Magazine Publishers & Distributors|Accused of Antitrust Conspiracy

     MANHATTAN (CN) – A magazine wholesaler claims industry giants – including The News Group and Time Inc. – are colluding to drive it out of business, and already have destroyed “the only other non-colluding wholesaler in the market,” which went out of business last week. In its federal antitrust complaint, Source Interlink Cos. claims 10 monopolist conspirators have cut it off from People, Sports Illustrated, Time, Entertainment Weekly and other major mags, threatening Source’s 8,000 employees.

     Source sued these defendants: American Media, Bauer Publishing Co., Curtis Circulation Co., Distribution Services Inc., Hachette Filipacchi Media US, Hudson News Co., Kable Distribution Services, The News Group, Time Inc., and Time/Warner Retail Sales & Marketing.
     “if defendants’ schemes are not stopped, Source’s entire business, including its good will, reputation, 8,000-employee work force and customer base, will be destroyed,” the complaint states. “Indeed, defendants already have succeeded in destroying Anderson, the only other non-colluding wholesaler in the market, by also recently cutting it off from all supplies of the publishers’ magazines. Anderson announced on Feb. 7, 2009, that it had no recourse but to cease normal business activities immediately.”
     Source demands a restraining order and injunction “to enjoin defendants from continuing their collusive anti-competitive scheme – in clear violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, and common law – to attack, disparage and destroy Source’s business. Emergency relief is necessary to prevent the imminent irreparable harm – the destruction of Source’s business and the monopolization of the United States wholesale magazine distribution market – that the misconduct of defendants, major magazine publishers, their distributors, and two of the only four major wholesalers in the United States, will, if not restrained, doubtless cause.”
     Source claims the defendants have “cut Source off from People, Sports Illustrated, Entertainment Weekly, Time and other major magazines; spread disparaging rumors about Source and its financial condition to its customers, employees and others in the industry; encouraged Source’s customers to cease doing with it through, among other things, such false rumors; sought to coerce Source into selling its distribution facilities to defendants at fire sale prices; and raided Source’s employees and sought to steal the intellectual property that those employees used to run its business. …
     “Defendants’ indisputable goal is to destroy Source’s business so that defendants – through Hudson and News Group, the two remaining wholesalers – will monopolize the wholesale market and use that monopoly power to shift to retailers and consumers – and away from publishers – the entire financial burden resulting from worsening market conditions and publisher-induced inefficiencies in the distribution system.”
     Source is represented by Marc Kasowitz with Kasowitz, Benson & Torres.

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