Competition Authority imposes multi-million fines on colluding book publishers

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Norwegian Competition Authority (“NCA”) handed on March 22nd 2017 the down fines accumulating to MNOK 32 to four Norwegian book publishers. The publishers Aschehoug, Cappelen Damm, Gyldendal and the former Schibsted Forlag received fines ranging from MNOK 4,5 to MNOK 9,6. According to the NCA`s decision, these publishers have illegally colluded by collectively excluding a distributor supplying the so-called “mass market” for retail sales of books, i.e. sales outside traditional bookshops such as kiosks, grocery shops and petrol stations. In addition, the NCA also found that the publishers have exchanged anti-competitive information.
Tuesday, April 4, 2017

Authors: Senior Lawyer Lennart Garnes and Partner | Lawyer Thomas Sando

The four publishers involved are not only responsible for most of the books supplied in Norway. Collectively, the four publishers also have ownership in the market leading distributor of books to the mass market retailers, Bladcentralen. The latter`s only real competitor, the distributor Interpress, was denied distribution of books issued by any of the four fined publishers. The four publishers only supplied such books to its “own” distributor, Bladcentralen.

The NCA has concluded that the collusion qualifies as an “object infringement” pursuant to the Norwegian Competition Act`s prohibition against anti-competitive concerted practices, holding that the collusion`s object was to restrict competition in the Norwegian mass market for books.

“Object infringements” – as opposed to infringements where a negative effect on competition must be substantiated – are in general considered the most serious form of anti-competitive behaviour.

The book industry is currently subject to an exemption from the Norwegian Competition Act`s prohibition of anti-competitive concerted practices. A scheme which, inter alia, includes fixed prices on all new books.

This scheme – which is supported by the traditional publishers, including the four now fined by the NCA – is politically initiated and alleged to promote cultural objectives such as literary pluralism. The NCA, however, has in the clearest terms advocated against it from a competition policy point of view, even arguing that alternative measures would be more targeted in order to achieve the literary pluralism objective.

Furthermore, in the new markets of online distribution of audio and e-books to consumers, new market operators without previous connections to the traditional book publishers may experience problems in being granted access to distribute the books issued by the traditional publishers. “Independent distributors” without a vertical connection to a publishing house, may therefore be met with protecting measures from the traditional publishers, safeguarding their own audio and e-book services by impeding access to their own book titles.

Law Firm Steenstrup Stordrange DA will continue to monitor the competition issues related to the Norwegian book industry, including the emerging online distribution platforms. Our EU/EEA and Competition department cooperates closely with our Technology department, in order to ensure the best quality advice through an interplay between competition law expertise and sector specific aspects.

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