Influencing a dominant company’s conduct can be abusive regardless of own market position

17 September 2010

Dr Jörg Witting, Fabian von Busse

The Hamburg District Court has prevented German publisher Bauer from using the label “Top 100 Titel” on its journals and from urging dominant press wholesalers to prompt their retailers to display “Top 100 Titel” journals in their shops in a favourable manner. Although Bauer’s market position was not assessed, the court found that Bauer was liable under German competition law as a so-called “disturber” for encouraging dominant press wholesalers to abuse their market position vis-à-vis press retailers.

Bauer had pressured the press wholesalers to direct press retailers to display “Top 100 Titel” journals in their shops in full view, and therefore in a manner more attractive to customers. The selection of “Top 100 Titel” journals comprised various Bauer publications. Consequently, Bauer was sued by its competitor Gruner+Jahr in preliminary proceedings before the Hamburg District Court to stop the use of the “Top 100 Titel” label and the influence on press wholesalers.

In its competition law assessment, the court did not consider Bauer’s market position, but the position of the press wholesalers who distribute the products of the publishers to retailers. In Germany, these press wholesalers are mostly protected by regional monopolies and are thus in a dominant position in the respective territory. Pursuant to German competition law, as dominant companies, the press wholesalers must not discriminate or unduly hinder other companies. From this rule the Hamburg District Court derived that the press wholesalers have to treat the different publishers neutrally. According to the court’s view, this obligation of neutrality was infringed by the preferred display of “Top 100 Titel” journals in two ways: firstly, journals of other publishers which are not displayed in full view are discriminated as such a display is less attractive to customers; secondly, the distribution of other publishers’ journals is unduly hindered as the display in full view requires more space and therefore leaves less space for these other journals.

Although the court did not determine that Bauer itself was in a dominant position, it ordered Bauer to stop its influence on the wholesalers and based this finding on competition law. According to the court, a competition law infringement of the dominant wholesaler which was induced by Bauer as a third party is sufficient to subject Bauer itself to the competition law discrimination ban. To support this argument, the court used the principle of “disturber liability” which was developed in German trade mark law and unfair competition legislation and transferred this principle to competition law. According to this principle, removal and injunction can be enforced against any person who has intentionally and effectively contributed to an unlawful interference. As an indirect contribution can be sufficient, the court could apply this principle to Bauer as the indirect initiator of the wholesalers’ infringement.

The Hamburg District Court’s decision is remarkable insofar as the principle of “disturber liability” stemming from trade mark law and unfair competition legislation was fully transferred to competition law for the first time. As a consequence, the scope of the discrimination ban could be substantially extended and would also comprise non-dominant companies provided that these companies are responsible for an infringement committed by a dominant undertaking. According to press releases, Bauer has appealed the decision of the Hamburg District Court and other proceedings between the parties are still ongoing. It therefore remains to be seen if the decision will be upheld on appeal and if other courts or the German Federal Cartel Office will follow the arguments set out by the Hamburg District Court.

Source:  http://www.bundeskartellamt.de