Posten Norge abused its dominant position in the market for business-to consumer parcel services with over-the-counter delivery

Judgment in Case E-15/10 Posten Norge AS v EFTA Surveillance Authority

On 18 April 2012, the EFTA Court upheld a decision by the EFTA Surveillance Authority (“ESA”) that Posten Norge AS had abused its dominant position in the market for business-to-consumer parcel services with over-the-counter delivery in Norway by pursuing an exclusivity strategy with preferential treatment when establishing and maintaining its Post-in-Shop network. Nevertheless, the fine imposed by ESA on Posten was reduced from EUR 12.89 million to EUR 11.112 million due to the excessive length of the administrative procedure (5 years and 8 months from the initial request for information sent to Posten to concluding the investigation, and a year for drafting the final decision since Posten’s last submissions).

Over-the-counter delivery has become the predominant method of business-to-consumer parcel delivery in Norway, and includes, in particular, shipment of goods bought by consumers via the internet from distance selling companies. Posten’s share in the market was close to or above 98% for the relevant period.

In 2000 and 2001, Posten entered framework agreements with NorgesGruppen, Shell, COOP and ICA in order to establish its Post-in-Shop network. The NorgesGruppen/Shell agreement specifically excluded competitors in the relevant market from access to any of the outlets in these chains. The COOP and ICA agreements guaranteed Posten exclusivity in the outlets which hosted a Post-in-Shop. These exclusivity obligations, once the main roll-out of the Post-in-Shop concept had been implemented towards the end of 2003, foreclosed Posten’s competitors from ca. 50% of all outlets belonging to grocery store, kiosk and petrol station chains in Norway. Moreover, from 2004 to 2006, Posten negotiated reference status questions with its partners for the period after the expiry of those agreements (2006). Posten did not directly link the negotiations on preference status with the exclusivity obligations, but it did not announce that it would resign from them in the future.

The Court held that due to the imposition of a substantial fine on the applicant, it must respect the guarantees for criminal proceedings enshrined in Article 6 of the European Convention on Human Rights. In particular, the right to a fair trial requires that the Court must fully review the decision, i.e. on questions of fact and of law. Moreover, it follows from the principle of the presumption of innocence that the undertaking to which the decision finding an infringement was addressed must be given the benefit of the doubt. Therefore, the Court did not limit itself to a “manifest error” standard assessment.

Still, the Court upheld ESA’s decision. In order to compete effectively, new entrants needed to establish a nationwide delivery network. To that end, cooperation with one or more of the leading grocery store, kiosk or petrol station chains was of major importance. Since other chains were not readily available to new entrants, Posten’s conduct was liable to restrict competition by foreclosing access to a substantial part of these outlets both directly, through the exclusivity obligations, and indirectly, through the incentives created for Posten’s partners during the roll-out of the Post-in-Shop network and the subsequent renegotiations. The Court dismissed Posten’s arguments that the exclusivity clauses were objectively necessary for the efficient implementation of the Post-in-Shop concept. Note that an action for damages, brought against Posten by its competitor DB Schenker/Privpak, is pending before Oslo District Court. These proceedings have been stayed to await the outcome of the case before the EFTA Court. Additionally, an action brought by DB Schenker against ESA concerning access to documents obtained during its investigation is pending before the EFTA Court.