[Federal Register Volume 68, Number 98 (Wednesday, May 21, 2003)]
[Notices]
[Pages 27863-27864]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-12745]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Village Voice Media, LLC, & NT Media, LLC; 
Public Comments and Plaintiff's Response

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16(b) and (d), the United States hereby publishes below the written 
comments received on the proposed Final Judgment in United States of 
America v. Village Voice Media, LLC, and NT Media, LLC, Civil Action 
No. 1:03CV0164, filed in the United States District Court for the 
Northern District of Ohio, together with the United States' response to 
the comments.
    Copies of the comments and the United States' response are 
available for inspection at the United States Department of Justice, 
Antitrust Division, 325 Seventh Street, NW., Suite 300, Washington, DC 
20530, and at the Office of the Clerk, United States District Court for 
the Northern District of Ohio, Carl B. Stokes United States Court 
House, 801 West Superior Avenue, Cleveland, OH 44113-1830. Copies of 
these materials may be obtained upon request and payment of a copying 
fee.

Constance K. Robinson,
Director of Operations.

Response to Public Comments

    Pursuant to the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h) (``APPA'' or ``Tunney Act''), the 
United States hereby responds to the public comments received regarding 
the Proposed Final Judgment in this case.

I. Background

    On January 27, 2003, the United States filed the Complaint in this 
matter to terminate the Defendants' illegal agreement to allocate 
markets for advertisers in, and readers of, alternative newsweeklies in 
metropolitan Cleveland, Ohio, and Los Angeles, California, in violation 
of Section 1 of the Sherman Act, 15 U.S.C. 1. Simultaneously with the 
filing of the Complaint, the United States filed a Proposed Final 
Judgment. A Competitive Impact Statement (``CIS'') was also filed with 
the Court on February 3, 2003, and published in the Federal Register, 
along with the Proposed Final Judgment, on February 12, 2003 (see 68 FR 
7132). Pursuant to 15 U.S.C. 16(c), a summary of the terms of the 
Proposed Final Judgment and CIS was published in The Plain Dealer 
during the period of February 6 through 12, 2003, and The Washington 
Post, a newspaper of general circulation in the District of Columbia, 
during the period of February 14 through 20, 2003.
    As explained more fully in the Complaint and CIS, prior to entering 
into their unlawful agreement, Defendants NT Media (``New Times'') and 
Village Voice Media were head-to-head competitors in publishing 
alternative newsweeklies in Cleveland and Los Angeles. In October 2002, 
New Times agreed to shut down its Los Angeles alternative newsweekly, 
the New Times Los Angeles, if Village Voice Media closed its newsweekly 
in Cleveland, the Cleveland Free Times. Thus, Defendants ``swapped'' 
markets, leaving New Times with a monopoly in Cleveland and Village 
Voice Media with a monopoly in Los Angeles. This unlawful agreement 
eliminated the competition that had brought advertisers in both cities 
lower advertising rates, more promotional opportunities and better 
service, and that had benefitted readers with a higher quality product.
    The Proposed Final Judgment requires, in part, that New Times and 
Village Voice Media terminated their unlawful agreement, allow affected 
advertisers in Los Angeles and Cleveland to terminate their contracts, 
notify the United States before entering into any merger, sale, or 
joint venture involving their alternative newsweeklies, and divest the 
assets of the New Times Los Angles and the Cleveland Free Times to new 
entrants in those markets. The proposed consent decree also prohibits 
the companies from entering into any market or customer allocation 
agreements in the future.
    The sixty-day period for public comment expired on April 21, 2003. 
As of today, the United States has received written comments from; (1) 
Citizens for Voluntary Trade, whose president filed an amicus motion 
with this Court, (2) Gary Beberman, and (3) Denise D'Anne. The United 
States has carefully considered the views expressed in these comments, 
but nothing in the comments has altered the United States' conclusion 
that the Proposed Final Judgment is in the public interest. Pursuant to 
section 16(d) of the Tunney Act, the United States is now filing with 
this Court its response to such comments. Once these comments and this 
response are published in the Federal Register, the United States will 
have fully compiled with the Tunney Act and will file a motion for 
entry of the Proposed Final Judgment.

II. Response to Public Comments

A. Citizens for Voluntary Trade's Comment

    In its written comment, Citizens for Voluntary Trade (``CVT'') 
states that the First Amendment to the U.S. Constitution preempts the 
Proposed Final Judgment, as ``[e]ven the most `anti-competitive' 
conduct is protected by the First Amendment.'' (CVT Comment at 2, a 
copy of which is attached at Exhibit A.)
    The Supreme Court as long ago as 1945 dismissed this assertion. The 
restraints imposed by these private arrangements are not protected by 
the First Amendment. Citizen Publishing Co. v. United States, 394 U.S. 
131 (1969); Associated Press v. United States, 326 U.S. 1, 20 (1945). 
Neither news gathering nor news dissemination are being regulated by 
the Proposed Final Judgment, which addresses only the Defendants' per 
se illegal restraints on certain business or commercial practices. The 
Defendants' unreasonable restraints on competition--which the Proposed 
Final Judgment remedies--comport neither with the antitrust laws nor 
with the First Amendment. As the Supreme Court held in the Associated 
Press case, and reiterated twenty-four years later in the Citizen 
Publishing decision:

    It would be strange indeed * * * if the grave concern for 
freedom of the press which prompted adoption of the First Amendment 
should be read as a command that the government was without power to 
protect that freedom. The First Amendment, far from providing an 
argument against application of the Sherman Act, here provides 
powerful

[[Page 27864]]

reasons to the contrary. That Amendment rests on the assumption that 
the widest possible dissemination of information from diverse and 
antagonistic sources is essential to the welfare of the public, that 
a free press is a condition of a free society. Surly a command that 
the government itself shall not impede the free flow of ideas does 
not afford nongovernmental combinations a refuge if they impose 
restraints upon that constitutionally guaranteed freedom. Freedom to 
publish means freedom for all and not for some. Freedom to publish 
is guaranteed by the Constitution, but freedom to combine to keep 
others from publishing is not. Freedom of the press from 
governmental interference under the First Amendment does not 
sanction repression of that freedom by private interests. The First 
Amendment affords not the slightest support for the contention that 
a combination to restrain trade in news and views has any 
constitutional immunity.\1\
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    \1\ Citizen Publ'g, 394 U.S. at 139-40 (quoting Associated 
Press, 326 U.S. at 20).

    In his amicus brief, S.M. Oliva, CVT's president, does not address 
the merits of the Proposed Final Judgment but rather objects to certain 
procedural aspects of the Proposed Final Judgment. In particular, Oliva 
alleges that the United States intentionally violated the Tunney Act by 
requiring the Defendants to complete certain divestitures within thirty 
days after the filing of the Complaint. (Amicus brief at 3, a copy of 
which is attached as Exhibit B.)
    First, nothing in the Tunney Act precludes the United States from 
taking or refraining from certain actions during the sixty-day comment 
period. The statute also does not prohibit the Defendants from 
divesting certain assets and refraining from certain action before this 
Court enters the Proposed Final Judgment.
    Second, contrary to Mr. Oliva's assertion, the required 
divestitures do not preclude this Court from evaluating whether entry 
of the Proposed Final Judgment is in the public interest or declining 
to enter the order if it believes the settlement is unacceptable. As 
Section IV(A) of the Hold Separate Stipulation and Order provides, the 
United States may withdraw its consent to the Proposed Final Judgment 
at any time before the entry of the Proposed Final Judgment. Moreover, 
the Hold Separate Stipulation and Order contemplates that this Court 
may not enter the Proposed Final Judgment. By divesting certain assets 
and refraining from any action in furtherance of their illegal market 
allocation agreement, the Defendants have assumed the risk that the 
United States might withdraw its consent and proceed to trial or that 
this Court may decline the Proposed Final Judgment.
    Furthermore, the divestitures at issued are common in many other 
Tunney act proceedings, It is customary in the vast majority of mergers 
that are resolved by consent in the form of proposed final judgments to 
permit the defendants to merge at the time when the complaint and 
proposed final judgment are filed, subject to the defendant's 
obligations under the proposed final judgment to take steps to divest 
certain specified assets. In these mergers, the defendants are 
generally allowed to complete the merger prior to the close of the 
sixty-day comment period and entry of the final judgment by the court. 
The defendants in such cases, as here, understand that the proposed 
final judgment is subject to public comment, that the United States may 
revoke its consent at any time before the final judgment is entered, 
and that the final judgment will not be entered unless a court finds 
that it is in the public interest.
    Third, to delay any remedial measures until after the sixty-day 
comment period expires might undermine the effectiveness of the relief. 
As the CIS states, ``[g]iven that Defendants had closed the Cleveland 
Free Times and New Times Los Angeles in October 2002, a quick and 
effective remedy was necessary to reestablish competition.'' (CIS at 
14.) Readers and advertisers will sooner benefit in Cleveland and Los 
Angeles as a result of a quick and effective divestiture.

B. Gary Beberman's Comment

    In his e-mail, Mr. Beberman writes that the United States ``may 
have been correct that the Village voice was colluding in anti-
competitive behavior'' but that ``their actions were merely attempts to 
survive.'' (A copy of Mr. Beberman's comment is attached as Exhibit C.) 
Mr. Beberman, however, never states whether he supports or opposes 
entry of the Proposed Final Judgment. And any critique of whether this 
investigation should have been brought in the first place amounts to a 
challenge of the initial exercise of the United States' prosecutorial 
discretion, which is outside the scope of this proceeding. See, e.g., 
United States v. Western Elec. Co., 993 F.2d 1572, 1577 (D.C. Cir. 
1993)(noting that Tunney Act proceeding does not permit ``de novo 
determination of facts and issues'' because ``[t]he balancing of 
competing social and political interests affected by a proposed 
antitrust decree must be left, in the first instance, to the discretion 
of the Attorney General'')(citations omitted). Likewise, Mr. Beberman's 
comments about another case, United States v. Microsoft Corp., are 
extraneous to this matter. (Also, the sixty-day comment period in that 
case ended on January 28, 2002, and the United States District Court 
for the District of Columbia entered the final judgment on November 12, 
2002.)

C. Denise D'Anne's Comment

    Mr. D'Anne thanked the United States for pursuing this action. (A 
copy of Ms. D'Anne's comment is attached as Exhibit D.)

III. Conclusion

    After careful consideration of these public comments, the United 
States has concluded that entry of the Proposed Final Judgment will 
provide an effective and appropriate remedy for the antitrust violation 
alleged in the Complaint, and is therefore in the public interest. 
Pursuant to seciton 16(d) of the APPA, the United States is submitting 
these public comments and this response to the Federal Register for 
publication. After these comments and this response are published in 
the Federal Register, the United States will move this Court to enter 
the Proposed Final Judgment.

Dated: May 1, 2003.

Maurice E. Stucke,
Carol A. Bell,
Matthews J. Bester,

Attorneys for the United States, United States Department of 
Justice, Antitrust Division, Litigation III Section, 325 Seventh 
Street, NW., Suite 300, Washington, DC 20530, (202) 305-1489 
(telephone), (202) 514-1517 (facsimile), [email protected].

Jon R. Smibert,
Attorney for the United States, United States Department of Justice, 
Antitrust Division, Cleveland Field Office, 55 Erieview Plaza, Suite 
700, Cleveland, Ohio 44114-1816, (216) 522-4070, telephone, (216) 
522-8332, facsimile, [email protected].

Certificate of Service

    I hereby certify that I served a copy of the foregoing Response to 
Public Comments via First Class United States Mail, this 1st day of 
May, 2003, on:

Melanie Sabo,

Preston Gates Ellis & Rouvelas Meeds, LLP, 1735 New York Avenue, 
NW., Suite 500, Washington, DC 20006-5209, Counsel for Defendant 
Village Voice Media, LLC.

Joseph Kattan,

Gibson, Dunn & Crutcher, LLP, 1050 Connecticut Avenue, NW., 
Washington, DC 20036, Counsel for Defendant NT Media, LLC.

Carol A. Bell,

Attorney for the United States, United States Department of Justice, 
Antitrust Division, Litigation III Section, 325 Seventh Street, NW., 
Suite 300, Washington, DC 20530, (202) 307-3076.

[FR Doc. 03-12745 Filed 5-20-03; 8:45 am]
BILLING CODE 4410-11-M