Be careful when it comes to ad rates
Attorney advises newspapers on how to avoid antitrust violations
Exchanging rate cards at a convention or even a casual discussion of ad prices with a competitor may put a newspaper afoul of antitrust laws, an expert in the field warned advertising executives.
Enforcement of antitrust laws, which was vigorously pursued in the 1960s and '70s but lagged in the 1980s, is "back with a vengeance," said attorney Kathyleen A. O'Brien at a meeting of the California Newspaper Advertising Executives Association in Redondo Beach.
O'Brien, whose firm Sheppard, Mullin, Richter & Hampton of Los Angeles represents several newspaper clients, added that federal and state antitrust divisions "have learned that criminal prosecutions are an excellent way to grab headlines and to generate revenues."
Fines, she continued, run up to $10 million per offense for a company and can total $350,000 and/or three years in prison for an employee.
O'Brien, who specializes in antitrust laws, said the problem with such legislation is that it prohibits business practices which most newspapers believe make good business sense.
"I bet that your advertising department or those of your colleagues at other newspapers are engaging in at least one illegal practice without knowing that it's illegal," she continued.
"The area most investigated by government prosecutors is contact between competitors," O'Brien pointed out, noting that antitrust laws are designed to stop firms in the same industry from collaborating in ways deemed to harm the consumer.
"All the government needs to show to obtain a conviction is that you engaged in prohibited conduct," the lawyer said. "It doesn't matter whether or not you knew it was illegal, whether you had a good reason, or whether or not it harmed the advertiser."
Unlawful conduct involves agreeing or having an understanding with a competitor on a course of action, O'Brien said.
She noted, however, the government interprets the "concept of agreement" so broadly that it can establish a "tacit agreement" through informal meetings with the competition.
Beware of the following behavior, O'Brien cautioned:
* Telling another advertising seller what you plan to do and listening to what he is planning in the way of pricing.
* Mailing a competitor your rate card or soliciting his rate card for the purpose of charging the same prices. …