Monday, March 7, 2016

News America Marketing Settles Advertiser Antitrust Claims for $280 Million

News America Marketing agreed last week to pay approximately $280 million to settle claims brought by advertising customers for alleged antitrust overcharges.

The settlement was announced on the first day of trial, at which Dial Corporation, Heinz, and a class of over 550 other consumer goods manufacturers sought to recover $674 million in antitrust overcharges, which would have been automatically trebled to over $2 billion under the antitrust laws.

On February 23, News America entered into settlement agreements with a few class members – Johnson & Johnson, General Mills, Dannon, and Reckit Benckiser.  A class-wide settlement on behalf of the remaining class members was announced on February 29 for $244 million, along with injunctive relief that would limit the duration of News America’s exclusive contracts with retailers.  The total payments by News America were reported at $280 million.

The lawsuit accused News America of engaging in exclusive dealing and monopolizing the market for in-store advertising and free-standing inserts (“FSIs”) in violation of Section 1 and 2 of the Sherman Antitrust Act.

Several competitors previously sued News America for some of the same misconduct, and entered into sizeable settlement agreements with News America: $125 million for Insignia Systems, $500 million for Valassis, and $29.5 million for Floorgraphics.

Thursday, January 28, 2016

Advertiser Class Action Against News Corp Related to In-Store Advertising Scheduled for February 29, 2016 Trial

A class action lawsuit filed by Dial Corporation against News Corporation has survived multiple procedural hurdles and appears to be headed for trial on February 29.

On June 18, 2015, Dial won a motion for class certification, permitting Dial's lawsuit to proceed as a class action. The court found that Dial had satisfied the requirements of Federal Rule of Civil Procedure 23, and certified a class of "non-retailer consumer packaged goods firms . . . which have directly purchased in-store promotions from News Corp. . . . and were not subject to mandatory arbitration clauses." 

News Corp. argued that class certification was inappropriate where some class members potentially benefited from decreased competition, as the lack of competition created a larger network of stores in which News Corp.'s customers could place ads. The court found that the question of potential ancillary benefits was subject to common proof at trial. The court also found that, although damages may present individualized issues, common issues predominated, as a key common issue was whether News Corp. is liable under the antitrust laws.

On January 15, 2016, Dial defeated News Corp's motion for summary judgment.  The court's Order denied summary judgment on the Section One exclusive dealing claim under the Sherman Act because, "on the current record, this Court cannot conclude as a matter of law that the procompetitive benefits of the exclusive contracts are outweighed by the harm to competition."

In denying summary judgment on the Section Two monopolization count, the court found that "Plaintiffs present ample evidence that News Corp. intended to use their exclusive retailer contracts . . . to exclude rivals," and that "Plaintiffs present[ed] evidence sufficient to withstand summary judgment that News Corp.'s exclusionary acts may be anticompetitive."

Trial has been scheduled for February 29, 2016.

News Corp. previously entered into settlement agreements with competitors Floorgraphics and Insignia over related conduct, as discussed in previous posts.


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