Marketing giant Valassis Communications, Inc., has settled with the Federal Trade Commission over charges that it tried to collude with its only FSI rival, News America Marketing, to eliminate competition between the two.

Under the terms of the settlement, Valassis is barred from engaging in similar anticompetitive conduct, the FTC said Tuesday.

The FTC charged that during a public conference call Valassis invited News America to participate in a scheme to allocate customer and fix prices to end their ongoing battle. The FTC said that Valassis' goal was to raise FSI prices, which had decreased to $5 per full page per thousand booklets in 2004 from $6.

Valassis did not admit to any wrongdoing and is not required to pay any fines or penalties, the company said in a March 14 Securities and Exchange Document. A Valassis spokesperson declined comment on the settlement. Officials at News America could not be reached.

The settlement comes on the heels of a lawsuit, filed by Valassis Jan. 18 in the United States District Court Eastern District of Michigan Southern Division, that claims that News America has embarked on an anti-competitive, predatory pricing scheme to gain a monopoly over these two tactics. FSIs reach as many as 70 million households weekly (Xtra, Jan. 25).

The suit claimed that News America is using brutal images of beatings from an Al Capone flick as one way to gain an unfair advantage in the sale of both newspaper FSIs and in-store ads and promotions. The suit also claims that News America has obtained exclusive long-term contracts with retailers, including Safeway, Kroeger, Albertsons, Ahold and Winn Dixie, to market its in-store advertising and promotions, effectively precluding competitors, according to documents filed with the Securities and Exchange Commission.

Valassis, based in Livonia, MI, is seeking damages in excess of $1.5 billion.

Valassis also claims that News America is tying the sale of FSI coupons to the sale of its in-store marketing products. Valassis said that News America has "coerced" consumer packaged goods companies (CPGs) to sign long-term exclusive contracts for FSI service by threatening to penalize the CPGs on prices for in-store marketing. Valassis said that the penalties have routinely exceeded $1 million for individual customers and $5 million for a single FSI deal. Valassis claims that CGPs have told it that they have been "economically coerced" to sign these contracts with News America, the documents said.

In its introduction in the lawsuit, Valassis said that News America COO Paul Carlucci shows his sales force a vignette from The Untouchables that shows Al Capone beating one of his enemies to death with a baseball bat. Valassis claims the scene is a metaphor for the business practices that News America expects of its sales force and employees to illegally leverage its market dominance in the in-store advertising and promotions market to gain an unfair advantage in the coupon market, the documents said.