Bernstein, Shur Wins Anti-Trust Case Regarding Wholesale on of Magazines and Newspapers in Maine

Hudson News Company and Portland News Company Vindicated by Federal Judge's Ruling

A U.S. District Court judge has upheld the dismissal of an anti-trust claim against Maine's largest wholesale distributor of magazines, newspapers and other periodicals, agreeing that consumers and retailers are not harmed by the distribution system.

Thursday's decision by U.S. District Judge Gene Carter vindicates Hudson News Company and Portland News Company, whose lawyers from Bernstein, Shur, Sawyer & Nelson had argued that its domination of the distribution market in large retail chains throughout the state was healthy and legal.

"This decision is basically a victory for efficiency and competition, and a victory for the consumer," said John M.R. Paterson, a top litigator in the state and a longtime shareholder at Bernstein, Shur. Attorney Ronald W. Schneider Jr. also worked on the case for Bernstein, Shur.

The judge's decision protects a system of distribution that ensures Maine retailers and consumers are provided with the magazines and newspapers that they want, he said.

Augusta News Company brought the anti-trust suit against Hudson News Company and Portland News Company in 1999, claiming they unfairly drove it out of business in the mid-1990s during a "regionalization" of the system of distribution to retail chains such as Wal-Mart, Hannaford, Shaw's, Rite Aid and Cumberland Farms.

Paterson contended that Hudson News Company and Portland News Company acted appropriately and lawfully at the time in responding to market needs by creating efficiencies that competitors could not provide. Prior to the consolidation, large retailers with stores located in several areas were forced to purchase magazines and periodicals from numerous local distributors such as the Augusta News Company, regardless of the quality of service and the retailers' desire to reduce the number of distributors servicing the chain.

"Augusta News Company didn't win the competition at the time and because of that they claimed that we did something wrong, which is utterly absurd," Paterson said.

U.S. Magistrate Judge Margaret J. Kravchuk considered arguments in the case in November and sided with the defendants. U.S. District Judge Gene Carter's ruling upholds the magistrate judge's decision.

Hudson News Company and Portland News Company were separate companies during the time period in question, but have since merged.

The court case also raised the newly-debated legal issue of "slotting fees" or up-front fees that wholesalers often pay retailers for shelf space. In this case, the court determined that payment of those fees was not illegal as Augusta News Company claimed. "Slotting fees create efficiencies by allowing retailers to manage their products and remain competitive, which in turn benefits consumers," said attorney Schneider, who assisted Paterson with the case. "Supermarkets and other retailers in Maine are not unresponsive to local demand, but there are a multitude of products out there and just so much shelf space. In this case, however, no magazines were ever kept off the shelves as a result of the payment of so-called "slotting fees."

A resident of Freeport, Paterson joined Bernstein, Shur, Sawyer & Nelson in 1981. He is chair of the Professional Ethics Commission at the Maine State Bar and practices in the areas of business litigation, administrative and regulatory law, antitrust, media, communications, First Amendment and health care law. He is a 1966 graduate of Bowdoin College in Brunswick, and received his law degree from New York University School of Law in 1969. In addition to the Board of Bar Overseers, he is also a member of the Maine State and American Bar Associations, the American Trial Lawyers Association, and is the Maine chair of the Association of Defense Trial Attorneys. Paterson is listed in the "Best Lawyers of America" for his First Amendment practice.

Schneider, also a member of the Litigation Department at Bernstein, Shur, is a resident of Wells and a 1996 graduate of the University of Maine School of Law in Portland and a 1988 graduate of Bates College in Lewiston. He is a member of the American Bar Association, the Maritime Law Association, the Maine and New Hampshire Bar Associations, a director on the University of Maine Alumni Association's Board as well as a director of USM Corporate Partners.

Established in 1915, Bernstein, Shur concentrates its practice in select areas, including corporate and commercial law, litigation and trials, municipal and governmental affairs, tax and estate planning, international and immigration matters, health law, employment, legislative representation and intellectual property, construction law, high technology and e-commerce practice. Its web site at www.mainelaw.com was the first of its kind when launched in 1995, and is now available in six languages for the convenience of its many foreign clients. In 1999, the firm opened TechVentures, a strategic consulting firm that assists start-ups and existing companies with Internet and e-commerce related issues and funding. Bernstein Shur also provides environmental consulting through its subsidiary, STRATEX. BSSN is the only Maine law firm that is a member of Lex Mundi, an international association of 151 law firms located in all major economic centers in the world.

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