ITALIAN BOOKSELLERS' ASSOCIATION/PUBLISHING HOUSES (Conclusion of the investigation)
PRESS RELEASE
The Italian Competition Authority has concluded its proceeding initiated last November and has found that the agreements between the Italian Booksellers' Association (ALI) and the companies holding Mach 2 Libri' s equity capital (Istituto Geografico De Agostini, Arnoldo Mondadori Editore, RCSLibri&Grandi Opere, Messaggerie) are in violation of Section 2 of Law No. 287/90 in light of the restriction they impose on competition.
The Authority's decision also concerns certain clauses, contained in the shareholders agreements stipulated by Mach 2 Libri's holding companies, as well as the supply contracts undersigned by Mach 2 Libri, European Book Service and Agenzia Distribuzione Stampa. Further, the Authority pointed out that the parties involved in the proceeding have remedied the infringements and, as such, have cancelled the agreements which were the subject of the proceeding.
In particular, the investigation concerned the following three agreements:
a) an agreement, stipulated on June 6th, 1995, by ALI and Mach 2 Libri's holding companies, which bound the publishers to stop supplying retail distribution outlets that cut prices over 15%, starting from September 1st, 1995, and over 10% starting from April 1st, 1996. This agreement also obligated the publishers to eliminate conditions in favour of the bookstores that applied discounts to customers;
b) the shareholders agreements, stipulated by Mach 2 Libri's holding companies, provided for: the assignment of an exclusive right to Mach 2 for the distribution of books through the large scale retail outlets; an obligation of non-competition among the publishers and Mach 2; and, finally, the imposition of uniform contractual conditions on Mach 2;
c) the supply agreements, stipulated by Mach 2 and two other wholesale book distributors to the large scale retail outlets - European Book Service and Agenzia Distribuzione Stampa - which forced these two operators to buy books from their competitor;
The Authority highlighted that the above mentioned agreements reduced competition substantially both in the wholesale and retail book markets. Indeed, the agreement stipulated by ALI and Mach 2 Libri's holding companies, by limiting the discounts to be applied to customers, fixed a minimum reselling price that retailers could not lower. In such a way, the retail distribution outlets were deprived of one of their most important instruments of commercial policy and, at the same time, customers missed out the possibility to choose among alternative distribution channels which could have offered different price/quality combinations. With regards to the clauses contained in the shareholders agreements, the Authority pointed out that they prevented the publishers from carrying out independent commercial policies and prevented them from competing directly in the wholesale book distribution market. Further, the exclusive distribution right enjoyed by Mach 2, which brought to the signing of the agreements with European Book Service and Agenzia Distribuzione Stampa, had the effect of reducing the profitability of these two operators and restraining their development.
In the final stage of the proceeding, the agreements were cancelled and Mach 2 Libri's holding companies resumed direct supply relations with European Book Service and Agenzia Distribuzione Stampa. The publishers, however, have not yet cancelled the relative contracts concerning this second point: as such, the Authority decided that the publishers have to file a report, within 60 days from the notification of the decision, on the initiatives they have adopted in order to reestablish conditions of effective competition in the wholesale book market.