UPDATE: Business Wire Objects To Nasdaq's Free Wire Services

Business Wire Inc. is challenging a move by Nasdaq OMX Group Inc. (NDAQ) to bundle free wire-distribution services with stock listings at the exchange, alleging that the practice is anti-competitive.

In a letter to the Securities and Exchange Commission, Business Wire called on regulators to block an increase in listings fees proposed by Nasdaq OMX, alleging the higher rates are intended to subsidize free information-distribution services offered by Nasdaq OMX subsidiaries like GlobeNewswire.

"Customers for listing services, while having the nominal right to choose their own provider of Information Dissemination Services, will inevitably treat Nasdaq's listing service and its 'free' Information Dissemination Services as a single unit and direct their wire distribution business to GlobeNewswire since they are already incurring the cost," attorneys for Business Wire wrote in the letter, a copy of which was seen by Dow Jones Newswires.

Representatives of Nasdaq OMX declined comment on the letter.

Business Wire, a unit of Berkshire Hathaway (BRKA), distributes press releases, regulatory filings and other information and dominates the U.S. market for such services alongside PR Newswire, a subsidiary of United Business Media Ltd (UBM.LN).

Nasdaq OMX's GlobeNewswire service, previously known as PrimeNewswire, was acquired by Nasdaq in 2006 and controls a relatively smaller portion of the market, estimated at 5% to 10%.

The maximum price for listing on Nasdaq is currently $95,000, though this is expected to rise to $99,500 in 2010, according to Nasdaq OMX's proposal. The exchange operator also is proposing to raise application fees to $25,000 from the current $5,000.

The battle between Nasdaq OMX and rival NYSE Euronext (NYX) to capture initial public offerings and woo listed companies away from the other market has become especially pitched this year. More listed companies are considering a switch to the other venue in a bid to save money by bargaining for services like Nasdaq OMX's GlobeNewswire.

For companies distributing an earnings press release that's thousands of words long, a free service could mean thousands of dollars in savings, which can factor into a company's decision to switch their shares to another exchange.

In its letter to the SEC, Business Wire representatives described one meeting between a Nasdaq OMX executive and a Business Wire client in which the exchange offered up to $1 million of free information distribution services for five years as an incentive to defect from NYSE Euronext.

Business Wire argued that as an exchange operator, Nasdaq OMX is obligated to not impose fees that burden competition or impede the operation of free markets.

The company has raised similar concerns around Nasdaq OMX's bundled services for issuing companies in the past.

When Nasdaq OMX sought to raise its listing fees in 2006, Business Wire and others objected to an effort to tie in wire services to its listings business as one of the reasons for raising its rates. That fee increase was approved in 2007.

-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; jacob.bunge@dowjones.com

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