Attorney: PRC only ‘speculated’ impact of NSA’s on competitors

October 1, 2013

By Tonda F. Rush

CEO and General Counsel | NNA

WASHINGTON—The impact upon fair competition from discounted postage rates for Valassis Direct Mail Inc., was analyzed only through “armchair speculation,” by the Postal Regulatory Commission, an attorney for the National Newspaper Association told the U.S. Court of Appeals for the DC Circuit in September.

Steven Douse, partner with the Nashville law firm King & Ballow, represented NNA in its appeal of the PRC’s decision last year to grant 22 percent to 34 percent postage discounts to Valassis so it could partner with the Postal Service to pull advertising inserts out of newspapers. The PRC approved the discounts in a Negotiated Service Agreement between USPS and Valassis. The Newspaper Association of America promptly appealed. NNA joined the appeal.

The PRC did not sufficiently understand its duty to examine the effects upon competitors when it approved the deal, according to Robert Long of Covington and Burling, attorney for NAA. Douse told the court that the PRC’s grasp of the antitrust laws was like someone trying to drive in unfamiliar territory without a map or a GPS: they are guaranteed to get lost. That is what happened to the commission, which rarely considers antitrust matters, in its review of the NSA, Douse said.

The NSA was intended to produce a new weekend direct mail product for Valassis that it was to name “Spree.” The product has not been rolled out into the 10 or so markets Valassis said it intended to target, but Long told the court that the impact of the competitive threat had harmed newspapers nonetheless.

Senior Judge A. Raymond Randolph, sitting as part of a three-judge panel, asked the PRC’s attorney, Jeffrey Clair, whether the commission should have analyzed both the effects of the deal upon competitors of USPS as well as the competitors of Valassis. Clair replied that the commission determined that the discounted postage was not below USPS costs and therefore was not predatory. He did not address whether the PRC had examined the effects upon the two different marketplaces: the distribution markets as well as the advertising markets.

An opinion from the court is expected either late 2013 or early 2014.

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