On 3 September 2018, the German Federal Cartel Office ("FCO") imposed fines amounting to in total €16 million on DuMont Mediengruppe GmbH & Co. KG ("DuMont"), an individual responsible within DuMont and DuMont's external lawyer for having concluded from 2000 - 2016 an illegal territorial agreement with its competitor, the Bonner General-Anzeiger media group ("Bonner General-Anzeiger"), to carve up the newspaper publishing market in the Bonn region. Bonner General-Anzeiger escaped a fine as it blew the whistle.
| What you need to know – key takeaways |
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- Two newspaper publishers, DuMont and Bonner General-Anzeiger, have been found to have infringed competition law in Germany by engaging in a market sharing cartel in the Bonn region.
- In July 2017, German competition law introduced an antitrust exemption provision for the press sector aimed to help ensure press diversity, facilitate cooperation between publishers and strengthen intermedia competition. The exemption, however, does not apply to price-fixing or market sharing agreements.
- Whilst it is common for the FCO to impose fines on individuals who were involved in a cartel (as it has done in this case), this is the first time that the FCO has published the fact that it has fined an external legal adviser for its role in advising the cartel participants.
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Newspaper publishers DuMont and Bonner General-Anzeiger had previously agreed, in December 2000, that they would allocate geographic areas in the Bonn region by withdrawing distribution of their newspapers from areas allocated to the other publisher.
In addition, the companies safeguarded the territorial agreements, which were to run until 2016 by awarding DuMont a pre-emption right over shares in Bonner General-Anzeiger.
In March 2004, DuMont notified its envisaged acquisition of an 18% shareholding (plus the pre-emption right) in Bonner General-Anzeiger to the FCO. Even though DuMont decreased the envisaged shareholding to 9% and gave up the pre-emption right, the FCO prohibited the transaction. DuMont appealed the prohibition to the Higher Regional Court of Düsseldorf ("Düsseldorf Court") which, in July 2005, rejected the prohibition. The Düsseldorf Court held that the acquisition of 9% did not constitute a "concentration", since it did not amount to the acquisition of a "competitively significant influence".
Under German law, the acquisition of a competitively significant influence constitutes a concentration if a minority shareholding, i.e. below 25%,1 and certain "plus factors" are acquired, i.e. factors that make the situation comparable to an acquisition of 25%. In general terms, the "plus factors" can include anything that may give the acquirer the possibility of influencing the (competitive) conduct of the target, such as representation of the acquirer on the Board or in any other committee of the target, de facto personal links between the acquirer and the target, information rights of the acquirer as a shareholder, for example, and also pre-emption rights. Since DuMont gave up its pre-emption right, the Düsseldorf Court concluded that there were no such "plus factors".
However, in December 2005, Bonner General-Anzeiger again agreed to grant a pre-emption right in favour of DuMont. In September 2006, DuMont and Bonner General-Anzeiger increased their mutual shares from 9% to 18% which they notified to the FCO. However, they deliberately did not disclose DuMont's pre-emption right to the FCO although, as the companies knew from the Düsseldorf Court's decision, it was of key relevance for the examination of the question of mutual participation under German merger control. In December 2016, DuMont and Bonner General-Anzeiger concluded an agreement to terminate their mutual participation as of December 2016.
The FCO found that the territorial agreements between DuMont and Bonner General-Anzeiger were aimed at phasing out competition between the publishers and therefore were in breach of competition law and did not benefit from the press sector antitrust exemption introduced in July 2017. In order to ensure press diversity, the new press antitrust exemption provision allows certain cooperations between publishers to strengthen their economic basis for intermedia competition. However, this provision does not exempt price-fixing, territorial and customer agreements from the cartel prohibition.
For the first time the FCO has fined an external lawyer as part of its decision. The lawyer advised DuMont during the entire period from 2000 to 2016 and was actively involved in all communications with the FCO and in the operations.
This case therefore illustrates the FCO's common practice to impose fines not only on the companies involved in a cartel, but also on individuals responsible, including external advisers.
1. An acquisition of 25% automatically constitutes a relevant concentration.
