The Danish Competition Council: Illegal agreement on customer allocation between media agencies

9.13.2017

According to the Danish Competition Council, a customer allocation agreement entered into by the consolidator companies Mediacenter Danmark A/S and MPE Distribution ApS constitutes an infringement of the prohibition against anti-competitive agreements. The investigations were initiated as a result of MPE Distribution's own inquiry to the Danish Competition and Consumer Authority.
The Danish Competition Council's decision of 30 August – customer allocation between MCD and MPE Distribution
By economist Thomas Andersen

The market and the consolidator schemes

Mediacenter Danmark and MPE Distribution are so-called consolidator companies within the sale of distribution of unaddressed mail (circulars, including in particular advertising material).
 
While large advertisers negotiate prices and terms directly with the national distributors of unaddressed mail, small advertisers do not have the required negotiation strength, due to the low volume of mail, to be able to obtain sufficiently favourable prices and terms from the distributors. The business concept of the consolidator companies is therefore to group the mail from many small advertisers in order to obtain better prices and terms from the distributors than the small advertisers could have obtained alone.

The Danish Competition Council's decision

The Danish Competition Council has established in its decision that Mediacenter Danmark and MPE Distribution had entered into an arrangement on joint purchase and resale of distribution of unaddressed advertising material from late 2013 to late 2014. The arrangement implied that the joint purchases took place through Mediacenter Danmark, which on behalf of both parties entered into contracts with the distributors. Consequently, the arrangement implied that MPE Distribution was not allowed to contact Mediacenter Danmark's customers. The Danish Competition Council therefore considered the arrangement to be a customer allocation agreement, which is contrary to competition law.
 
The Danish Competition Council has subsequently decided to submit the case to the State Prosecutor for Serious Economic and International Crime for the purpose of assessing criminal liability (if any).