The Competition Authority has reached the conclusion in its new decision No. 24/2011 that Forlagið ehf. has breached the conditions of the decision of the Competition Authority No. 8/2008. The publishing house was formed in 2008 by the merger of two companies, namely JPV útgáfu ehf. and Vegamóta ehf. The Competition Authority identified concerns with the merger, but the merging parties reached an agreement with the Competition Authority in February 2008 to allow the merger to proceed and the Publisher to be established. The Publisher participated in formulating the conditions intended to mitigate the merger's anti-competitive effects, which the company considered it could comply with. The Publisher has now breached these conditions. The Competition Authority is therefore imposing an administrative fine of 25 million krónur on the Publisher.
The publisher breached a condition prohibiting the publication of a recommended retail price to retailers. The Publisher also breached a condition prohibiting it from granting resellers a discount on the wholesale price of its books, unless the Publisher can conclusively demonstrate cost savings from the transaction and that the savings are commensurate with the discount.
The evidence in the case revealed that before Christmas 2009, the Publisher had published recommended retail prices to retailers, either on order and registration forms accompanying book deliveries to resellers or in its online shop on the company's website. By law, the Publisher, as a retailer, is required to publish the final price for consumers in its online shop, or in other words, the price that consumers must pay if they wish to purchase the product. Instead, the Publisher published two types of prices: a retail price (a recommended resale price) and a discount price, which is the price consumers must pay if they wish to purchase the product (the final price).
The Publisher was also unable to demonstrate conclusively that the discount terms for resellers were granted on the basis of a cost advantage, as stipulated in the terms of the settlement which the Publisher had helped to formulate and accepted in 2008. Furthermore, it was a condition of the merger that there must be a correlation between the discount terms and the cost savings resulting from the transaction. The condition regarding the cost savings underlying the discount terms was designed to ensure the fairness of resellers towards the new market-dominant company created by the 2008 merger. Furthermore, the Competition Authority assessed that the difference in the discount terms the Publisher offered to its customers was greater than could be justified by arguments of cost-benefit, or in other words, that the Publisher had not treated its customers equally when granting discounts.terms.
See the decision for details No. 24/2011.
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