NEW YORK STATE PERIODICAL DISTRIBUTOR PLEADS GUILTY

NEW YORK STATE PERIODICAL DISTRIBUTOR PLEADS GUILTY

WASHINGTON, D.C. – A New York State periodical distributor pleaded

guilty today and was sentenced to pay a criminal fine of $200,000 for

allocating markets for the wholesale distribution of magazines, other

periodicals, and books in Western New York State and at the Pittsburgh

International Airport, the Department of Justice announced.

Empire State News Corporation Inc. (Empire), of Buffalo, New York, was charged

in a two-count felony case filed today in U.S. District Court in Syracuse, New

York. The case charged that Empire participated in a conspiracy to suppress

and eliminate competition in the wholesale distribution of magazines, other

periodicals, and books in Western New York State from January 1999 to

mid-2000. Additionally, Empire was charged with participating in a conspiracy

to eliminate competition for the contract to supply magazines, other

periodicals, and books at the Pittsburgh International Airport between March

1999 and mid-2000. Under the plea agreement, Empire is cooperating in the

ongoing investigation into violations of antitrust laws and other related

criminal laws in the wholesale magazine distribution industry.

Wholesale distributors receive magazines, other periodicals, and books

directly from publishers and national distributors, and then distribute them

to retailers for sale to the general public.

According to court papers, Empire and another wholesale distributor carried

out the market allocation scheme by engaging in discussions regarding the

allocation of markets, agreeing in those discussions to allocate markets, and

then withdrawing from servicing some customers for the purpose of implementing

the agreed-upon market allocations for the wholesale distribution of

magazines, other periodicals, and books in Western New York State. Empire is

also charged with participating in a conspiracy to suppress and eliminate

competition by agreeing to refrain from the wholesale distribution of

magazines, other periodicals, and books at the Pittsburgh International

Airport in Western Pennsylvania in exchange for another wholesale distributor

not expanding its market share in Buffalo, New York, the home territory of

Empire.

Empire was charged with violating Section One of the Sherman Act, which

carries a maximum fine of $10 million, per count, for a corporation. The

maximum fine may be increased to twice the gain derived from the crime or

twice the loss suffered by the victims of the crime, if either of those

amounts is greater than the statutory maximum fine.

Todays charges resulted from an ongoing investigation of the wholesale

magazine distribution industry being conducted by the Divisions Cleveland

Field Office with assistance from the Syracuse, Albany, and Buffalo, New York

Offices of the Federal Bureau of Investigation.

Anyone with information concerning bid rigging, territorial or customer

allocation or related offenses in the wholesale magazine industry should

contact the Cleveland Field Office of the Antitrust Division at (216)

522-4070.