Source Interlink (NASDAQ:SORC)
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Source Interlink Cos. (SORC) sued a group of publishers, distributors and rival wholesalers on Monday, saying its magazine wholesaler has been cut off from its supply of People, Sports Illustrated and other popular titles after trying unsuccessfully to implement a per-copy distribution fee last month.

The antitrust lawsuit, filed in U.S. District Court in Manhattan, alleges the magazine publishers and distributors, along with two wholesalers, are trying to destroy Source's business and monopolize the U.S. wholesale magazine distribution market.

"Defendants' indisputable goal is to destroy Source's business so that defendants - through Hudson and News Group, the two remaining wholesalers - will monopolize the wholesale market and use that monopoly power to shift to retailers and consumers - and away from publishers - the entire financial burden resulting from worsening market conditions and publisher-induced inefficiencies in the distribution system," the complaint said.

The lawsuit names as defendants magazine publishers American Media Inc., Bauer Publishing Co., Hachette Filipacchi Media, and units of Time Warner Inc. (TWX).

It also names as defendants: magazine distributors Curtis Circulation Co., Kable Distribution Services Inc., and Distribution Services Inc.; and wholesalers Hudson News Co. and The News Group LP.

The lawsuit claims the collusive actions of the publishers, distributors and other wholesalers has caused wholesaler Anderson News Co. to go out of business.

On Jan. 14, Anderson announced it would implement a 7-cent per-copy distribution fee and Source's distribution unit followed suit on Jan. 19, announcing its own fee effective Feb. 1, according to the complaint.

The publishers and distributors resisted the surcharge and Source's distribution unit rescinded it, according to the lawsuit. Source Interlink also publishes magazines, including Motor Trend and Soap Opera Digest.

Source claims the publishers and distributors, despite assurances to the contrary, moved in "virtual lockstep" to cut off its supply of magazines, including People and Sports Illustrated.

The lawsuit also alleges the defendants launched a campaign to spread false rumors to Source's customers and others that "Source was in deep financial trouble and had ceased operations or was exiting the magazine wholesale business."

"The goal of that coordinated campaign was to do just that - to put Source out of business," the complaint said.

Dawn Bridges, a spokeswoman for Time Inc., declined comment late Monday, saying the company was reviewing the lawsuit. A spokeswoman for Bauer Publishing also declined comment late Monday.

Spokespersons at the other companies didn't immediately respond to requests for comment late Monday.

-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com