B. HEARST’S ACQUISITION OF THE CHRONICLE VIOLATES SECTION 7 OF THE CLAYTON ACT AND SECTIONS 1 AND 2 OF THE SHERMAN ACT

Plaintiff has already shown in the briefing on his motion for a preliminary injunction that Hearst’s acquisition of The Chronicle will violate section 7 of the Clayton Act and sections 1 and 2 of the Sherman Act. It goes without saying that if daily newspapers in San Francisco are a relevant market, and if Hearst’s acquisition of The Chronicle will result in a Hearst’s obtaining a monopoly in that market, then Hearst will have violated these three sections of the antitrust laws, while CPC will have violated at least section 1 of the Sherman Act. State of Hawaii v. Gannett Pacific Corp., 1999 U.S. Dist. Lexis 19069 (D. Haw., October 15, 1999), aff’d, Nov. 15, 1999 (9^th Cir., unreported); Community Publishers, Inc. v. Donrey Corp., 139 F.3d 1180 (8^th Cir. 1998); United States v. Times Mirror Co., supra. The more relevant inquiry is what are the possible defenses to plaintiff’s claims.

Defendants have four defenses in this lawsuit: (1) that daily newspapers in San Francisco are not a relevant market; (2) that competition will not be foreclosed because The Examiner will continue under the Fangs; (3) that, notwithstanding their second defense, The Examiner is a failing company, which Hearst is not required to continue; and (4) that Hearst and CPC cannot be required to perpetuate the JOA, fixing prices and dividing markets, under either the antitrust laws or the Newspaper Preservation Act. None of these defenses has merit. Plaintiff will address each in turn.