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VNU's $55m Settles Antitrust Case
VNU and IRI have settled their ten-year antitrust case, with VNU agreeing to pay IRI US$55m. The case was recently valued at around $650m but was on appeal following judgement in favor of VNU and its co-defendants. Both sides appear to have preferred the settlement to the possibility of the case rumbling on for a number of years more.
IRI (Information Resources, Inc.) brought the original case in 1996 against Dun and Bradstreet, ACNielsen and IMS Health. ACNielsen (now owned by VNU) was accused of unlawful bundling of services, exclusionary dealmaking and predatory pricing to beat off the challenge posed by IRI's InfoScan.
The settlement will result in a complete dismissal of all claims in the case, and sees VNU paying US$55m (EUR 47m), which, after tax, will result in a EUR 28m charge to its 2005 earnings. The company noted that the dismissal of IRI's claims will also terminate the Amended Indemnity and Joint Defense Agreement (JDA) among the defendants and thereby give VNU the flexibility to implement certain beneficial changes to its group structures which would otherwise have been limited by the JDA.
VNU CEO Rob van den Bergh said yesterday 'We are pleased to have finally concluded this decade-old lawsuit. While we believe that the appellate court would have affirmed the dismissal of IRI's meritless case, it was in our company's best interest to resolve this matter and eliminate any further litigation uncertainty and expense. We have always maintained that the competition between ACNielsen and IRI belongs in the marketplace and not in the courtroom.'
Expert opinion from Right Agents involved in the case gave strong support to the settlement: it was believed that IRI would lose on the bundling issue before the Second Circuit Court of Appeals due to a number of factors including the uncertainty of the relevant laws and recent opinions expressed by scholars, or that if it prevailed, the Supreme Court would rule against it given the known views of its newest addition, Justice Alito. Even if successful in the Supreme Court, and ultimately at trial, both litigation teams advised that it was likely to be several years before IRI would be able to collect on its judgement due to post-trial motions and appeals.
IRI was bought out in 2003 by Symphony Technology and investment firm Tennenbaum (see Gingko Completes Acquisition ) and promised its former shareholders 60% of any gains from the litigation, but its case was seriously undermined by a decision on December 3 2004, when the Court issued an order ruling that the economic analysis on which it relied to establish its pricing claims was inadmissible as a matter of law, and that its expert report on liability and damages could not be presented at trial. The case was dismissed with prejudice on January 28 2005 by the US District Court for the Southern District of New York, and was until yesterday on appeal before the United States Court of Appeals for the Second Circuit.
For earlier articles on this story see, in addition to the above links, Second Date Set, Key Rulings for IRI July 2003, and Court Dismisses Key Part... July 2000.
Full information about the lawsuit, the Trust, and the CVRs trading under IRICR.OB can be found on the companies' web sites and in the disclosure materials filed by the Information Resources, Inc. Litigation Contingent Payment Rights Trust with the Securities and Exchange Commission, including the prospectus dated November 3, 2003 relating to the CVRs. The above summary is for information only and MrWeb Ltd accepts no responsibility for its accuracy or completeness. VNU is online at www.vnu.com and IRI at www.infores.com
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