Magazine article Editor & Publisher

Newspaper Sues Real Estate Firms

Magazine article Editor & Publisher

Newspaper Sues Real Estate Firms

Article excerpt

Alleges that they conspired to keep real estate ads out of the paper and instead place them in a real estate agent association giveaway publication

AS SCORES OF target and niche advertising vehicles continue to draw advertising revenue away from newspapers, the potential for conflict keeps expanding.

In a recent example, Nov. 22, the Daily Progress. Charlottesville, Va., filed a lawsuit in state court alleging that beginning m February 1992, four area real estate companies and four of their officers "willfully and maliciously" participated in an illegal boycott and conspired to keep real estate advertising out of the Daily Progress. The 32,316-circulation daily is seeking up to $52 million in damages.

The lawsuit claims that the real estate companies collectively agreed to place "substantially all" of their advertising in the Charlottesville Area Real Estate Weekly, a publication owned by a corporate subsidiary of the Charlottesville Area Association of Realtors Inc.

CAAR is composed of approximately 120 real estate companies and 800 individual agents who do business in the Charlottesville area. The defendants in the Daily Progress suit all are members of CAAR.

The CAAR-sponsored weekly claims a circulation of 12,000. It is distributed free to 280 news boxes, 120 stores and other distribution points in the Charlottesville area.

The Daily Progress claims that by placing their ads in the weekly, the real estate companies attempted to increase profits at the public's expense, fix prices, restrict real estate services available in the surrounding area and eliminate competition. According to the suit, the four companies account for a total of 50% of the area residential real estate market.

"We have a free-market system in this country," said Dennis Rooker, attorney for the Daily Progress, "but competitors compete against each other, they don't band together. The essence of this claim is the concerted activity."

Michael Urbanski, counsel for one defendant and acting spokesman for the group, said, "There is simply and absolutely no basis" for the claim of an organized boycott.

The group of real estate companies has filed a countersuit, contending that actions that the paper has taken, including the lawsuit, are an attempt to "maintain a monopoly on newspaper advertising in the CharlottesvilleAlbemarle County area and to defame the reputations of the defendants?"

The countersuit claims that by use of its "monopoly power," the Daily Progress set advertising rates "at excessive and anticompetitive levels" and provided "inattentive and inferior advertising services" to customers. …

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