On 6 June 2016, the French broadcasting company TDF was fined 20.6 million euros by the French Competition Authority (“FCA”) for two abuses of a dominant position.
This is not the first time the FCA has censured TDF’s anticompetitive conduct: in 1999, and again in 2015 (see our article “Towering Abuse”), the firm was handed a fine for exclusionary conduct. Once again, the FCA tried to make sure TDF understood the gravity of its actions: the amount of the fine was increased by 20% to sanction the reiteration of the unlawful behaviour. An appeal before the Paris Court of Appeals has since been lodged, as in 2015.
This particular case harks back to 2009: TDF, although no longer a state-owned company since 2004, still held a dominant position on the Hertzian broadcasting market, and had a very good reputation with local authorities. When digital terrestrial television (“DTT”) was introduced in France in 2009, this was a unique opportunity for its competitors to finally gain some of the new market shares. Howver, TDF set up two anticompetitive mechanisms which made sure they did not.
First, the firm adopted a disparaging conduct, and used its good relations with local authorities to dissuade them from allowing competitors to set up their own pylon sites to broadcast. In order to do so, they alleged the existence of a radio disturbance risk, should more pylons be built. The mayors, to ensure that their constituents remained able to watch TV, preferred to follow TDF’s instructions, even though the firm no longer had the authority to give any.
The second practice sanctioned by the FCA resulted from the loyalty rebates offered to channel providers (grouped into multiplexes), to reward their choosing TDF as a broadcasting service supplier. The rebates increased with the number of locations within the same zone, and encouraged channel providers to prefer TDF over the other suppliers, thus evicting the latter from the market.
The FCA rejected, in particular, the following defense of TDF: in an effort to lower the amount of the fine, the firm claimed to be a single-product company, as it specialised in the broadcasting sector only. To that, the FCA replied that the concept of “single-product company” could not be applied in such a broad manner, to do so would defeat its purpose, which the FCA reminded is to make sure that when the usual method places the amount of the fine too close to that of the revenue of the firm, that amount can be lowered so as not to push the company toward bankruptcy. This method should therefore not be used to apply to the type of activity a firm specialises in, but rather be considered as a tool to adapt the amount of the fine when it is disproportionate.
It should also be noted that the context of the repeated anticompetitive practices was highlighted as an aggravating factor by the FCA. Indeed, the consequences of the disparaging practices and to a lesser extent of the rebates, were all the more dire as they impeded competitors from entering the market at a time when the introduction of the DTT could have been a springboard for their development. The amount of the fine, more than 20 million euros, attests to that.