Irish Competition Authority Decisions

1. Arrangements for the distribution of the Irish Farmers Journal between the Agricultural Trust and Newspread Ltd. were notified to the Authority on 30 September 1992. The notification requested a certificate, or in the event of a refusal by the Authority to grant a certificate, a licence.

2. The notification concerns an agreement dated 31 December 1987 between The Agricultural Trust and Newspread whereby the latter is appointed as sole distributor of the Irish Farmer's Journal for a period of 10 years. The Farmers Journal is a weekly newspaper which is published by the Agricultural Trust. As its name implies its target audience is farmers and the rural community generally. Under the terms of the agreement Newspread distributes copies of the Journal to retailers located throughout the State. The agreement is for a period of ten years commencing on 1 January 1988.

3. The Agricultural Trust is a charitable trust established to further the interests of Irish agriculture inter alia through the promotion of good farm practice. Its activities include inter alia publication of the Farmers Journal. Newspread is a subsidiary of Independent Newspapers which is engaged in the distribution of newspapers and magazines.

4. The product concerned in the notification is the Farmers Journal a weekly newspaper aimed primarily at farmers and members of the rural community generally. The market therefore is that for news publications aimed specifically at such a target audience. The Authority does not believe that daily newspapers constitute a sufficiently close substitute to the product in question to be considered to be part of this market. It is relevant, however, that a number of daily newspapers do actually include weekly supplements which deal with agricultural matters. The Farmer's Monthly is another publication aimed specifically at the target audience. Sales of the Farmers Journal are estimated at 70,000 per week. The Farmer's Monthly is estimated to sell approximately 24,000 copies per month. The Labour Force survey indicates that there were 150,000 people engaged in agriculture in 1992.

5. The arrangements relate to an agreeement dated 31 December 1987 between The Agricultural Trust and Newspread for the distribution of the Farmers Journal. Under the terms of the aagreement the Trust gives Newspread the entire and total franchise for the sale, distribution and dissemination of the Journal for the entire State excluding Donegal, for a period of ten years commencing on 1 January 1988. Newspread is required to provide a complete distribution service at least equivalent to that already being provided by them. Newspread are required to invoice each newsagent and customer supplied by them and to collect the sums due on all such invoices. Newspread are required to sell the paper at the list price less a percentage unless otherwise agreed. Newspread is required to pay the Trust a percentage of the full retail value of its net sales (after returns and bad debts (if any)), six weeks after the publication date of each issue. Newspread is required to use its best endeavours to keep returns from newsagents below ten per cent and is entitled to credit for such returns. Newspread is not responsible for exceptional returns due to factors outside of its control.

6. Under the agreement Newspread delivers copies of the Farmers Journal to approximately 3,000 newsagents located throughout the State excluding Donegal. They take packed and labelled parcels for overnight delivery to the retailers every Thursday morning, take back returns and record sales. They reimburse the Trust in accordance with the provisions of the agreement.

7. The parties submitted that the extent of the business involved was such that one distribution company was more than adequate to cater for it and for a small operation of 70,000 copies per week it would not make sense to divide the business. They stated that it did not in any way restrict the purchaser's access to the product as it was available in many different outlets.

8. Section 4(1) of the Competition Act states that ´all agreements between undertakings, decisions by associations of undertakings and concerted practices 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 are prohibited and void.'

9. 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.' The parties to the arrangements are The Agricultural Trust and Newspread. The Trust is engaged inter alia in the publication of the Farmers Journal for gain and is therefore an undertaking within the meaning of the Act. Newspread is a corporate body which is engaged for gain in the distribution of newspapers, magazines and periodicals and is also an undertaking. The notified agreement therefore constitutes an agreement between undertakings.

10. The essential feature of the agreements is that Newspread deliver the Farmers Journal to retailers throughout the State with the exception of Donegal on behalf of the Agricultural Trust. The agreement does not involve the purchase and resale of the product by Newspread and it is not an exclusive distribution agreement as defined in the category licence for exclusive distribution agreements. [1] The Authority believes that undertakings are entitled to decide how their products shall be distributed to their customers. The Agricultural Trust has decided to retain Newspread to deliver the Farmers Journal to retailers rather than deliver the paper itself. Distribution agreements involving delivery only do not, in the Authority's opinion, offend against section 4(1).

11. While a delivery agreement might not per se offend against section 4(1), certain clauses in the agreement might do so. Such an arrangement does not prevent other firms entering the market for the delivery of newspapers and periodicals throughout the State. None of the other clauses in the agreement offend against section 4(1). In particular the requirement that Newspread sell to retailers at a price specified by the Trust is not anti-competitive since in this case Newspread is merely providing a delivery service for the Trust and is not acting as reseller. As the Trust is selling the products to the retailers it is entitled to set the price at which the papers should be sold to them. (This is in contrast to the position in Easons/Newspread where competing wholesalers entered into arrangements to ensure a uniform selling price to retailers of imported magazines and also recommended uniform retail prices of such magazines.) [2]

12. In the Authority's opinion, The Agricultural Trust and Newspread are undertakings within the meaning of Section 3(1) of the Competition Act, and the notified arrangements for the distribution by Newspread of the Irish Farmers Journal constitute an agreement between undertakings. In the Authority's opinion, the agreement does not have, as its object or effect, the prevention, restriction or distortion of competition and does not offend against Section 4(1) of the Competition Act, 1991.

13. 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 agreement of 31 December 1987 between The Agricultural Trust and Newspread Ltd. for the distribuion by Newspread Ltd. of the Irish Farmers Journal, (notification no. CA/469/92E), notified on 30 September 1992 under Section 7, does not offend against Section 4(1) of the Competition Act, 1991.

For the Competition Authority

Patrick Massey

Member

28 October, 1994.