Bay Guardian, SF Weekly reach antitrust settlement

Both publications issued statements saying the two sides "have settled their differences on mutually acceptable terms," but did not specify a monetary amount. The announcement comes six weeks after the state Supreme Court denied a hearing on the Weekly's appeal of the damage award.
The legal battle began in 2004, when the locally owned Guardian filed a lawsuit accusing the Weekly of using cash infusions from its parent company in Phoenix to underwrite cut-rate ads in hopes of ruining its competitor.
The Weekly and its parent, Village Voice Media Holdings, denied they had any monopolistic intent and said the newspaper's low-priced advertising was legitimate competition that benefited local businesses. They said the Guardian was losing money because of declining reader interest and the sagging economy.
In March 2008, however, a San Francisco jury decided that the Weekly had engaged in illegal predatory pricing to try to drive the Guardian out of business.
The jury awarded $6.2 million in damages, and Superior Court Judge Marla Miller tacked on almost $10 million in antitrust penalties.
Interest added another $5 million during the Weekly's appeals. Court orders allowed the Guardian to collect half the Weekly's ad revenue as part of the damage award.
Both papers are distributed for free and depend on advertising for their income.
The central legal issue in the case was the scope of California's antitrust law, which prohibits a business from taking advantage of its power in the market to damage a competitor.
The Weekly argued that below-cost pricing is legal. To win damages, the Weekly said, the Guardian should have had to prove that the Weekly was likely to have raised prices to cover its losses once it drove the Guardian out of business, thus hurting consumers.
That is the standard for damages under federal antitrust law, the Weekly said. But the First District Court of Appeal in San Francisco, in a ruling in August that upheld the verdict, said California's broader law bans all below-cost pricing that seeks to damage competition.
The state Supreme Court left that ruling intact in November.
Bruce Brugmann, the Guardian's editor and publisher, said Monday that the case produced "a model for protecting other small, independent businesses facing predatory pricing schemes from competitors."
Andy VanDeVoorde, a Village Voice Media executive, said SF Weekly would "continue business as usual" and "has continued to widen its lead over the Guardian, despite the six-year legal distraction."