Valassis Uses News America's Own Clients Against It in Trial; Feel the Wrath of Sara Lee!

Last Updated Jun 12, 2009 12:56 PM EDT

Account reps for News America Marketing could face some uncomfortable meetings and phone calls with their clients over the next few weeks, because dozens of their clients' names have been dragged into the ongoing Michigan state court trial in which the agency is accused of forcing its customers to take anti-competitive bundled deals on in-store promos and newspaper coupons.

The News America clients named on just the first day of the trial were:

Procter & Gamble, Unilever, Dial, S.C. Johnson, Georgia-Pacific, Campbells, Sara Lee, Pepsi, Church & Dwight, Johnson Family Co., Kraft, Coca-Cola, Conagra, Cadbury, Ocean Spray, Clorox, Novartis, Pfizer, Tropicana and Reckitt-Benckiser. Valassis, the plaintiff in the case, claims that the bundled deals banned clients from News America's near monopoly on supermarket in-store marketing unless they also bought into News America's coupon business. By subsidizing its coupon deals with its in-store monopoly, Valassis has been driven out of newspaper coupons, Valassis claims. Valassis also claims that clients who chose it for newspaper coupons were threatened with punitive rates if they also wanted in-store services from News America.

The trial is subject to a de facto media blackout and thus, BNET's coverage of it is delayed by several days as we rely on sources to relay what's going on. But in Valassis' opening statements it became clear that the company intends to use News America's own clients against it in order to make its case. Some of those clients seem to be annoyed that being required to take the bundled deal when they only want the in-store stuff.

Former Sara Lee director of business development Debra Lucidi is shaping up to be Valassis' star witness. She asked News America to give her a proposal on in-store marketing but NAM submitted a joint coupon/in-store bid instead, and refused to alter it. If Sara Lee declined the offer, the implication was that News America would either not let them advertise in-store or charge exhorbitant rates. She told a deposition:
Answer: News America pretty much had the market captured on that. I believe they still do. We didn't really have options.

Question: Do you believe that News America imposed an economic penalty on the price of in-store promotions because Sara Lee awarded the FSI contract to Valassis?

Answer: I believe they attempted to and unless something changed, yes, they would have done that.

Question: And they did do it in 2004, right?

Answer: Yes.

Question: If someone from News America were to testify that News America never threatened to charge a higher in-store price, if the company gave its FSI business to Valassis, that would not be an accurate statement in your experience?

Answer: Absolutely incorrect and there is documentation that shows that.
Lucidi said she brought up the unfair pricing issue with News America but "they never seemed to care that much" because they regarded it as their business model.

The jury was also promised deposition testimony from Christine Hall, a former Pepsi employee. She said:
I felt that Valassis -- that News America had somewhat of a monopoly on in-store so they were pretty much forced to go with them in-store and leveraging their in-store to get FSI, I did not think was fair and I didn't like it.
Also on the list, the manager of consumer promotions from Heinz:
Question: Would giving News America 100 percent of the prepaid insert business [be] a deviation from what your preference and practice would have been?

Answer: Yes.
More to come. Image by Flickr user bloomsberries, CC.