Competition Authority decision of 12 September,  1995 relating to a proceeding under Section 4 of the Competition Act, 1991.

Notification no. CA/531/92E - Newspaper Publishing/The Irish Times.

Decision no. 420   

Introduction

1.	This decision concerned an agreement dated 1 January 1991 between Newspaper Publishing plc and The Irish Times, which was notified to the Authority on 30 September, 1992 by Newspaper Publishing plc, whereby Newspaper Publishing granted to the Irish Times the right to reproduce certain newspaper articles. The notification requested a certificate under Section 4 (4) of the Competition Act, 1991 or, in the event of a refusal by the Competition Authority to grant a certificate, a licence under Section 4 (2).  The agreement was subsequently amended by letter of 16 November, 1992.

The Facts

(a) The Subject of the Notification

2.	The original notification concerned The Independent and The Independent on Sunday News Service Syndication Agreement dated 1 January 1991 between Newspaper Publishing and the Irish Times.  Under the terms of the agreement Newspaper Publishing granted to The Irish Times the right to reproduce certain articles published in its own newspapers, namely the Independent and the Independent on Sunday.  

(b) The Parties involved

3.	Newspaper Publishing is a UK public company engaged in the business of publishing newspapers for sale.  It publishes two newspapers, namely the Independent and the Independent on Sunday.  The bulk of its shares are owned by Independent Newspapers plc and Mirror Group Newspapers.  The Irish Times Newspapers Limited is a subsidiary of The Irish Times Trust Limited. The Group is involved in the publication and distribution of newspapers.

(c) The Products and the Market  

4.	The arrangements involved the grant of an exclusive right by Newspaper Publishing to the Irish Times to re-produce certain articles published in the Independent and the Independent on Sunday.  The products involved are newspaper articles.  The markets involved are those for newspaper articles and those for daily newspapers within the State.  Newspapers obtain articles from a variety of sources.  Many articles will be produced in-house by their own staff reporters.  In addition newspapers may publish articles written by freelance journalists.  They also subscribe to various national and international newsagency services which provide material to various different newspapers.  In addition newspapers may reproduce articles from other newspapers under the terms of syndication agreements such as the one involved in this notification.

5.	There are four domestically produced national daily newspaper titles on sale in Ireland (The Irish Times, Irish Independent, The Cork Examiner and The Star), two domestically produced evening titles (Evening Herald and The Evening Echo) and four domestically produced Sunday titles (The Sunday Business Post, The Sunday Independent, The Sunday Tribune and The Sunday World). In addition twelve UK national daily newspapers and nine UK Sunday titles are distributed and sold throughout the State. The Authority stated in its interim report on the newspaper industry that there were several distinct newspaper markets in Ireland.  The arrangements relate to the Irish Times a daily newspaper which is published six days per week.  In the case of daily newspapers the Authority concluded that there was a distinct Irish quality daily newspaper market which is the market in which the Irish Times competes.  While the Independent is also sold in Ireland, on average its circulation is less than 2,000 per day.  It is a quality broadsheet newspaper but the focus of its coverage is on UK news, politics, current affairs and sport.  Thus it is not a substitute for a quality Irish newspaper such as the Irish Times whose main focus is on domestic affairs.   

 Table 1: Irish Quality Daily Newspaper Sales in 1994

Title	  Number	    Percentage	
Irish Independent	  144,738	     44.0%	
Irish Press	   38,848	      11.8%	
Irish Times	   93,372	     28.38%	
Cork Examiner	   52,063	     15.82%	
TOTAL	  329,021  	    100.0%	
 Source: ABC                       

6.	Table 1 indicates that total Irish quality daily sales of newspapers in 1994 was just under 330,000. Sales of the Irish Times amounted to 93,372 or just over 28% of all Irish quality daily newspaper sales.  Sales of the Irish Times in the first six months of 1995 rose to 95,000.  The Irish Independent was the largest selling Irish daily with average daily sales of 144,738 in 1994.  According to the National Newspapers of Ireland (NNI) total sales for all UK daily newspapers in Ireland amounted to 141,907 per day in 1994 although the UK newspapers claim the figure was lower.  The Star is a tabloid newspaper and is not part of the Irish quality daily newspaper market. The Irish Press has not been published since 26 May, 1995.  Sales of The Cork Examiner Group are largely confined to the Munster region.

7.	The notified arrangements are described as a news service syndication agreement.  Under the agreement Newspaper Publishing grants to the Irish Times an exclusive licence to publish the service, abridgements or abstracts thereof on condition that all such items are credited to The Independent and The Independent on Sunday News Service.  The service consists of any and all items attributed to the authors named on an attached schedule published during the currency of the agreement in The Independent and The Independent on Sunday Newspaper newspapers.  Additional authors may be added by Newspaper Publishing.  The agreement was initially for a period of one year with a six month termination period. 

(e) Submissions by the Parties   

8.	Newspaper Publishing submitted that the arrangements did not prevent, restrict or distort competition but facilitated the establishment of efficient competitors in the relevant market.  They stated that it was not believed that the reprinting of articles acted in any decisive way to influence consumer behaviour and that competition in the newspaper sector was not seriously affected by the parties.  They stated that the number of competitors would not be reduced as a result of the arrangements.  They also pointed out that the arrangements did not prevent Newspaper Publishing from selling its newspapers within the State.  They submitted that exclusivity was essential because the product , i.e. the newspaper articles, were subject to  copyright. A number of arguments were also made in support of the request for a licence but these are not considered here.

(f) Subsequent developments

9.	 The agreement was amended by letter of 16 November, 1992, with effect from 1 January, 1993  to run until  31 December, 1995 unless renewed three months before that date. The Independent on Sunday was removed from the arrangements and copy from that publication became subject to spot sales rates.

Assessment 

(a) Section 4 (1)

10.	Section 4 (1) of the Competition Act, 1991, prohibits and renders void all agreements between undertakings which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State or in any part of the State.

(b) The Undertakings and the Agreement

11.	Section 3(1) of the Competition Act defines an undertaking as `a person being an individual, a body corporate or an unincorporated body of persons engaged for gain in the production, supply or distribution of goods or the provision of a service.'  Newspaper Publishing and the Irish Times are engaged in the production and supply of goods, in this case newspapers, for gain.  The notified arrangements constitute an agreement between undertakings. The relevant geographic market is the State. 

(c) Applicability of Section 4 (1)

12.	The Authority does not believe that Newspaper Publishing and the Irish Times are in direct competition with one another since in its view Irish and UK quality newspapers do not constitute a single product market.  The Independent has a very limited circulation in Ireland and its market is confined to those consumers who are interested in detailed coverage and analysis of UK affairs.  It is in direct competition with other newspapers providing such coverage which are effectively the other UK quality and mid-market newspapers on sale within the State.  None of  these has an average daily circulation of more than around 4,000.  Under the arrangements the Irish Times is able to provide its readers, whose primary interest is in Irish affairs, with some additional coverage of international events.  In the absence of such an arrangement it is  unlikely that it would have the resources to provide such material itself.  The arrangements therefore enhance its ability to compete in the Irish quality newspaper market.

13.	Although the arrangements involve the provision of the service on an exclusive basis to the Irish Times, this does not have any impact on competition in the Irish quality newspaper market. The inclusion of material not available to other newspapers is an essential feature of competition between newspapers. Other Irish newspapers are free to enter into similar arrangements with other newspaper publishers whether in the UK or elsewhere.  In addition they can also obtain substitute material from other sources such as international newsagency services or from freelance reporters.

14.	The Authority believes that the arrangements do not have any effect on the market for newspaper articles.  The Irish Times is not obliged to reproduce any of the material.  It is not prevented from using stories from other sources in preference to those provided by the service.

15.	None of the  provisions in the original notified terms and conditions or as later  amended, by letter of 16 November 1992,  offend against Section 4(1).

The Decision

16.	In the Authority's opinion Newspaper Publishing plc and The Irish Times are undertakings within the meaning of Section 3(1) of the Competition Act, and the notified arrangements constitute an agreement between undertakings.  In the Authority's opinion the arrangements do not have, as their object or effect, the prevention, restriction or distortion of competition within the State or any part of the State.

The Certificate

17.	The Competition Authority has issued the following certificate:

The Competition Authority certifies that, in its opinion, on the basis of the facts in its possession, the Independent and the Independent on Sunday News Service Syndication Agreement of 1 January 1991, between Newspaper Publishing plc and The Irish Times, (notification no. CA/531/92E), notified on 30 September 1992 under Section 7, and amended by letter of 16 November 1992, does not offend against Section 4(1) of the Competition Act.

For the Competition Authority

Patrick Massey
Member
12 September, 1995.