Does today's hush-hush meeting of newspaper executives violate antitrust law?

The conventional wisdom debunked.
May 28 2009 7:15 PM

Collusion Course

Does today's hush-hush meeting of newspaper executives violate antitrust law?

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In fact it's the "merriment and diversion" component of meetings that can be the most perilous, says Blecher. The biggest danger isn't what goes on in the official meetings, where lawyers "make sure everything is lily white and virgin pure," he said. But "we don't know what happens when they go out to dinner."

Of course, newspaper execs will never admit that they have collectively decided to start charging. But what if, one by one, over the next few months, each of them "independently" announces a new online subscription plan? Is that enough to send plaintiffs racing to the courthouse seeking treble damages?

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Until recently, the answer would have been yes. An antitrust plaintiff could have slapped together a skeletal complaint saying basically: "Meeting of competitors + discussion of business models + subsequent price increases = evidence of conspiracy," and probably would have survived a motion to dismiss. That would have led to—at the very least—years of expensive and intrusive discovery, depositions of everyone involved, and exchange of millions of pages of sensitive business documents as well as the possibility of a crippling damages award.

But Ewing and Blecher both agree that the Supreme Court's 2007 decision in Bell Atlantic Corp. v. Twombly changed the game by requiring plaintiffs to include more concrete evidence of wrongdoing in their initial pleadings. Bare-bones allegations, with speculation piled on top of inferential leap, no longer cut it, at least in federal court. "Two years ago a meeting among competitors followed by parallel price increases would have led to a class action," says Blecher. "Today, there's at least a 50/50 chance [such allegations] would not meet the Twombly requirements."

But what about the federal government, which can bring both civil and criminal antitrust cases on its own? New Department of Justice antitrust chief Christine Varney has signaled a newly aggressive enforcement role, and the Obama administration has made clear it isn't issuing get-out-of-jail-free cards to the newspaper industry.

Ewing, for one, wouldn't be shocked if DoJ takes an interest in possible newspaper collusion. "There are a lot of people in the Antitrust Division who don't have a whole lot on their plates because their merger work has dried up. The staffing is there, and they have the opportunity to go do something."

But based on what he has heard so far, Ewing doesn't believe DoJ or private plaintiffs have the goods. "The mere fact that companies get together, and then something happens afterwards" isn't illegal, he said. "You need an actual agreement."

Ben Sheffner is an attorney in Los Angeles and a former newspaper reporter. He blogs at Copyrights & Campaigns.

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