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Post Denmark has abused its dominant position in the market for magazine mail

30. august 2007

4/0120-0100-0048/ISA/TWA The council meeting August 30th 2007

On August 30th 2007, The Danish Competition Council decided that the Danish universal postal carrier Post Danmark A/S had abused its dominant position in the national market for magazine mail in 2004 and 2005, thus infringing section 11(1) in the Danish Competition Act and Article 82 of the Treaty. The abuse consisted in imposing exclusionary pricing and rebate schemes and discriminating between customers, thereby placing the customers at a competitive disadvantage. The case was initiated as a result of a complaint from Forbruger-Kontakt, a competitor.

The Danish Competition Authority has defined the market as being the clearing, sorting, transport and delivery of magazine mail, defined as a large number of identical postal items delivered to named recipients on a regular, but not daily, frequency. The relevant geographic market is found to be Denmark. Post Danmark has a dominant position on the relevant market due to a very high market share, a nationwide distribution network and a significant brand which allow it to act independent from its competitors. As the infringement may affect trade between member states the Danish Competition Authority has applied Article 82 of the Treaty alongside section 11(1) in the Danish Competition Act.

Post Danmark’s pricing and rebating scheme for magazine mail consist of i) a general price list, ii) individual price lists, and iii) individual quantity rebates granted on the basis of either the general price list or the individual price lists.

All customers in the relevant market face prices and/or rebates which are cumulative or retroactive. This results on the one hand in significant surcharges for customers moving quantity from Post Danmark to a competing distributor and on the other hand significant discounts for customers moving quantity to Post Danmark from a competing distributor. Post Danmarks pricing and rebate scheme has significant spans between highest and lowest prices.

Post Danmark is also a necessary contracting party as a consequence of its very strong position regarding geographic coverage and ranges of postal services. The effect of Post Danmark’s pricing and rebate scheme on the customers’ choice of distributor is not insignificant.

Post Danmark has not been able to justify its pricing and rebate scheme sufficiently on the basis of its costs. Specifically, Post Danmark has not been able to justify in relation to its costs the cumulative nature of the pricing and rebate scheme.

Also, the fact that Post Danmark offers its customers different price lists and rebates to its customers, without a justification based on costs, implies discrimination between customers competing against each other, thus placing the customers at a competitive disadvantage.

Post Danmark has therefore been ordered to arrange for its pricing and rebate scheme for magazine mail to comply with section 11(1) in the Danish Competition Act and Article 82 of the Treaty from January 1st 2008 the latest.