U.S. Department of Justice Antitrust Division Reaches Settlement with Nexstar Media on Exchanging Revenue-Pacing Data with Competitors

On December 13, the U.S. Department of Justice announced that its Antitrust Division had reached a settlement with Nexstar Media Group Inc., one of the largest owners of television stations in the United States, as part of the Division’s ongoing investigation into exchanges of competitively sensitive information in the broadcast television industry.  According to the amended complaint that the Antitrust Division filed against Nexstar and six other television broadcasting companies, Nexstar and other entities agreed

in many metropolitan areas across the United States to exchange revenue pacing information, and also engaged in the exchange of other forms of non-public sales information in certain metropolitan areas.  Pacing compares a broadcast station’s revenues booked for a certain time period to the revenues booked in the same point in the previous year.  Pacing indicates how each station is performing versus the rest of the market and provides insight into each station’s remaining spot advertising for the period.

By exchanging pacing information, Nexstar and other broadcasters were better able to anticipate whether their competitors were likely to raise, maintain, or lower spot advertising prices, which in turn helped inform their stations’ own pricing strategies and negotiations with advertisers.  As a result, the information exchanges harmed the competitive price-setting process.

The proposed settlement would prohibit the direct or indirect sharing of such competitively sensitive information, as the Justice Department determined “that prohibiting this conduct would resolve the antitrust concerns raised as a result of Nexstar’s conduct.”  It also would require Nexstar to cooperate in the Department’s ongoing revenue-pacing investigation and to adopt “rigorous antitrust compliance and reporting measures to prevent similar anticompetitive conduct in the future.”

Per the Antitrust Procedures and Penalties Act (also known as the Tunney Act), notice of the proposed settlement, as well as the Justice Department’s competitive impact statement in the case, was published in the Federal Register on January 14, for public notice and comment for a 60-day period.  At the conclusion of the comment period, the U.S. District Court for the District of Columbia, with which the settlement is filed, “may enter the final judgment upon a finding that it serves the public interest,” according to the Department.  In light of the uncertainly about the duration of the current federal government shutdown, the timing of the District Court’s decision after the 60-day period is uncertain.

Note:  This announcement provides a timely reminder to senior management and corporate compliance officers that their companies’ antitrust compliance programs, including training, need to extend beyond core criminal-liability concerns such as price-fixing.  While most companies understand that directly exchanging or fixing of prices is a live wire for antitrust enforcement, some companies may think that if they do not directly exchange such data, but merely exchange other data from which they can infer their competitors’ prices and pricing practices, that will insulate them from liability.

The Antitrust Division’s revenue-pacing  investigation and settlements demonstrates that that will not be the case.  Antitrust-compliance policies and training should therefore certainly address core concerns for Sherman Act criminal liability, but also should point out that the Antitrust Division will be attentive to any intraindustry practices by competitors that have the necessary effect of sharing what the Division terms “competitively sensitive information” or affecting the competitive price-setting process.

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