Nestle Exec Had "Tirade" Over News America's Pricing; Mixson Says He Always Does That

News America Marketing president Chris Mixson testified in a Michigan state court that Nestle director of promotional services Glenn Barry flew into a "tirade" over the agency's alleged "punitive" pricing. The testimony came in a trial where rival agency Valassis is hoping to prove that News America raised prices on its virtual monopoly of in-store supermarket advertising if clients declined to also use the agency for newspaper coupon ads.

In a video deposition played for a jury, Mixson was asked about a 2005 memo from a meeting where News America's sales chiefs discussed a proposal that had made Nestle unhappy:

Question: It says Nestle: Team presented in-store pricing to Glenn, Jason and Tim. Glenn was very disappointed that the in-store rates were not lower and went into a tirade against NAM's alleged punitive pricing. Matt told Glenn he would relay his comments to management and let him know NAM's responses. So, you were aware that he thought you had engaged in punitive pricing on the in-store side, isn't that right? Answer: Well, you have to do business with Glenn to -- to -- Glenn's idea of punitive pricing may very well not be punitive pricing. So, you know, he is prone to go into tirades. Let's put it that way. Question: But he, at least, said these -- expressed these sentiments, did he not? Answer: I am presuming he did, yeah. That's standard -- that's -- that's par for the course. Glenn is never satisfied with any proposal. And he tries to play both ends against the middle to get the best rates that he can.

Mixson also testified that the pricing ploy didn't always work. One client, Unilever, balked when presented with a proposal for higher in-store ad rates if it did not also take News America's newspaper coupons. Unilever stuck with Valassis instead, Mixson said:

Question: Their FSI business continued with Valassis, did it not? Answer: Yeah, the $8.50 rate wasn't such a good idea. We haven't had any FSI business from them since 2001, if I recall. So, that's not -- I wasn't so smart.

Mixson also testified that Valassis CEO Al Schultz attempted to hire him in 2001 and 2002. While that news likely won't have much legal bearing on the case, it's another item of gossip that Schultz has to explain to his colleagues. The court already heard that Schultz miscalculated by believing that News America would end its price war against Valassis by 2003, and market share would stabilize, thus allowing both companies to raise their prices again. That didn't happen -- News America execs were determined to stamp Valassis out of the newspaper coupon business, according to speeches and memos heard in court.

Answer: He pursued me for employment, I believe, in 2001, maybe -- maybe 2002, maybe -- it may have spanned both time periods. He contacted me multiple times in an effort to hire me. ...
Answer: The initial contact was a -- from a gentleman who had been a facilitator at the FSI Council meetings. I believe he was affiliated with the actual facility that the meeting was held at, and then wanted to know if I would entertain a call. He wouldn't tell me who the company was, but it occurred to me it was probably Valassis since that's -- from references that he made. And then the next call that I got was from Valassis. And then subsequent calls that I received were from Al Schultz.

Separately, the court also heard testimony from News America regional manager Tom Dittrich, who described his interpretation of a series of memos that describe a plan to raise advertising rates for Smuckers by 5 percent per year until News America obtained enough "leverage" to persuade Smuckers to add newspaper coupons to their buy, which would lower the client's overall cost. A 2003 memo said:

... we've raised these rates by 25 percent and it will provide us leverage to close the deal ...

another added:

... we are going to raise in-store rates by 5 percent per year if we don't get a free-standing insert right of first refusal ...

Dittrich avoided specifics, but admitted that it was News America's policy to offer lower prices for greater volumes of business. The trial resumes July 6.

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