Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Consumer product firms move for class certification of monopoly claims on in-store advertising services, (Aug 13, 2014)

By John W. Arden, J.D., LL.M.

Consumer product companies—charging News Corporation with monopolizing the market for third-party, in-store promotions by entering into anticompetitive contracts with retailers—have made a motion for class certification in the federal district court in New York City (The Dial Corporation v. News Corporation, August 11, 2014).

The consumer product firms—including The Dial Corporation, H.J. Heinz Co., Foster Poultry Farms, and Smithfield Foods, Inc.—proposed a class of persons who have directly purchased in-store promotions from News Corporation on or after April 5, 2008 and have not purchased these services under contracts with mandatory arbitration clauses.

The plaintiffs brought antitrust claims under Sections 1 and 2 of the Sherman Act and Section 3 of the Clayton Act. According to the motion, the action satisfied the prerequisites for the maintenance of a class action by (1) consisting of at least a thousand geographically diverse members, making joinder of all members impracticable; (2) involving numerous questions of law and fact arising from the pattern of anticompetitive conduct common to class members; (3) alleging claims typical of members of the class and fairly encompassing the claims of the members of the class; and (4) providing class representatives and counsel that will fairly and adequately protect the interests of the members of the class.

Moreover, the action met requirements of Rule 23(b)(3) by featuring common questions of law and fact that predominate over any question affecting only individual members and providing a superior method for the fair and efficient resolution of the controversy, the companies asserted. News Corporation was alleged to act or refused to act on grounds generally applicable to the class, making final injunctive or declaratory relief appropriate for the class as a whole.

The memorandum of law, filed with the motion, maintained that News Corporation engaged in “a swath of anticompetitive tactics to obtain and maintain an illegal monopoly in the market for third party, in-store promotions and extract monopoly prices from its customers,” that is, the consumer products companies pursuing this action. The defendants’ “staggered, long-term, cash guaranteed, exclusive agreements with retailers locked up the primary channels for placement of third party in-store promotions and forestalled any rival from becoming a meaningful competitive check on News’s pricing.”

The consumer product companies argued that the market for third-party in-store promotions was discrete, well defined, and unusually effective at incentivizing consumers to buy products and that News Corporation unlawfully obtained and maintained monopoly power over the third-party, in-store promotions through exclusive retailer contracts. In addition to moving for class certification, the companies requested appointment of class counsel.

The case is 1:13-cv-06802-WHP.

Attorneys: Lewis T. LeClair (McKool Smith, PC); R. Stephen Berry (Berry Law PLLC); Steven F. Benz (Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C.); Daniel B. Goldman (Paul Hastings LLP); and James T. Southwick (Susman Godfrey L.L.P.)

Companies: The Dial Corporation; Henkel Consumer Goods Inc.; H.J. Heinz Co.; Foster Poultry Farms; Smithfield Foods, Inc.; HP Hood L.L.C.; Bef Foods, Inc.; Spectrum Brands, Inc.; News Corporation; News America Inc.; News America Marketing FSI LLC; News America Marketing In-Store Services LLC

News: Antitrust