Competition law: Collective boycott – A restriction by object

The Norwegian Court of Appeal (Borgarting lagmannsrett) has in a recent judgement concluded on whether a collective boycott constitutes a violation of the competition rules:

The judgement addresses several issues relevant for the interpretation of the Norwegian Competition Act Article 10, which corresponds to the TFEU Article 101 and EEA Article 53. The key issue was whether a collective boycott as such can be considered as a so-called “restriction by object “. A restriction by object is, in short, a type of agreement or concerted practice between competitors which is considered to restrict competition (and therefore harm consumers) by its very nature. Accordingly, by proving a by object-restriction the Competition Authority is not obliged to examine the actual or potential effects which saves significant resources.

Here you may read the whole judgement (in Norwegian).

Background

The Appeal Court was conducting a judicial reviewing of the validity of an infringement decision by the Norwegian Competition Authority’s where four publishers (Cappelen Damm, Gyldendal, Ashehoug and Schibsted Forlag) were found to have exchanged sensitive information and engaged into a concerted practice that leaded to a collective boycott of a distributor, Interpress, that delivered books to the “mass market” (sales of books, usually best-sellers, to non-traditional book stores such as kiosks, grocery stores, gas stations etc). Interpress was at that time owned by Reitan Convenience, who also owns the retailer Narvesen – an important retailer whose sale of books was approximately 20 % of the mass market at that time. There was only one other competing distributor of books to the Norwegian mass market, Bladcentralen, which was controlled by the same four publishers (that together had a joint market share of approximately 70 % of the total market for books in 2014), and some magazine publishers.

Previously, the four publishers had to some extent also distributed their books to the mass market through Interpress. As from March 2014, Interpress did not receive books for distribution from the four publishers, with the exception of one book. Interpress assumed the four publishers had colluded on a collective boycott and filed a complaint to the Norwegian Competition Authority, which conducted a dawn raid at the four publishers and Bladcentralen in April 2014.

The Norwegian Competition Authority imposed fines (press release – in English)on the four publishers for infringement of the Competition Act Article 10 (which corresponds to TFEU Article 101). The decision (here – in Norwegian) was appealed to Oslo District Court by three of the publishers.

Oslo District Court found (here – in Norwegian), as The Norwegian Competition Authority, that the publishers had exchanged sensitive information, and that there was an agreement of a collective boycott between the publishers to exclude the distributor (Interpress) that was considered as a restriction by object. However, the District Court reduced to some extent the amount of fines as compared to the fines set by the Competition Authority. Two of the publishers  appealed the judgement of the District Court.

The Court of Appeal came to the same result as the  District Court in a dissenting judgment (the three judges dissented 2-1), i.e. that there was a collective boycott that amounted to a restriction by object.

Key points from the judgement of the Court of Appeal

  • All three judges found that the four publishers had engaged into an agreement in the sense of competition law: In the view of the majority of the court the contact between the publishers qualified both as a ‘concerted practice’ and as an ‘agreement’ – both facilitated by the information exchange between the publishers about ‘standing together’ by not using Interpress as distributor for bookstore books to the mass market.
  • The majority and minority of the court disagreed on whether the agreement had as its object to restrict competition. The majority found there were two by object restrictions; both i) the information exchange between the publishers regarding future volumes of books to be/or not to be delivered to Interpress, and ii) a collective boycott in line with EU/EEA-decisions on collective boycotts.
  • The majority found that the four publishers acted intentionally and increased the fines imposed by the District Court, nevertheless still on a lower level (lower amounts) than the fines imposed by the Norwegian Competition Authority.
  • The minority, on the other side, found that it was not sufficiently proved that there was a restriction by object.
  • Further, the minority rejected the theory of harm presented by the state. In the view of the minority the EU/EEA case law invoked by the State, i.e. case law that this was a collective boycott constituting a ‘by object’-restriction, could not be invoked, as the present case significantly distinguished itself from the previous cases.