Valassis claims News America violates antitrust regulations
March 28, 2006
Valassis Communications Inc. filed suit in federal court Wednesday alleging antitrust practices by its No. 1 rival, News America Marketing Group of New York City.
The suit alleges that News America threatened to raise prices to manufacturers on in-store coupons and advertising unless they also agreed to exclusive contracts to use News America for newspaper-insert coupons.
Livonia-based Valassis markets coupon inserts for Sunday newspapers. The two companies dominate the manufacturers-coupon business: Valassis controls 47 percent of the market; News America has 53 percent.
Valassis claims it is illegal for News America to use pricing on one line of the coupon business to get customers to agree to contracts on the other line.
Valassis also claims News America has offered contracts for the freestanding newspaper inserts at below cost, ``with the intent of driving Valassis, their only significant competitor in the FSI market, out of the FSI market.''
In November 2004, Valassis (NYSE: VCI) disclosed that the Federal Trade Commission was investigating it for ``unfair methods of competition or unfair acts and practices.'' That investigation is ongoing, said Sherry Lauderback, Valassis' director of investor relations and communications.
Lauderback said the company would have no comment on the News America suit. The suit seeks tripling of damages, which Valassis claims already exceed $1.5 billion.
The brief in the case begins with a description of a sales meeting led by Paul Carlucci, News America's chairman and CEO. That description was used as the opening of a profile of News America on Forbes.com.
Carlucci showed a clip from the film ``The Untouchables'' where Al Capone beats a man to death with a baseball bat. ``This message is obvious and irrefutable,'' said the Valassis suit. ``The News' employees will operate in the business world with unbridled aggression.
``The selected scene is a perfect metaphor for the business practices both expected and in fact being employed by the News' defendants.''
Laura Richards, News America's vice president of corporate communications, said Friday the company would have no comment.
The suit has been assigned to Judge John Feikens of the U.S. District Court for the Eastern District of Michigan in Detroit.
Also representing the plaintiff are the Law Offices of David Mendelson P.C., Arnold & Porter L.L.P. of Washington and Miller Canfield Paddock & Stone plc of Detroit.
News America is owned by News Corp. (NYSE: NWS), Rupert Murdoch's New York-based media conglomerate.
According to Forbes.com, News America recorded $1.1 billion in sales for the year that ended June 30, up 9 percent, and is one of the most profitable pieces of Murdoch's $24 billion media conglomerate.
In October 2004, another in-store marketer, New Jersey-based Floorgraphics Inc., filed a federal suit in New Jersey alleging that News America offered to pay retailers not to do business with the company.
In September 2004, an antitrust suit against News America was filed by Insignia Systems Inc., a Minnesota-based creator of in-store marketing displays. The suit was amended and refiled last September.
The suit alleges that News America threatened to raise prices to manufacturers on in-store coupons and advertising unless they also agreed to exclusive contracts to use News America for newspaper-insert coupons.
Livonia-based Valassis markets coupon inserts for Sunday newspapers. The two companies dominate the manufacturers-coupon business: Valassis controls 47 percent of the market; News America has 53 percent.
Valassis claims it is illegal for News America to use pricing on one line of the coupon business to get customers to agree to contracts on the other line.
Valassis also claims News America has offered contracts for the freestanding newspaper inserts at below cost, ``with the intent of driving Valassis, their only significant competitor in the FSI market, out of the FSI market.''
In November 2004, Valassis (NYSE: VCI) disclosed that the Federal Trade Commission was investigating it for ``unfair methods of competition or unfair acts and practices.'' That investigation is ongoing, said Sherry Lauderback, Valassis' director of investor relations and communications.
Lauderback said the company would have no comment on the News America suit. The suit seeks tripling of damages, which Valassis claims already exceed $1.5 billion.
The brief in the case begins with a description of a sales meeting led by Paul Carlucci, News America's chairman and CEO. That description was used as the opening of a profile of News America on Forbes.com.
Carlucci showed a clip from the film ``The Untouchables'' where Al Capone beats a man to death with a baseball bat. ``This message is obvious and irrefutable,'' said the Valassis suit. ``The News' employees will operate in the business world with unbridled aggression.
``The selected scene is a perfect metaphor for the business practices both expected and in fact being employed by the News' defendants.''
Laura Richards, News America's vice president of corporate communications, said Friday the company would have no comment.
The suit has been assigned to Judge John Feikens of the U.S. District Court for the Eastern District of Michigan in Detroit.
Also representing the plaintiff are the Law Offices of David Mendelson P.C., Arnold & Porter L.L.P. of Washington and Miller Canfield Paddock & Stone plc of Detroit.
News America is owned by News Corp. (NYSE: NWS), Rupert Murdoch's New York-based media conglomerate.
According to Forbes.com, News America recorded $1.1 billion in sales for the year that ended June 30, up 9 percent, and is one of the most profitable pieces of Murdoch's $24 billion media conglomerate.
In October 2004, another in-store marketer, New Jersey-based Floorgraphics Inc., filed a federal suit in New Jersey alleging that News America offered to pay retailers not to do business with the company.
In September 2004, an antitrust suit against News America was filed by Insignia Systems Inc., a Minnesota-based creator of in-store marketing displays. The suit was amended and refiled last September.