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June 26, 2009 10:08 AM

PepsiCo Exec: News America Charged an Extra $18 Mil. If We Didn't Take Bundled Deal

By
Jim Edwards
(MoneyWatch)  Former Pepsico executive Christine Hall testified that she believed News America Marketing's policy of pricing its in-store supermarket ads as a bundle with its newspaper coupons was ethically problematic. She told a Michigan state court that News America's bundled deal represented an $18 million price discount over taking supermarket ads alone.

In the case, Valassis is alleging News America Marketing's bundled deals made it prohibitively expensive to use any other company for newspaper coupons if clients also wanted access to News America supermarkets.

Hall (pictured) oversaw a team that did the planning and execution of all promotions and all packaging for Quaker, Tropicana and Gatorade, until she was laid off in October 2008. She was asked in court about News America's bundled deals:
Question: And can you tell the jury what your reaction was to that tactic? Answer: I did not think it was right. I viewed free-standing inserts and in-store as being very, very different. I felt that Valassis -- or that News America had somewhat of monopoly on in-store so you were pretty much forced to go with them in-store. Leveraging their in-store to get FSI I did not think was fair and I didn't like it. Question: Did you have any opinion on whether it aligned with your business ethics? Answer: No, it did not. And I told them that.
Hall had lots of nice things to say about Valassis -- not surprising, as she's Valassis' witness. Her dealings with News America were more slippery, she said:
They'd set a price and then all of a sudden all these hidden things would start coming in throughout the program. So I just never believed what they were telling me. I never felt like they were being totally up front.
At first, News America didn't seem to care when Hall complained about News America's tactics, she said. But, Hall, said, the company begun to uncouple its deals in 2008 (well after litigation against it was under way):
Question: What was their reaction, News America's reaction, to your expressed displeasure with their tactics? Answer: In the beginning, it just -- they just listened and basically thank you for your feedback kind of thing. Most recently, which would have been in the past year I want to say, they said that they had changed the way they were doing things and were no longer linking in-store with FSI and that they were getting in-store discounts by bundling in-store programs together. Question: All connected to in-store -- Answer: All connected to in-store which I said was good. I was glad to hear that.
The trial continues. BNET's coverage of the case is delayed by several days because of this.

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