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DBC Mediers's exclusive rights

31. maj 2006

4/0120-0100-0017/SEK/LOB The Council Meeting 31 May 2006

On 31 May 2006 The Competition Council adopted a decision concluding that DBC Medier’s exclusive rights to a number of films and computer programmes/games intended for distribution to public libraries did not constitute an infringement of section 11 of the Danish Competition Act an of article 82 of the Treaty. Furthermore, The Council concluded that there was no basis to make a further examination of whether DBC Medier’s exclusive contracts infringed article 81 and section 6.

Subject matter of the case
DBC Medier sells books, music, films, computer programmes/games and talking books to Danish libraries intended for public loan. According to The Danish Copyright Act films and computer programmes must not be used for public loan without the consent of the copyright possessor. This rule has enabled DBC Medier to entering into exclusive contracts with a number of copyright possessors and hereby obtaining exclusive lending rights to a substantial number of films and computer programmes.

Danish libraries buy lending materials through a distributor. The distributor is cho-sen by a public tender where the library appoints one distributor among the received offers. DBC Medier’s competitor, Flex Medie, has claimed that DBC Medier’s pooling of exclusive rights makes it very difficult for other distributors of lending materials to win tenders.

Also, the libraries have declared that due to DBC Medier’s exclusive rights, the li-braries having chosen Flex Medie as their distributor still have to buy a substantial number of films and computer programmes at DBC Medier.

Since the libraries always choose only one single distributor of films and computer programmes, it is of great importance for a distributor to have a wide range of films and computer programme titles.

The Competition Council should therefore decide whether DBC Medier’s exclusive rights constituted an abuse of a dominant position in contravention of section 11 in the Danish Competition Act and article 82 in the Treaty and/or whether the exclusive contracts restricted competition in contravention of section 6 in the Danish Competition Act and article 81 in the Treaty.

The relevant market and dominance
The geographical market was identified as Denmark. The relevant product markets were identified as the markets for distribution of films and computer programmes intended for public loan. On both markets DBC Medier has a dominant position.

Effect on trade between EU states
The Danish Competition Authority found that DBC Medier’s exclusive contracts impede distributors of lending materials from other member states from gaining access to the Danish market. Therefore, trade between EU states may be appreciably restricted by DBC Medier’s exclusive contracts.

The Danish Competition Authority’s examinations

The Danish Competition Authority has examined the extent of DBC Medier’s ex-clusive rights. The examinations have shown that DBC Medier has only exclusivity to about 5-7 percent of the films and computer programmes purchases by the libraries. Libraries using Flex Medie as a distributor buy many other materials from DBC Medier than those covered by exclusive contracts.

The decision by The Competition Council
Article 82 and section 11

On the basis of the Danish Competition Authority’s examinations, the Council concluded that DBC Medier’s exclusive contracts did not constitute an infringement of article 82 and section 11. One reason was that the extent of DBC medier’s exclusive rights was not sufficient having foreclosure effect. Moreover, the actual entering into exclusive contracts did not have an extent constituting unusual business behaviour.

Article 81 and section 6

According to the decision of the Court of Justice in Coditel II (262/81), a contract, whereby the owner of the copyright in a film grants an exclusive right to exhibit that film for a specific period is not, as such, subject to the prohibitions contained in article 81. However, the exercise of the right may restrict competition and thereby be in contravention of article 81. This is e.g. the case of contracts creating artificial barriers, or of contracts having duration disproportionate to such requirements.

The Competition Council attached great importance to the fact that the contracts did not have an unusual long duration, and that the contracts did only affect a limited share of the market. Therefore, the Council concluded that there was no basis to make a further examination of whether DBC Medier’s exclusive contracts infringed article 81 and section 6.