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When was the last time you saw RedPlum (or RetailMeNot Everyday) coupons in an in-store blinkie machine? Years ago? Never?

RetailMeNot Everyday (previously RedPlum) publisher Valassis says it was forced to end a brief foray into the in-store promotions business by News America Marketing, the owner of SmartSource blinkie machines, shopping cart placards and other in-store ads that dominate the retail landscape. Now, a federal judge has ruled that Valassis’ long-standing $1.1 billion antitrust lawsuit against its rival coupon company can proceed, minus one key claim.

If the lawsuit succeeds, you just might start seeing in-store coupons and promotions from a brand other than SmartSource again. If not, SmartSource’s dominance in the space may well become permanent.

News America began offering in-store coupons and ads back in 1997. Valassis didn’t attempt it until years later, in 2010, when it won several contracts with retailers including Supervalu, A&P, Winn-Dixie, Rite Aid and Family Dollar. But within just a few years, it quit the in-store promotions business altogether.

News America says it’s because Valassis simply couldn’t compete. Valassis says it’s because News America wasn’t playing fair. And the judge in the case says it will be up to a jury to decide.

Valassis’ lawsuit centers on two main claims – that News America locked retailers and advertisers into long-term contracts in an attempt to maintain a monopoly, and engaged in “predatory pricing” to undercut competitors. The judge in the case has granted News America’s motion to dismiss the pricing claim, but says it must face Valassis’ other allegations.

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Valassis claims that once it entered the in-store promotions business, News America began undercutting it on price to the point that Valassis could not be profitable. It also says News America entered into long-term contracts with staggered expiration dates, and often renewed them far in advance in order to keep competitors at bay.

News America argues there was nothing untoward about its pricing practices. “Antitrust laws are intended to encourage aggressive, lawful price competition, not discourage it,” the company wrote in its motion to dismiss the case. It blames Valassis’ failure on a number of factors, including that demand for in-store promotions “dropped by 30% industry-wide the year after Valassis entered the business”, that Valassis “adopted a bad business strategy” and “failed to distinguish its products from News America’s, offering only ‘me toos’.”

The judge agreed that “Valassis has not presented sufficient evidence that News engaged in predatory pricing,” and dismissed that portion of the case. But “the Court holds that a reasonable trier of fact could find that Valassis suffered antitrust injury as a result of the other alleged anticompetitive conduct.”

The ruling is a partial victory for Valassis, which beat back most of News America’s motion to dismiss the case outright. But even though News America only succeeded in getting one claim dismissed, the ruling could turn out to be a crucial one, since News America had argued that the entire crux of Valassis’ case was the pricing dispute. News America says its contracting methods were already in place when Valassis entered the business, they didn’t prevent Valassis from successfully winning several contracts of its own, and they therefore had nothing to do with Valassis’ ultimate failure. With the pricing claim tossed, News America can argue that Valassis no longer has much of a case.

The two companies have been facing off in court for the better part of the last dozen years. Valassis first sued News America in 2006, accusing it of using its stranglehold on the in-store promotion business to strong-arm clients into offering coupons in the SmartSource Sunday inserts instead of in Valassis’ inserts. News America ultimately paid $500 million to settle that case. But Valassis sued again in 2013, claiming that News America hadn’t changed its anticompetitive tactics even after the settlement. Only the in-store dispute now remains to be decided.

Valassis claims its competitor “utilized unethical, unfair and anticompetitive strategies to prevent Valassis from gaining a foothold in the market for in-store advertising and promotions.” News America counters that businesses like Valassis’ “fail all the time as a result of lawful competition.” It could now be up to a jury to decide the types of coupons and ads you may be seeing in store, once this long-running dispute finally comes to an end.

Image source: News America Marketing

2 Comments

  1. Lillian Mcclinton says:

    No. think about this. He took over the market and lower the value of the coupons to .50 which is not helping us. Also as the prices of food goes up, the value of the coupon should compensate. They have a winning situation. Is very rare to see food coupons for 1.00 or 1.50 on a name brand product. We see 1.00 on 4. Then each item is over .65 cents. Some store has discontinue the ability to match two coupons for one item. They tell you that the coupon is not working which is not true. Their computer system was updated to denied a second coupon for the item.

  2. Honest Couponer says:

    As the late Rodney King would say: “Can’t we all just get along?”

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