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Competition and Fair Play

By John Fox · March 12th, 2008 · Editorial

Last week the San Francisco Bay Guardian, the pioneering independent alt weekly newspaper, won its predatory pricing lawsuit against SF Weekly and parent company Village Voice Media. Village Voice Media is the largest chain in the alt weekly world and was known as New Times until it bought The Village Voice a few years ago.

The jury awarded the Guardian $6.3 million in damages. Village Voice Media has said it will appeal the verdict.

The five-week trial came about when the Guardian alleged that SF Weekly sold ads below cost in an effort to kill the Guardian's advertising sales and put it out of business. SF Weekly has lost money every year since New Times bought it in 1995, and Guardian officials say that Village Voice Media was unfairly pumping in money from its other papers in order to keep SF Weekly afloat.

After the verdict was announced March 6, Guardian Executive Editor Tim Redmond posted this observation on the paper's Web site: "The verdict sends a clear signal to small businesses, independent newspapers and the alternative press that a locally owned publication has the right to a level playing field and that a chain can't intentionally cut prices and sell below cost to injure a smaller competitor."

Over at SF Weekly, the verdict was viewed as the predictable outcome of California's Depression-era Unfair Practices Act that "makes a mockery of prevailing federal court standards."

"Over the years," Andy Van De Voorde wrote on the SF Weekly Web site, "federal courts have increasingly viewed below-cost pricing claims dubiously because they can so easily be twisted to protect not consumers' pocketbooks but the right of inefficient competitors to stay afloat."

American capitalism worships the rough-and tumble concepts of survival of the fittest, bigger is better and might makes right. The market wants cheaper, faster and better goods and services, and sentiment and tradition are for suckers.

Still, the market works best when everyone plays by the same rules. Over the years Congress has passed laws to ensure fair play, busting monopolies, nixing price fixing and regulating a number of industries unable to regulate themselves.

Thinking of the San Francisco case and CityBeat's situation as a locally-owned independent in the chain-dominated Greater Cincinnati media scene, I'm caught in a swirl of contradictions: If your competitor offers cheaper ad prices than you do, shouldn't you just lower your own prices in order to compete? Is it fair for a corporate chain to artificially keep an unprofitable paper going so it can offer below-market ad prices its independent competitor can't match? Is it really survival of the fittest if one competitor is fed steroids by its parent company? Or is that smart business on the chain's part?

Should a locally-owned independent business expect its existence to be protected by law? If you're not cheating, are you just not trying?

I don't have a lot of answers, but questions are always a good way to start a conversation.

CONTACT JOHN FOX: jfox@citybeat.com



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