Opinion ID: 693382
Heading Depth: 3
Heading Rank: 2

Heading: Advo and the Philadelphia Market for Preprint Advertising

Text: 11 Advo is a national MC services company and is the largest full-service direct mail marketing company in the country. It distributed at least three billion advertising packages in 1992, generating nearly a billion dollars in revenue. Advo began operating in the eight-county area that comprises the Philadelphia market 1 in the mid-1960s, and appears to have grown rapidly since obtaining the Acme supermarket chain as a base advertiser for shared mailings in 1983. 12 Ironically, Advo faced a Sherman Act section 2 suit as a result of capturing the Acme account and expanding its business in Philadelphia. Cassidy Distrib. Serv. v. Advo-Sys., Inc., No. 84-3464 (E.D.Pa.1984). A small competitor that previously had serviced Acme sued Advo charging predatory conduct in furtherance of a plan to monopolize the market for distributing advertising circulars in the region. In the course of countering this charge, Advo argued that there are few, if any, barriers to entering the business of marketing communications, and thus there is little, if any, chance that a predator could recoup the costs of illegally obtaining a monopoly. See app. at 1772-1908, 2317-2340, 2341-2348. 13 The market for circular advertising distribution appears to have become more competitive in recent years. When Advo changed its delivery schedule in 1989 to accommodate Acme, other major customers became dissatisfied and invited CBA, a MC services company from outside the area, to enter the Philadelphia market. Despite start-up costs of over $3,000,000, CBA turned a profit within 14 months. In a move admittedly taken to avert a price war, Advo acquired CBA's Philadelphia preprint distribution operations in 1992. This acquisition apparently encountered no antitrust scrutiny. 14