The Competition Appeal Tribunal has today in a case No. 1/2018 Confirmation of the decision of the Competition Authority No. 47/2017 to reject the request of Forlagið ehf. to annul the conditions imposed in connection with the merger of JPV útgáfu ehf. and Vegamóta ehf. That merger resulted in Forlagið taking its current form as the country's most powerful book publisher, and the conditions were imposed to eliminate the merger's harmful effects on competition.
The appeal board's ruling confirms that the position of the Publisher has not changed in principle in recent years. The Publisher is still the largest book publisher in Iceland with a 45-50% share of the general book publishing market, and has approximately four times the share of the next largest publisher, Bjartur-Veröld. The Forlagið also has a wide range of publications compared to most other book publishers.
The Court of Appeal has therefore confirmed that the conditions, primarily intended to prevent the company from using its strength against competitors and thereby harming competition, will continue to apply to the Publisher.
The Competition Authority considers the ruling to be important, and the decision is intended to safeguard effective competition in the book market, where Forlagið is the market leader and the barriers to entry are high, particularly for smaller publishing companies with limited finances.
The conditions that will continue to rest on the Publisher
On 5 February 2008, the Competition Authority made decision no. 8/2008 regarding the merger of JPV útgáfa ehf. and Vegamóta ehf. (an imprint then owned by Mál og menning). To remedy the competition concerns that the Competition Authority considered the merger would entail, the merging parties submitted proposals for conditions to be imposed on it. An agreement was reached on the conditions, which were subsequently imposed by the decision.
The conditions that are still in effect, and were confirmed by the appeal board's ruling today, include the following:
- The publisher may only negotiate publication rights for one book title at a time with any given author.
- The Publisher is not permitted to grant book resellers a discount from its wholesale price unless the Publisher can demonstrate beyond doubt a cost saving from its dealings with the relevant reseller that is consistent with the discount.
- The publisher is prohibited from discriminating against booksellers in any promotional or advertising activities, or with materials relating to the display and promotion of books in booksellers' shops, unless such discrimination is based on general commercial considerations.
- The publisher is prohibited from entering into any exclusive purchasing agreements with booksellers.
- The publisher is prohibited from having any involvement in the resale price of books published by the company, or from publishing the resale price in any way.
Previous rulings of the Court of Appeal and the courts regarding the conditions
The conditions have previously been the subject of appeals to the Appeals Committee and the courts:
- Breach of decision: By decision no. 24/2011, Appeal by Forlagsins ehf. against the decision of the Competition Authority no. 8/2008, the Publisher was ordered to pay an administrative fine of 25,000,000 kr. for breaches of the aforementioned conditions. The Publisher appealed the decision to the Competition Appeals Board, which upheld it in its ruling in case no. 5/2011. The case went all the way to the Supreme Court of Iceland, which upheld it with its judgment in case no. 28/2015 that the Publisher had breached a ban on publishing recommended retail prices to retailers and that the company was liable to pay a fine of 20,000,000 kr. to the state treasury as a result.
- The Publisher's request for information about sources/competitors: During the proceedings on the reopening of the case, pursuant to decision no. 47/2017, in April 2017 the Publisher requested access to documents that had been obtained from the company's competitors and were confidential information. This included, amongst other things, information about informants (mainly competitors) who had provided the Competition Authority with information and submitted their views, as well as statistical data. The Competition Authority refused the Publisher access to the information, as it consisted of sensitive business information that was to be kept confidential. The Publisher appealed the Competition Authority's decision to the Competition Appeals Board. In its ruling in case no. 5/2017 The decision of the Competition Authority to refuse the Publisher the delivery of the information was confirmed in its entirety. Among other things, it was stated that it was not seen that there were any real interests for the Publisher in obtaining information about how the company's competitors and customers had commented on its submission to the Competition Authority.
