NAA files brief in suit to challenge postal rate deal for newspapers' largest direct-mail competitor
Director of Communications
February 11, 2013
Arlington, Va. – On behalf of its member newspapers, the Newspaper Association of America filed its initial brief today in its lawsuit against the Postal Regulatory Commission regarding that agency’s August 2012 decision to approve a negotiated service agreement between the U.S. Postal Service and Valassis Direct Mail. The lawsuit is being heard in the U.S. Court of Appeals for the District of Columbia Circuit.
Under the NSA, USPS granted Valassis Direct Mail discounts of 20 percent to 34 percent on new mail pieces containing advertising from national retailers of durable and semi-durable goods. Through these discounts, the U.S. Postal Service – a governmental enterprise – has given one company a price incentive to move advertising inserts out of newspapers delivered to consumers’ homes. Advertising inserts comprise a critical revenue stream that supports the original reporting done by local newspapers in service to their communities.
In its brief, NAA notes that the commission’s decision is both contrary to law and arbitrary and capricious, because it does not consider the “impact of the agreement on competitors to the Postal Service, on competitors of its NSA partner, and mail users in general.” When it enacted the Postal Accountability and Enhancement Act, Congress codified commission precedent establishing that assessing “unreasonable harm to the marketplace” requires evaluating and weighing harm to competitors of the Postal Service’s NSA partner.
NAA argues that the commission “interpreted ‘unreasonable harm to the marketplace’ to require only that the Postal Service is not pricing its products below cost.” NAA states that “even though the Postal Service has the burden of ‘assuring an adequate record’ on the issue of ‘unreasonable harm to the marketplace,’ ” the commission did not require the Postal Service and Valassis to identify relevant markets in which the NSA will be implemented so that it could provide a proper analysis.
NAA further argues that in assessing whether the NSA will improve the net financial position of the Postal Service, “the commission ignored comments showing that newspapers in major markets pay the Postal Service millions of dollars to distribute total market coverage products with advertisements from national retailers.” NAA emphasizes that in order to cuts costs in response to the NSA, the “diversion of these total market coverage products to private delivery could quickly outweigh any new revenue from Valassis.”
"The Postal Regulatory Commission’s Public Representative had it right when he said in comments to that agency that this NSA is a lose-lose proposition for both the newspaper industry and the Postal Service,” NAA President and CEO Caroline Little said.
View NAA's brief to the U.S. Court of Appeals for the District of Columbia Circuit.
NAA is a nonprofit organization representing nearly 2,000 newspapers and their multiplatform businesses in the United States and Canada. NAA members include daily newspapers, as well as nondailies, other print publications and online products. Headquartered near Washington, D.C., in Arlington, Va., the association focuses on the major issues that affect today's newspaper industry: public policy/legal matters, advertising revenue growth and audience development across the medium's broad portfolio of products and digital platforms. Information about NAA and the industry also may be found at www.naa.org.