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News Corp must face Dial, Heinz ad monopoly class action - judge

Reuters
A woman holds different sizes of tomato ketchups at a store selling small-sized products for single-person households at a department store in this photo illustration taken in Seoul October 28, 2014. REUTERS/Kim Hong-Ji

By Jonathan Stempel

(Reuters) - News Corp (NasdaqGS:NWSA - News) has been ordered by a Manhattan federal judge to face a class action lawsuit accusing it of monopolizing the market for in-store promotions at some 52,500 retail stores across the United States.

U.S. District Judge William Pauley said consumer packaged goods companies such as Dial Corp, H.J. Heinz Co [HJHC.UL] and Smithfield Foods Inc [SFII.UL] may pursue their antitrust claims as a group, potentially boosting overall damages.

News Corp spokeswoman Laura Adams said the company, which is controlled by Rupert Murdoch, is reviewing Thursday's decision.

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The litigation is part of a long-running battle over News Corp's marketing operations.

In January 2010, the New York-based company agreed to pay $500 million to end rival Valassis Communications Inc's [VCII.UL] antitrust lawsuit over the newspaper coupon market.

News Corp has an estimated 80 percent of the U.S. market for in-store promotion services, where it acts as a middleman to help companies promote goods through coupon dispensers, electronic signs, end-of-aisle displays and shopping cart ads.

The plaintiffs said News Corp has monopolized this market since 2004 by locking up exclusive long-term contracts with retailers.

They said this anticompetitive conduct has forced them to pay artificially high prices to promote such goods as Dial-brand soap, Heinz ketchup and Smithfield's Eckrich hot dogs.

In certifying a class action from April 5, 2008, to the present, Pauley rejected News Corp's arguments that damages would be too hard to measure.

He noted that the plaintiffs' damages expert estimated overcharges of 31 percent to 43 percent in the 2008-13 period.

The judge also said "central questions regarding liability" for alleged supra-competitive prices were "susceptible to common proof" that could be addressed in a single trial.

John Briody, a lawyer for the plaintiffs, declined to comment.

Pauley said Valassis is News Corp's only remaining competitor in the in-store promotion services market.

Valassis has also accused News Corp of unfairly dominating that market, and is suing the company in Detroit federal court.

Heinz is owned by Warren Buffett's Berkshire Hathaway Inc (BRKa.N) and Brazil's 3G Capital, and plans to merge as soon as next month with Kraft Foods Group Inc (NasdaqGS:KRFT - News).

Smithfield was bought in 2013 by the Chinese company now called WH Group Ltd (HKSE:0288.HK - News). Dial is a unit of Germany's Henkel & Co (HNKG_p.DE).

The case is Dial Corp et al v. News Corp et al, U.S. District Court, Southern District of New York, No. 13-06802.