The Danish Competition Council
Intervener TV 2/Danmark A/S
Viasat Broadcasting UK Ltd.
Use of progressive and retroactive annual discount amounted to abuse of dominant position
The case concerned the TV broadcaster TV 2’s use of annual discounts for TV commercials from 2001 to 2005.
The annual discount was calculated on the basis of the advertisers’ expected annual revenue with TV 2 and increased progressively relative to the amount of the annual revenue from 4.7% to 19.3%, which was obtained with revenue of DKK 25 million. The discount achieved did not only apply to the revenue in the interval corresponding to the amount of the discount, but instead to the total annual revenue. This meant that the marginal discount achieved when buying more from TV 2 could be up to 35%.
The Competition Council had come to the decision that the discount amounted to abuse of TV 2’s dominant position. The case was referred to the Competition Appeals Tribunal, which revoked the Competition Council’s decision.
The question before the Court was whether the Competition Appeals Tribunal’s decision should be revoked and the Tribunal should be ordered to recognise that TV 2’s progressive annual discount amounted to abuse of a dominant position.
The Supreme Court held that TV 2’s use of the annual discount from 2001 to 2005 amounted to abuse of TV 2’s dominant position in contravention of s. 11(1) of the Danish Competition Act and Article 82 of the EC Treaty (now Article 102 of the Treaty on the Functioning of the European Union. (Dissenting opinion in favour of finding for the Competition Council’s (the Tribunal’s) claim for dismissal).
The majority of the Supreme Court held, among other things, that the annual discount had an appreciable loyalty-enhancing (lock-in) effect, and that the annual discount, thus, fundamentally amounted to abuse of TV 2’s dominant position. The Supreme Court was not satisfied that there were objective financial reasons to use the annual discount.
The High Court had reached the same conclusion.