Brussels Court of Appeal finds that Belgian press distributor AMP abused its dominant position
On 29 May 2012, the Brussels Court of Appeal handed down a judgment in which it found that the newspapers and magazines distributor “Agences et Messageries de la Presse” (AMP) had abused its dominant position.
AMP is a subsidiary of French media group Lagardère and holds exclusive rights to distribute the main Belgian newspapers and magazines, a number of other specialized magazines as well as the majority of international magazines and newspapers to Belgian press shops and grocery stores. Press retail shops who want to be delivered with newspapers and magazines by AMP are charged a fee for this so-called “third” leg in the distribution chain (the first and second leg being the collection of newspapers and magazines at the publisher and the distribution to regional warehouses).
In November 2008, AMP announced plans to increase the fixed minimum monthly fee charged to smaller retailers for its services from 103 EUR to 219 EUR. In February 2009, a number of press retail shops brought proceedings before the Commercial Court of Brussels challenging this announcement. According to the retail shops, the increase of the fixed minimum monthly fee was discriminatory, excessive and unfair because it was implemented unilaterally and without consideration of the economic situation of the retailers or consultation with them, and in such a way that it fell to be paid only by smaller retailers and not by larger retailers. The retail shops argued that AMP abused its dominant position and infringed the Belgian law on fair commercial practices by increasing the fee in this way. The Commercial Court ruled that AMP held a dominant position on the market for the distribution and delivery of press but dismissed the actions because it considered the price increase of AMP was not abusive in light of AMP’s costs. The press retail shops brought an appeal against this judgment to the Brussels Court of Appeal.
The Court of Appeal first confirmed the dominant position of AMP on the market for the distribution and delivery of press articles. According to the Court, AMP is the distributor of almost all Belgian newspapers and the majority of international newspapers and popular magazines in Belgium and it is therefore an unavoidable trading partner for retail shops. Moreover the Court recognized the existence of entry barriers to the market such as high fixed costs, significant economies of scale and exclusive contracts with publishers and/or transporters. AMP’s specific know how, the economies of scale of its logistical network and market power vis-à-vis the publishers and transporters represent significant cost advantages that cannot easily be obtained by smaller organizations having their own transport organization.
Secondly, the Court found that AMP’s price increase was discriminatory because it only concerned the fixed minimum monthly fee which was charged to smaller retailers, and not the variable percentage of net income which larger retailers had to pay. According to AMP, as the costs for its services were the same for all the retailers, the fixed minimum monthly fee system created a positive discrimination in favour of the smaller retailers because in relative terms they paid less than the larger retailers which have to pay a variable percentage of their net income. AMP argued that increasing the fixed minimum monthly fee would only have the consequence of restoring the balance between the prices paid by retailers of different sizes. The Court acknowledged that an increase of the variable percentage by itself would not have been efficient but considered that only increasing the fixed minimum monthly fee was not an appropriate solution either: such an increase created a disadvantage for the smaller retailers because they would have to pay a higher relative price for the services and would no longer have the possibility of competing with the larger retailers on the market. The Court referred to the analysis of an economic expert which found that only a combined increase of the fixed minimum monthly fee and of the variable percentage could be justified as non-discriminatory. The Court concluded that AMP’s selective pricing practice distorted competition on the downstream market between the retailers and constituted therefore an abuse of dominant position.
Finally, the Court considered that the increase was not only discriminatory but also excessive. The Court agreed that an increase of the fixed minimum monthly fee was necessary to cover AMP's increased costs. However, the economic expert appointed by the Court estimated that an increase of the fee to a level of EUR 205, instead of EUR 219, would have generated sufficient compensation. The Court followed the expert's analysis and considered the fee's increase to be excessive since it exceeded the costs objectively incurred by AMP.
The Court consequently ordered AMP to stop its infringement and to partly refund the minimum fees already paid by the retailers.
It appears that this judgment will not end the conflict between AMP and the press retail shops. It has been reported that AMP and the press retail shops continue to disagree over the price increase applied by AMP at the end of 2008 and, in the meantime, AMP, on 3 July 2012, has sent a letter to the retailers announcing a further increase of the fixed minimum monthly fee. To be continued.