The Montenegrin Agency for Protection of Competition has decided its first cartel case. The decision, issued on 25 April 2014, concerns price-fixing conspiracy between the publishers of the country’s major newspapers – Pobjeda, Vijesti, Dan, and Dnevne novine. The Agency’s investigation leading to the decision also spanned to two Serbian newspapers sold on the Montenegrin market (Blic and Novosti) but the Agency eventually found there was not sufficient evidence of their participation in the collusion. The reasoning of the decision is not publicly available but BDK obtained a copy pursuant to a freedom of information request.
Summary of the case
The Agency learned of possible collusion between the publishers during a sectoral investigation it was conducting on the market of newspaper publishing. Once it obtained information and documents which led it to suspect the existence of a price-fixing conspiracy among daily newspapers publishers, the Agency on 18 June 2013 initiated investigation against Vijesti, Dan, and Pobjeda. On 24 July 2013 the investigation was expanded to include Dnevne novine, Blic, and Novosti.
The smoking gun in the case was a written agreement signed by Pobjeda, Vijesti, and Dan, whereby they agreed to simultaneously increase the price of the papers to 0.70 euros. The agreement was signed in April 2012 and the price increase was supposed to occur starting from May 1 that year. Prior to the target date, Pobjedainformed other participants that it was dropping out of the agreement. It did raise its price to 70 euro cents, however only in May 2013. The price of Vijesti and Danincreased to 0.70 euros on 1 May 2012.
The three signatories to the agreement defended themselves by arguing that the agreement did not amount to a prohibited restrictive agreement since the parties did not intend it to be binding. They also asserted that the agreement was not valid because it was not signed by all of the publishers who were named in it (from the Agency’s decision it follows that the agreement also designated Dnevne novine,Blic, and Novosti as signatories although they eventually did not sign). In addition, the publishers submitted that the agreement could not have had negative effects on the market as it was never actually implemented – Pobjeda in the end did not proceed with the price hike on the target date but only a year later, while Vijestiand Dan both argued that their respective decisions to raise the price of the papers represented independent commercial decisions and were not a result of a collusion.
The Agency dismissed these arguments, noting that an agreement does not have to be a binding contract in order to amount to a prohibited restrictive agreement. It also confirmed a well-known position in comparative competition law that the fixing of prices between competitors is a restriction by object, which is prohibited regardless of its actual effects on the market. The authority refuted the assertion that Vijesti and Dan increased their respective prices independently, pointing to the fact that they signed the agreement on price increase and raised the prices to the figure and on the date designated in the agreement.
The Agency established that the publisher of Dnevne novine, which ultimately did not sign the agreement, was nevertheless part of the cartel because it participated in the price fixing negotiations without taking distance from what was being discussed. Such participation, which of itself constitutes an infringement, was anti-competitive also because it enabled the publisher to adjust its commercial behavior - even though Dnevne novine did not increase its price starting from 1 May 2012, it did change its commercial policy as of that date by distributing its papers free of charge. The Agency relied on the ECJ rulings in Huls v. Commission and Commission v. Anic, Court of First Instance judgment in Cimenteries CBR v. Commission, and Commission decision in Amino Acids.
Periodic penalty payments
The decision is also significant in that the Montenegrin competition authority for the first time exercised its power to impose periodic penalty payments on undertakings which fail to act in accordance with its procedural orders. The authority imposed a EUR 5,000 fine on Novosti and Dnevne novine each, for a failure to deliver requested information and documents.
Measures imposed on infringers
Having found the infringement, the Agency ordered Vijesti, Dan, Pobjeda, and Dnevne novine to independently set the price of their respective newspapers and set out the methodology used, within 30 days of the receipt of the infringement decision. On the date of this post, Pobjeda, Vijesti, and Dan still cost EUR 0.70, while the price of Dnevne novine is 50 euro cents.
In Montenegro, the competition authority does not have the power to issue fines for antitrust infringements, but can only request initiation of misdemeanor proceedings before a misdemeanor court. It is yet unknown whether the Agency triggered misdemeanor proceedings in this case.
One of the parties, Vijesti, applied for leniency in the course of the proceedings but was refused this status by virtue of a separate, unpublished, decision of the Agency.
The possibility of leniency was introduced in the Montenegrin competition legislation in 2012. Leniency is available to the applicant which is neither the initiator nor the organizer of a restrictive agreement and which (i) is the first to report to the Agency the existence of the agreement and deliver valid evidence thereof, (ii) delivers to the Agency evidence of a restrictive agreement of which the Agency has knowledge but lacks sufficient evidence (the breath of this condition remains unclear, specifically how exactly it differs from the condition under (i)), or (iii) reports to the Agency and delivers evidence of another restrictive agreement in which the applicant participates or has direct knowledge of. If the applicant satisfies one of the alternative conditions listed above and enables the conclusion of the proceedings before the Agency and the issuance of an infringement decision, the Agency may grant leniency and decide (i) not to request the initiation of misdemeanor proceedings against such applicant, (ii) to withdraw a request for the initiation of misdemeanor proceedings, or (iii) to propose to the misdemeanor court a more lenient penalty for the applicant.
The newspaper cartel decision is a sign of the Agency’s nascent enforcement activity following the remake of the Montenegrin competition legislation in 2012. Currently, the Agency is conducting three investigations - two in the area of restrictive agreements and one concerning an alleged abuse of dominance. Given that a set of block exemption decrees has been recently enacted, it can be expected that the Agency will step up its investigations efforts concerning restrictive agreements that fall out of the safe harbors provided by the block exemptions.