Latest News Corp. Hacking Suit Alleges Execs Used Al Capone As A Role Model

Although News Corp.'s latest hacking scandal doesn't involve breaking into the voicemails of deceased school girls or 9/11 victims' relatives, it does allege the corporation used hacking to gain a marketing edge in 40,000 retail stores in the United States.

Courthouse News Service reports that Dial Soaps sued Rupert Murdoch's News Corp. and its News America Marketing unit, alleging it gained an unfair monopoly over in-store promotions in tens of thousands of retail stores and the free-standing newspaper inserts that touted them.

This monopoly was allegedly done by hacking " customer lists and other marketing materials to solicit its accounts and lock them into News long-term and exclusive contracts."

The suit, excerpted by Courthouse News Service, begins:

"In two distinct relevant markets the multifaceted and pervasive exclusionary strategies of defendants ('News') over twenty years have violated the antitrust laws of the United States. News has suppressed competitive promotion of a massive number of consumer goods in forty thousand retail stores, and scores of newspapers nationwide, to acquire and maintain two unlawful monopolies and earn large monopoly profits at the expense of its purchasers."

A particularly colorful detail in the lawsuit depicts a board meeting in which top execs -- such as former New York Post publisher and NAM boss Paul Carlucci -- allegedly used Al Capone's tactics as a model (emphasis ours):

Its unlawful purposes could not be more transparent. For example, in a sales meeting Paul Carlucci, then News America Inc.'s Chief Operating Officer, ... illustrated News' desire for the ultimate in competitive suppression with a video from 'The Untouchables,' in which Al Capone serves as a sales role model as he cudgels a competitive enemy to death with a baseball bat. Mr. Carlucci has been equally blunt with the press as to News' exclusionary purposes, vowing to 'destroy' his competitors as a 'man who has to have it all.'

Mr. Carlucci threatened to fire any News employee ('concerned about doing the right thing') who did not support exclusive control by News of shelves in retail accounts.

The lawsuit also accuses News Corp. of:

Using large cash guarantees unjustified by potential in-store promotional revenues to derail competitor contracts with retailers, a practice expressly designed to exclude competitors from these chains; ...

Defacing competitors' in-store advertisements and then disparaging the quality of the defaced promotions to the retail chains.

Dial's lawsuit also cited News Corp's past cases of breaking competitors' "floor advertising (the late Floorgraphics' Floortalk) or shelf signs with brand price messaging (Insignia's POPSign)."

In 2009, before the British hacking scandal came to light, Floorgraphics (a company that placed ads on supermarket floors) alleged News America "illegally accessed plaintiff’s computer system and obtained proprietary information” and “disseminated false, misleading and malicious information about the plaintiff.” The case settled for $29.5 million.

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