Rouge Media Group president Martin Poitras says a Quebec court has delivered a “knockout punch” to its two major competitors in the highly competitive indoor advertising space.
For the second time this year, the Montreal-based company has emerged on the winning side of a court decision regarding its ability to sell advertising in restaurants, nightclubs and post-secondary campuses where its primary competitors, Newad Media and Zoom Media, have contracts.
In a ruling Wednesday, the Quebec Court of Appeal paved the way for the out-of-home advertising company to install advertising in approximately 39 establishments in Toronto and Montreal where Zoom Media has contracts to supply in-washroom advertising.
The ruling invoked the Latin principle of Audi alteram partem (“hear the other side too”) – because the affected establishments were not called to testify on Zoom’s behalf about the scope of their contract, it would be contrary to the law to take away their right to earn additional revenue through contracts with Rouge Media.
The decision overturned an April 2011 ruling by the Superior Court of Quebec denying Rouge Media permission to install advertising in areas of the establishments other than the washroom. Rouge Media’s primary product is 5 x 7-foot vinyl murals that are often displayed in the main room of bars, clubs and resto-bars.
Wednesday’s decision came less than two months after another significant legal victory for Rouge, in which the Quebec Court of Appeal dismissed an appeal by another competitor, Newad, regarding a 2011 decision by the Superior Court of Quebec in which it declined to issue a permanent injunction against Rouge Media.
These decisions are the latest salvo in a frequently rancorous battle between Rouge and its two Montreal-based competitors. Poitras said the decision is vindication for his company.
“It’s been a long [battle] to show that we’re right,” Poitras told Marketing. “It’s been a long process and we often felt it was a bit unfair, because we knew we were right.”
Rouge Media now has partnerships with more than 2,000 companies through three networks catering to resto-bars, campuses, beauty salons and spas.
But Zoom Media chairman and CEO Francois de Gaspé Beaubien claims that Rouge Media’s court victory last week came on a technicality. He asserts that the court actually refused to rule because none of the involved establishment owners were asked to testify in the proceedings.
“Martin is taking it as a victory,” said de Gaspé Beaubien. “Good for him.
“Clearly we’re disappointed, but basically at the end of the day [the ruling] was procedural in nature,” said de Gaspé Beaubien, who asserted that the judgment was basically saying “We refuse to judge.”
Poitras disagreed with de Gaspé Beaubien’s characterization. “There’s a 30-page ruling that says their claim on exclusivity is limited only to the product they carry, which is washroom ads in 98% of the cases.
“These two companies misled people,” he added. “But the judgment is more than a victory – it’s a knockout punch. It confirms that their agreement with every single bar in Canada is only valid for the product they have in the washrooms.”
Further complicating matters is the fact that Poitras worked for Zoom between 1995 and 2002. De Gaspé Beaubien said that Poitras knew exactly how Zoom’s contracts with establishments were worded, and exploited this knowledge to draft contracts with business owners that circumvented certain stipulations.
“I was very upset that a former employee of mine took my contracts and… willfully went into venues where we had exclusivity,” said de Gaspé Beaubien.
For instance, he said, Zoom’s old contracts referred to advertising faces bolted into the wall, while Rouge Media designed banners that were bolted into the ceiling. De Gaspé Beaubien admitted that some of the former contracts weren’t clear on exclusivity, but have now been reworded to be “crystal clear,” he said.
Responding to de Gaspé Beaubien’s claim of contract circumvention, Poitras responded, “the clause at Zoom changed all the time, and the only thing that mattered was to protect the washrooms. To claim that we came up with a product that is suspended [in order] to circumvent the clause is ridiculous.”
Poitras claims that less than 10% of Rouge Media’s inventory is suspended from the ceiling, with the remainder affixed to walls. None of the inventory in Rouge Media’s resto-bar network, he added, is suspended from the ceiling.
