Applied Economic Consultants

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Case Studies

Valassis v. News America

Antitrust liability for plaintiff

applEcon presented trial and deposition testimony that made a comprehensive, clear, and convincing case for liability for anticompetitive conduct, tortious interference, and unfair business practices, helping Valassis to a $300 million jury-decided victory at the first of three scheduled trials and to a final settlement of $500 million prior to trial on applEcon's home ground, antitrust liability.

Valassis, a producer of coupon books distributed in Sunday newspapers nationwide, filed suit alleging tortious interference with business expectations and unfair competition in Michigan Circuit Court, and attempted monopolization, tying, and predatory pricing in Federal and California jurisdictions. The defendant, News America (NAM), is the sole other supplier of coupon books in competition with Valassis, and the dominant supplier of in-store promotions, such as grocery shelf signs and on-shelf coupon dispensers. Valassis alleged that NAM used its market power in the in-store promotions market to harm competition in the market for coupon books, conduct illegal under both Michigan tort and federal antitrust law. applEcon provided expert economic analysis and deposition and jury trial testimony for Valassis at the state Circuit Court trial, which culminated in a jury award of $300 million in damages to Valassis. As the antitrust trial was about to begin, on claims similar to those applEcon has demonstrated its ability to communicate to a jury, News agreed to settle all claims for $500 million and to be bound by an injunction proscribing its conduct.

The challenges in this case corresponded to applEcon's strengths, calling for detailed analyses of dozens of offers by NAM to consumer product companies, no two alike; the definition of two markets, neither with obvious boundaries; handling multiple, large datasets from different firms; and economic insight in a complex and evolving area of the law related to bundling. applEcon established a conservative protocol for analyzing offers that implemented a legal standard likely to be robust under review, and prepared a thoroughly-documented case that NAM made offers that violated the standard to a significant fraction of the market. We modeled both firms' costs, and demonstrated the imminence of Valassis's decision to exit the market and Nam’s likely recoupment of its investment in predation, if it were allowed to monopolize the coupon book market.

At applEcon, we believe that we have earned our successful record by our mastery of relevant case-specific facts and issues, and by communicating them simply and effectively to laypersons. The Valassis case presented an opportunity to bring applEcon's strengths to bear, benefiting both our client and fair competition in general.