Clients Overcharged by News America Listed in Court; Sara Lee: NAM "Is Raping Us and Enjoying It"

Last Updated Aug 17, 2009 2:09 PM EDT

Valassis has filed a "statement of material facts" in Michigan federal court that details eight News America Marketing clients who were charged higher prices because they declined to cooperate with NAM's supermarket advertising monopoly.

It also lists more than a dozen clients who were threatened wth higher prices if they did not combine their newspaper coupon buys with their in-store supermarket advertising. The statement does not make it clear whether the companies who were threatened capitulated or not, but the implication is that some of them did.

Although many clients were named during the eight-week state court trial that resulted in a $300 million verdict favoring Valassis, the testimony was so disjointed and confusing that it was hard to keep track of what alleged damage was done to which clients.

In response to a NAM motion to dismiss a similar case in federal court, Valassis created an index of damage to NAM clients based on testimony in the state court trial. It is, essentially, NAM's victim list, and will be crucial reading for anyone in the POP or coupon businesses. In addition to naming names, it also contains details on client pricing, CPMs and NAM's negotiating tactics. Want to know if your company got a good deal or not with either NAM or Valassis? This is the document you will need to read. Among those named as paying more than they needed to because they refused to give all their newspaper coupon business to NAM: Sara Lee, Hormel, S.C Johnson, Novartis, Heinz, Cadbury, Georgia-Pacific, Pactiv and Kellogg.

Kellogg's prices doubled under the regime, the document states.

The companies threatened include: Conagra, Pepsi, Smuckers, DelMonte, Kraft, Coca-Cola, Clorox, Kimberly-Clark, GlaxoSmithKline, Novartis, Pfizer, Reckitt Benckiser, Dial, Quaker Oats, Church & Dwight, Unilever, Tyson, Hain Celestial, T. Marzetti, and Campbell's Soup.

In addition to listing clients and the needless price increases they paid, the document also quotes from internal emails, memos and witnesses at the trial. There are too many gems to summarize here, but this has got to be one of the best: It comes from NAM's negotiations with Debra Lucidi (pictured), a former POP buyer for Sara Lee (now at Wrigley). The context is that Sara Lee's in-store volume with NAM increased from $500,000 to $4 million but NAM increased Sara Lee's rates by 45 percent because Sara Lee did not want to give NAM all its coupon business. (Clients usually get discounts for volume, not increases.) The document appears to be quoting an email exchange describing Lucidi's reaction to the situation:
Debra Lucidi, Former Director of Business Services Procurement, Sara Lee ("Was so pissed at them when they raised rates because they did not keep FSI. Told them she does not appreciate tactics; this is not the way we work with suppliers. Is intolerable and unforgivable Cut in-store as a result. Was just livid with them. This is the way they have been across the board. Adding insult to injury, have had huge issues related to accuracy of placement of in-store vehicles. Feels like they are raping us and they enjoy it and there is no desire to work with us in partnership to grow our business.")
News America's motion to dismiss was filed months ago under seal, and is thus not available. NAM is appealing the state court ruling and fighting the federal court case.

Comments

CBSN Live

pop-out
Live Video

Market Data

Watch CBSN Live

Watch CBS News anytime, anywhere with the new 24/7 digital news network. Stream CBSN live or on demand for FREE on your TV, computer, tablet, or smartphone.

Market News

Stock Watchlist