor from obtaining a critical mass of retailer contracts, overpaid for contracts with retailers to shut out its competitors, and unlawfully bundled in-store advertising with FSIs.  Using these exclusionary tactics, News America allegedly obtained an 84% market share of the in-store advertising market by 2009.  (Given the anti-competitive components of News America’s settlements of the competitor lawsuits, that share has presumably grown).

Last week, Plaintiffs sought permission to file a proposed Second Amended Complaint that expands the case to include class allegations (as predicted), and to add Foster Poultry Farms as a proposed class representative.  The proposed class is defined to include domestic entities that have “directly purchased in-store promotion services from News America” within the past four years.

News America is arguing that the relevant product market is not limited to third-party advertising in retail stores, but should be defined much more broadly to include other forms of advertising, including advertising placed by retailers.

News America counter-sued Dial and Heniz in January for allegedly breaching a forum selection clause in the parties’ contracts requiring that they litigate in New York, rather than in Michigan where the advertisers’ suit is pending.  News America is also seeking declaratory judgment in the New York suit that it did not engage in monopolization or tying.
 
If your rights may be affected by this case, please feel free to contact me or my firm for advice.
 

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