Valassis to Face off in Court Against News America Marketing

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By: Jim Edwards

A major drama in the in-store and junk-mail business should come to a head later this year as coupon giant Valassis faces off against Rupert Murdoch’s News America Marketing in three different courtrooms.

In the cases, Valassis has accused NAM of spreading false statements about Valassis to its clients, using anti-competitive tactics and restrictive contracts in an attempt to create a monopoly over the coupon and supermarket business. NAM’s network includes Safeway and Kroger.

The details have been colorful, with accusations of computer hacking and the use of the baseball-bat beating scene from “The Untouchables” as a sales-force motivator.

Also on the line is the professional reputation of NAM CEO Paul Carlucci, who is also the publisher of the New York Post. He is accused of saying “I will destroy you!” to another in-store agency CEO who declined his offer of a buyout over lunch at a Chinese restaurant. (The target agency, Floorgraphics Inc., later capitulated following a lawsuit.)

Trials in Michigan and California state courts are scheduled for May and August, respectively, and a federal court trial date is expected later this year.

Valassis, whose clients include Arby’s, Kellogg and Nivea, has spent between $1.8 and $4.5 million per quarter on legal bills in the fight, and is seeking $1.5 billion in damages.

A fourth direct agency, Insignia Systems (whose clients include Barilla, Kellogg and McNeil Consumer Healthcare), has spent between $1 million and $4 million a year on legal bills in its fight against NAM. That case ? which alleges similar claims as Valassis’ ? is in the discovery phase.

Looking on will be NAM’s clients, who learned in the Floorgraphics lawsuit that NAM had allegedly charged some of them for ads that never appeared, because the supermarkets they were supposedly placed in were bankrupt.

NAM denies all claims against it, and has fought the cases with all its might, going so far as to expose anonymous Valassis’ executives use of bogus online “sock puppet” identities” to criticize NAM on coupon-enthusiast bulletin boards.

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