News Corp. Pays $125 Million to Settle Insignia Suit, Ending Federal Trial
A News Corp. unit will pay $125 million to Insignia Systems Inc. to settle a lawsuit claiming it disparaged its rival and broke antitrust law while attempting to dominate the U.S. in-store advertising market.
The accord announced today ends a trial that began in federal court in Minneapolis yesterday. Insignia was seeking triple damages on its antitrust claim, alleging that it lost hundreds of millions of dollars as a result of anti-competitive behavior by the News America Marketing unit.
The settlement doesn’t include an admission of liability, News America said today. Under the settlement, Insignia will enter into a 10-year exclusive agreement with News America to sell signs and pay $4 million to the News Corp. unit.
“We view this settlement as a prudent business decision for News America Marketing,” Chris Mixson, News America president, said in a statement today. The 10-year-exclusive agreement “has the potential to be very profitable for both companies,” he said.
Insignia Systems sued its larger rival in Minneapolis in 2004, alleging violations of U.S. antitrust law and the Lanham Act, which prohibits unfair disparagement of competitors. Lawyers for Insignia and News America gave opening statements in the first day of trial yesterday.
‘Avoid Protracted Litigation’
“I am pleased that we were able to reach a mutually agreeable settlement and avoid protracted litigation,” Insignia President Scott Drill said in a statement today.
News Corp., owner of the Fox television network and the Wall Street Journal, previously settled unfair-competition suits brought by two other rivals in the in-store advertising and promotions market. The New York-based company agreed last year to pay $500 million to Valassis Communications Inc. It paid $29.5 million in 2009 to settle a claim of anti-competitive behavior brought by Floorgraphics Inc.
News America competes in stores with Insignia to run promotions for food companies including Sara Lee Corp., putting signs on shelves, ads on shopping carts and coupons at checkout counters. The companies create and sell in-store advertising and promotional materials to consumer-goods companies for placement in stores and buy placement rights from retailers.
News America’s promotional materials include in-store machines that dispense coupons and shelf signs with product prices. Insignia’s primary product is a shelf sign, called Pop Signs, designed to attract customers at point of purchase, according to court filings.
Insignia claimed that News America entered into exclusive contracts with retailers, paid the stores to boycott Insignia and used predatory pricing and bundling of advertising and promotion products, in violation of U.S. antitrust law.
Insignia also claimed News America disparaged it to customers, telling the consumer-goods companies that they would be throwing their money away by contracting with Insignia.
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