The Belgian Competition Authority recently established that the National Lottery had abused its dominant position by launching a sports betting product under the name Scooore!. In its September 22 2015 decision (Stanleybet ea v National Lottery) the authority also imposed a fine of almost €1.2 million.
The National Lottery has a legal monopoly in Belgium for the organisation of public lotteries. The case turned on the use of resources developed in the context of this monopoly activity when the National Lottery decided to move into the sports betting market, which is regulated but highly competitive.
When the National Lottery entered this market with Scooore!, a number of sports betting groups claimed that it had unduly leveraged its position in the market for public lotteries in order to enter the new market. The companies complained to the Competition Authority taking issue with a number of practices, including the National Lottery's use of data acquired in the context of its monopoly activity and the fact that the National Lottery had blocked a slot for a sports betting licence, as the law sets a maximum number of licences and the National Lottery held two of them. They also objected to:
- the use of the National Lottery logo to promote the new product;
- cross-subsidisation practices; and
- exclusivity and non-compete clauses in the contracts between the National Lottery and its retailers.
The Competition Authority dismissed all of the claims except the first point concerning the use of data. It investigated two practices in this context. The first concerned the National Lottery's use of a database developed in the context of its monopoly activities. The database contained a large amount of contact details, compiled on the basis of data submitted by customers of its monopoly activities. The National Lottery used the database for a one-off mass email campaign when Scooore! was launched.
The second practice concerned the planning phase. At that time, the National Lottery performed a market study and requested its retailers to submit commercially sensitive information about other sports betting companies. Similar requests were made after the launch of Scooore!. Some retailers responded to these requests and submitted confidential data on competing suppliers to the National Lottery.
Unsurprisingly, the authority held that the National Lottery was dominant in the public lottery market. The authority explicitly stated that a monopolist is entitled to diversify its activities and that diversification does not constitute abuse. However, it established that the two practices under investigation constituted abuse. Regarding the first practice, the authority noted that the database had been developed in the context of activities under monopoly and that it was not the result of competition on the merits. The authority further noted that the database was a unique asset that could not be reproduced by competitors under reasonable financial conditions and within a reasonable amount of time.
With regard to the second practice, the authority observed that access to commercially sensitive information reduced the uncertainty regarding the behaviour of other sports betting operators. It also gave an insight into the pricing of competitors' products, which in turn may have had an impact on pricing by the National Lottery in its relationship with retailers and end consumers.
The authority acknowledged that the practices did not have a proven impact on competition, even though Scooore! had been successful. However, the authority noted that a potentially restrictive effect is sufficient to trigger the prohibition of abuse of dominance. In this particular case, the potential effect was deemed to exist.
The National Lottery eventually opted for settlement and the settlement decision explains at length the authority's reasons for applying a relatively modest fine.
The case is the first settlement decision in an abuse of dominance case in Belgium (this option does not exist at the EU level). The finding of an abuse for the use of data developed in the context of a monopoly is novel. The decision also highlights the risks for a supplier seeking to obtain commercially sensitive data from its distributors.
This is the second settlement decision adopted by the Competition Authority since the new Competition Act entered into force. Under Belgian law, settlement decisions cannot be appealed.
For further information on this topic please contact Koen Platteau at Simmons & Simmons LLP by telephone (+32 2 542 0960) or email (email@example.com). The Simmons & Simmons LLP website can be accessed at www.simmons-simmons.com.
ILO - This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.