Stop The Presses!: Predatory Pricing Verdict Against San Francisco Weekly Upheld

The California Supreme Court, in Bay Guardian Co. v. New Times Media LLC, No. S186497 (Cal. Nov. 23, 2010), has declined to review rulings from the California Superior trial court and California Court of Appeal upholding a $21 million antitrust damages verdict against the San Francisco Weekly.  The SF Weekly and its parent, Village Voice Media Holdings, were accused by the plaintiff, the Bay Guardian, of trying to drive the plaintiff out of business by selling advertisements below cost.  The defendants had argued unsuccessfully that the SF Weekly’s pricing strategy was procompetitive in that it kept prices lower for advertising customers.  Both newspapers are free for readers and depend on advertisements for revenue.

A San Francisco jury in March 2008 awarded $6.2 million in damages against the defendants under California’s Unfair Competition Act, an award that was tripled by Superior Court Judge Marla Miller.  The California Court of Appeal on August 11, 2010, upheld the verdict, which has since been accumulating interest.  The California Supreme Court voted 6-1 against granting a hearing for the case on appeal, with Justice Joyce Kennard being the only voice in favor of review.

Michael Lacey, the executive editor of Village Voice Media Holdings, stated that “[n]either judges with gavels nor editors with martinis (or delusions fueled by martinis) can tell people which website or newspaper to read. … As journalists, we will continue the fight in San Francisco.”  Andy Van De Voorde, another observer sympathetic to the defendants, added:

For more than a century, the California Supreme Court has interpreted antitrust law as protecting consumers from high prices, not protecting the profits of entrenched market leaders who fear competition. The Supreme Court’s refusal … to follow Justice Joyce Kennard’s wishes and hear this appeal turns a century of pro-consumer California antitrust law on its ear.

He further opined that “[t]his is a sad day for consumers who deserve the lower prices that only aggressive competition provides.”  The Bay Guardian, on the other hand, had contended that the SF Weekly intended to drive it out of business in order to become the “only game in town,” which would be detrimental to consumers.