This is indeed a strange case.

The low-cost, higher-profit firm in this market is suing the high-cost, unprofitable firm for lost profits when the higher-profit firm hit a rough spot after the dot-bomb.

The sad thing about the Unfair Practices Act, exemplified in the Bay Guardian's case against the SF Weekly, is that it is likeliest to be invoked in declining industries such as newspapers. A higher-cost firm in a declining industry will be likelier to show losses, which according to the SFBG is evidence of predatory intent, and thus the higher-cost firm will be exposed to below-cost pricing claims by lower-cost firms, especially the producer of the next-best substitute. Thus the insult of a UPA claim is added to the injury of disappearing profits, even in the best outcome. This cannot be a good competition policy.

One other pernicious effect of the Bay Guardian's claim is to discriminate against firms taking advantage of modern internal and external capital markets. It is fine for the SFBG to renounce those markets, but the Bay Guardian has not earned the right to impose its tastes on the market at large...even in its own industry. Yet that is precisely the effect that its claim, if successful, would have (at least in the San Francisco alternative newspaper market).

If there were some showing that alt-weeklies enjoyed some market power against advertisers, then there ought to be some concern about a large firm "taking over" the SF alt-weekly market. But there is no such showing here. In fact, both newspapers seem to have charged as high as the market would bear, as evidenced by the cyclical pattern of both papers' display ad rates. And it has been the so-far unprofitable SF Weekly that is eroding the Bay Guardian's dominance and profitability, not the other way around. This particular action is entirely unnecessary to preserve competition in the SF alt-weekly industry; perversely, it seems to punish competition in this market.

If successful, the Bay Guardian would convert today's duopoly alt-weekly market into a monopoly of sorts. If the jury decides against New Times, the SF Weekly might very well exit the market, thereby removing the Bay Guardian's nearest competitor. Then perhaps the Bay Guardian, the only alt-weekly left standing in SF, will realize that it really does face competition from The Onion, neighborhood newspapers, CraigsList, Yelp, and the Internet...just as New Times has argued. And when the Bay Guardian incurs its first loss, it can expect one or more of those competitors to claim below-cost pricing (and Google-caliber "lost profits" to match).

The message that this Unfair Practices Act action sends to companies throughout California is that the State requires its businesses to turn a profit, under penalty of law, payable to the business' strongest competitors. This seems to penalize bad luck in a way that destroys the competitive process. That the UPA makes such an action possible argues strongly for the UPA's repeal.

Disclosure: I have no affiliation with either party in this case.

Here, here, I.B. Sounds like you're studying up on the UPA as well. I'd add (or at least re-emphasize) the damages claimed by the Guardian can't be real: They're still in business and posting larger profits than their main competitor. It's a wonder the case has even gone to trial, based on the fact the Guardian is the dominant business in its market.

the only outcome i am hoping for in this case is that vandervurt stops writing and goes and buys some better clothes. the frat boy thing was out in like 1985.

that is really stupid reasoning, 'student.'

you can be harmed and still be in business.
you can be harmed and still run a profit.
duh.

'uhhhh' is correct: Under the muffin-headed logic of California's Unfair Practices Act, a profitable firm can deem competition from an unprofitable firm as the sole cause of the profitable firm's inability to earn even higher profit ("harm"), regardless of what else is going on in the economy. Most people would label this state of affairs "competition"; the California law labels it a cause for recovery of treble damages. Strange.

I share "student"'s wonder that this action actually went to trial. It just goes to show that the law encourages promiscuous litigation. The shame of it is that the Bay Guardian seems to be cashing in on the SF Weekly's bad fortune. (This is why I think the UPA is bad policy.)

Based on all that has been written about this case, it seems that SF Weekly's failure to charge higher prices is due to its lack of market power, not its possession, and certainly not a conscious strategy of predatory pricing. The fact that both the SF Weekly and the SFBG maintained regular reports on each other's publicly observable display ad inches seems innocuous enough, in a "Coke tracks Pepsi ads" kind of way. The fact that the Bay Guardian sued New Times suggests that the reports were not, in fact, some form of tacit collusion between the firms (which might actually be of interest to antitrust enforcement).

I suppose the best outcome would be for the jury to find unambiguously for the SF Weekly. But that finding would not compensate for the lost resources spent by both sides on attorneys, experts, etc. The cause for action here seems due to a confluence of market misfortunes, not conscious strategies, made actionable by an unfortunately over-broad law (the Unfair Practices Act).

What's strange is that a verdict in favor of The SFBG has not been rendered yet. You guys are really doing your best to make it look complicated and unfair, aren't you?

"Pornosec, the sub-section of the Fiction Department which turned out cheap pornography ... to be bought furtively by proletarian youths who were under the impression that they were buying something illegal."
-George Orwell, 1984