Managers and the Legal Environment 7th Edition by David Madsen, Constance Bagley

Exercise 4

The two largest newspapers in Chicago are the Chicago Tribune and the Sun Times, and the two largest supplemental news providers are the New York Times News Service and the Los Angeles Times/Washington News Service. In addition to printing the work of its own staff, the Tribune has a contract with the New York Times News Service pursuant to which the Service provides news and other material of interest to the Tribune on an exclusive basis in the Chicago area. The Sun Times has a similar exclusive arrangement with the Los Angeles Times/Washington News Service. As a result of these exclusive contracts, Chicago's third largest newspaper, the Daily Herald, could not obtain newsfeed from either service. It was also unable to obtain newsfeed from the third most popular provider because it was owned by the Tribune, which refused to license its stories to a competitor in its home market. The Daily Herald challenged this pattern of exclusive distributorships as a violation of section 1 of the Sherman Act, claiming that it effectively denied the Herald the opportunity to subscribe to the best supplemental news services. Does a pattern of exclusive distributorships in a market violate the Sherman Act? In what way could the news services' practices harm consumers? What if the Herald could show that it had tried to outbid the Tribune or the Sun Times for their supplemental news service subscriptions? Would the Herald's argument be stronger if the exclusive agreements were long-term agreements? [Paddock Publications, Inc. v. Chicago Tribune Co., 103 F.3d 42 (7th Cir. 1996).]