30. november 2005
Journal nr. 3/1120-0301-0371/SEK/DRP
The Council meeting 30th November 2005
On 30th November 2005, the Danish Competition Council (DCC) adopted a decision concluding that the commitments made by Ritzaus Bureau I/S (Ritzau) meet the DCC’s concerns about Rizau’s standard agreement’s compatibility with section 11 in the Danish Competition Act.
The case was initiated when the Danish news agency, Ritzau, notified an agree-ment with the purpose of obtaining a statement of non-intervention in accordance with section 11 (5) in the Danish Competition Act. According to this provision, the DCC can assert that a given behavior is not considered to be an abuse of dominant position and hence not a violation of section 11.
The notified agreement was an agreement between Ritzau and Ritzau’s customers about the distribution of Ritzau’s news service. The news service contains Danish-language news from home and abroad, which is transmitted continuously all around the clock. First of all, the news service provides news coverage, which gives the media (i.e. newspapers and radio/TV) an overview of the news flow and secondly, the service enables the media to bring articles from the news service – edited or unedited – in their publications.
Based on an extensive market survey the relevant market has been defined as the national market for Danish-language news covering all categories of subject matters throughout the country. According to the Danish Competition Authority, Ritzau possesses a dominant position in this market.
The notified agreement contained one condition, which gave rise to scrutiny; Rit-zau wanted to impose a restriction on the use of articles from the news service. Accordingly, news from the news service may only make up for 25 pct. of the cus-tomers’ total news material. Ritzau wanted to impose this restriction, because they felt that some customers’ extensive use of Ritzau articles was diminishing the value of the news service for other customers. Ritzau feared that especially the free newspapers extensive use could lead the daily papers, who own Ritzau to abandon Ritzau’s news service.
However, the Competition Authority found that the restriction gave rise to certain concerns. The behavior could be seen as a possible abuse of dominant position and hence an infringement of section 11 of the Competition Act, because the restriction would lead to discrimination of Ritzau’s customers and would be placing espe-cially the free news papers, MetroXpress and Urban, at a competitive disadvantage.
Hence, the 25 pct. limit would result in secondary line price discrimination, which would raise the cost of the rivals of the owners of the news service. As a result, the 25 pct. limit was found to be disproportional with the damaging effects on the competition at the downstream news market.
Therefore, Ritzau agreed to give binding commitments and raise the limit from 25 pct. to 40 pct. in order to meet the DCC’s concerns. The DCC found that the offered commitment meet the concerns regarding the agreements compatibility with section 11 in the Danish Competition Act. Hence, the limit of 40 pct. was found to be proportional and objectively justified. The DCC therefore made the offered commitment binding according to section 16a in the Danish Competition Act.