News Corp is spending $280 million to settle a potential $2-billion lawsuit over in-store promotions
The case was first brought in 2012 (a year before the separation of News Corp and 21st Century Fox) and concerned the company's News Marketing American division. That subsidiary was responsible for creating the coupon inserts found inside newspapers and in-store adverts that appear on aisle displays and on shopping carts in stores like Walmart and Target.
The suit, led by Dial (which markets big brands like Persil and Loctite) and Kraft Heinz Co. alleged News Corp broke anti-trust laws with exclusionary contracts and practices that kept prices for its coupon clients artificially high for years, reaching back as far as 1997.The plaintiffs in the case had been seeking $674.6 million in damages, which Reuters reported could have tripled to more than $2 billion under federal anti-trust law.
The packaged good companies claimed News Marketing America had locked up as much as 90.5% of the market by 2009, Reuters reported, by locking up long-term exclusive contracts. Those contracts saw News Marketing America overcharge clients by as much as 39.6% for in-store promotions, the plaintiffs claimed.
Business Insider previously reported that Dial accused News Marketing America of making large up-front payments to supermarkets to guarantee they would not go to competitors, and that News Marketing America had torn down signs from rivals' advertising clients in supermarkets which had signed such contracts.
In an emailed statement, News Corp said: "News America Marketing has consistently denied any wrongdoing in this case, which involves allegations relating to historical conduct reaching back as far as 1997. We are pleased to have concluded this settlement, which allows us to avoid the expense and uncertainty of further litigating this matter. While we had full confidence in our case, we believe this decision is in the best interests of our company and stockholders."
News Corp has agreed to pay approximately $250 million for the case to be dismissed, subject to court approval. The company has also agreed to pay around $30 million to resolve other related claims.
News Corp has also agreed not to enter exclusive contracts with retailers lasting longer than 2 years, unless retailers specifically request a contract of that kind.The settlement, announced on Monday, came on the day the trial entered the US District Court, Southern District of New York.
Prior to this settlement, News Corp had already lost several rounds of litigation over alleged anti-trust activities in the grocery coupon business, and it has cost the company $656 million in settlements. Those settlements were with Floorgraphics, Valassis and Insignia Systems, all agencies that supply advertising services for coupons and groceries.