That's the claim of this article, which notes James M. Buchanan (he, too, a future Nobel Prize winner) as a second victim. Both were faculty in what was then called UVa's Thomas Jefferson Center for Studies in Political Economy, and according to the article, their offense (and, the article suggests, the offense of the Center more broadly) was exploring the use of "markets to achieve efficient and beneficent goals."
Besides the dispiriting possibility that Coase and Buchanan were edged out for conducting unpopular research, the other (intertwined) thing of note here is the apparent assumption that was made about Coase's personal politics on the basis of his scholarly methodology. Coase reportedly said, of the "secret dossier compiled by then Dean of the Faculty Robert Harris in which Harris outlined a plan to change the economics faculty," that it
was very damning because it makes quite clear what their attitude was and there was actually a policy to get rid of us. . . . My wife once heard someone at a cocktail party describe me as someone to the right of the John Birch society. It wasn't true. You know, I'm English and have a completely different history from most of the other people and am not really much involved at all in American politics.
Would that scholars' work and the arguments contained therein were evaluated on their own terms.