Wednesday, May 30, 2007

Justice Department Files Suit to Restore Newspaper Competition in West Virginia

This posting was written by Jeffrey May, editor of CCH Trade Regulation Reporter.

The Department of Justice filed an antitrust lawsuit against newspaper publishers Daily Gazette Company and MediaNews Group, Inc., aiming to undo a series of May 2004 transactions that resulted in the acquisition by Daily Gazette of MediaNews’ Daily Mail, its only competitor in the Charleston, West Virginia, daily newspaper market.

According to the Justice Department’s May 22 complaint, Daily Gazette—owner and publisher of The Charleston Gazette—bought the Daily Mail from MediaNews with the purpose and intent of shutting down the Daily Mail.

Daily Gazette actually had begun using its new control over the Daily Mail to initiate such a termination, until it suspended those actions that December in the face of a Justice Department investigation into the transactions, according to the complaint.

The suit seeks an order requiring the parties to restore the competition between them that existed prior to May 2004.

Until 2004, the Justice Department claimed, the Daily Gazette and MediaNews operated within a joint operating agreement (JOA) and each owned a 50 percent interested in an entity called “Charleston Newspapers,” which performed many of the commercial functions of The Charleston Gazette and the Daily Mail. The Newspaper Preservation Act of 1970 expressly permits the joint operation of commercial functions in certain circumstances.

The May 2004 transactions were not required to be reported under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976, which requires companies to notify and provide information to the Department and FTC before consummating certain acquisitions. As a result, the Justice Department did not learn about the transactions until after they had been consummated.

A press release on the lawsuit appears on the U.S. Department of Justice Antitrust Division web site.

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