Danish Competition Appeals Tribunal upholds: FK Distribution abused its dominance
It amounted to abuse of dominance when FK Distribution made it a condition for distributing unaddressed promotional items that the customers also purchased advertising leaflets on FK Distribution’s online platforms. That was the conclusion reached by the Competition Appeals Tribunal’s in a recent appeal case.
The Competition Appeals Tribunal’s ruling on 27 April 2021 in case KL-4-2020: Forbruger-Kontakt A/S vs the Danish Competition Council
Background
FK Distribution is the largest distributor in Denmark of unaddressed promotional items, which include advertising material, local weekly papers and other printed material. Since PostNord left the market on 1 January 2018, FK Distribution has been the only nationwide distributor of such items.
The case concerns FK Distribution’s tying of customers in the period from 2018 to October 2019. Customers wishing to use FK Distribution as distributor of their unaddressed items also had to buy display of their advertising leaflets on FK Distribution’s online platforms, including www.minetilbud.dk and the app "minetilbud". With this requirement, FK Distribution tied the two services.
While the market for unaddressed promotional items has been declining in recent years, the market for online advertising on platforms has soared. The two markets are connected, because many advertisers, including the large supermarket chains, are customers on both markets. The case illustrates that the competition authorities pay particular attention to online markets and platforms.
The Competition Appeals Tribunal's ruling
The Competition Council agreed with the Competition Council that, by tying the sales, FK Distribution had abused its dominant position on the market for unaddressed items.
According to the Tribunal, the tied selling practice was capable of restricting competition, because FK Distribution was guaranteed that many of its customers on the market for unaddressed mail - including large key accounts - would also purchase its services on the market for online advertising on platforms. The Tribunal identified two consequences of this practice:
- FK Distribution captured more users on its own online advertising platforms.
- That reduced the customers’ incentive to use and pay for other online advertising platforms.
In these circumstances, the Competition Appeals Tribunal concluded that FK Distribution had abused its dominant position on the market for unaddressed promotional items to gain an unfair competitive advantage on the growing market in Denmark for online advertising on platforms. The Tribunal therefore upheld the Competition Council’s decision from June 2020.
Read also our previous news article on the Competition Council’s decision.
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