165 F. Supp. 3d 25
S.D.N.Y.2016Background
- Plaintiffs (a class of consumer packaged goods manufacturers) challenge News Corporation’s sale of third‑party in‑store promotions (ISPs) alleging exclusive dealing and monopolization in the pre‑checkout, at‑shelf ISP market for purchases since April 5, 2008.
- By 2009 News Corp. had an overwhelming share of third‑party ISP revenue (about 90.5%); by 2014 its last major competitor, Valassis, exited the market.
- Plaintiffs identify three contract features as exclusionary: long terms, staggered expiration dates, and guaranteed payments/commissions to retailers (e.g., aggressive bidding to retain Kmart).
- Plaintiffs’ proposed relevant product market is third‑party, pre‑checkout at‑shelf ISP (signage, displays, sampling), supported by industry testimony and an economist’s SSNIP/critical‑loss analysis.
- Defendants moved for summary judgment on antitrust claims (Sherman Act §§1 & 2; Clayton Act §3) and to exclude portions of two experts’ testimony; the court denied summary judgment and denied the Daubert challenges, finding triable issues of fact on exclusivity, monopoly power, product market, and damages causation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Legality of News Corp.’s exclusive retailer contracts (Sherman Act §1 / Clayton §3) | Contracts’ duration, staggering, and guarantees substantially foreclosed rivals (locked up ≥73% of stores; limited annual rebids among top retailers) | Contracts are procompetitive; average terms short (~2.7 years) and many contracts came up for rebid annually | Denied summary judgment — material issues of fact exist on substantial foreclosure and procompetitive justification; jury to decide |
| Monopolization / maintenance of monopoly (Sherman Act §2) | News Corp. has monopoly power (market shares >70%) and used exclusionary conduct (contracts, alleged misconduct toward rivals) to obtain/maintain power | High market share reflects lawful competition; alleged misconduct pre‑dating damages period or not anticompetitive | Denied summary judgment — plaintiff produced sufficient evidence of market power and exclusionary conduct to raise triable issues |
| Relevant product market definition | Third‑party, pre‑checkout at‑shelf ISPs are a distinct market (moment‑of‑truth function); supported by MacKie‑Mason’s SSNIP/critical loss analysis and industry testimony | Market definition too narrow; substitutes exist; methodology (e.g., Lerner index use) flawed | Denied summary judgment — market definition is factual and plaintiffs’ evidence (including SSNIP analysis) suffices for a jury to adopt it |
| Expert testimony (Daubert motions on MacKie‑Mason and Farris) | Experts’ methods (critical‑loss, benchmark damages, industry substitutability criteria) are reliable and relevant | Defendants attack benchmark selection, averaging, omitted controls, and failure to segregate lawful from unlawful conduct | Denied motions to exclude — disputed methodologies go to weight, not admissibility; experts meet Rule 702/Daubert standards |
Key Cases Cited
- Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320 (exclusive dealing unlawful if probable effect substantially lessens competition)
- Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (evidence of intent/repeated exclusionary conduct bears on Section 2 analysis)
- United States v. Grinnell Corp., 384 U.S. 563 (elements of monopolization claim and willful acquisition/maintenance standard)
- Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (price‑cost test for predatory pricing/bidding)
- Dentsply Int’l, Inc. v. United States, 399 F.3d 181 (market share as evidence of monopoly power and exclusive dealing implications)
- ZF Meritor, LLC v. Eaton Corp., 696 F.3d 254 (exclusive dealing can be lawful/procompetitive; price‑based exclusion distinctions)
- Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (damages must flow from anticompetitive conduct; lawful monopoly remains compensable only for injury caused by illicit acts)
- LePage’s Inc. v. 3M, 324 F.3d 141 (discussing damages and difficulty disaggregating lawful and unlawful conduct)