On October 27, 2020, the FCO decided that it had no objections to the planned joint venture and cooperation between the German newspaper publishers Süddeutsche Zeitung GmbH (“SZ”) and Frankfurter Allgemeine Zeitung GmbH (“FAZ”) relating to the joint commercialization of their national advertising inventory.[1] Under German law, and in contrast to EU law, potential coordination effects between the parent companies are not already assessed as part of the merger control process relating to the creation of the joint venture, but are reviewed separately under the restrictive practices provisions of the ARC.[2]
While a cooperation between press publishers (outside editorial work) is generally exempt from German competition law, this type of agreement is still subject to EU competition law, if it may affect the trade between Member States. In the case at hand, the FCO found that this condition would be met because the cooperation covered newspaper adverts in all of Germany and directly affected companies in other Member States wishing to advertise in Germany.
The FCO found that SZ and FAZ were both active in a supra-regional market for advertisements in news print media which should be distinguished from adverts in local newspapers and (national) tabloids. In the FCO’s view, this market includes daily and weekly newspapers as well as news magazines, since they all target well-educated readers with higher income.[3] The FCO found that SZ and FAZ would have a joint market share between 20-30% and be the third largest player behind Gruner + Jahr and Holtzbrinck.
Joint commercialization agreements generally fall outside the safe harbor of the European rules on horizontal cooperation agreements if the joint market share of the cooperating companies exceeds 15%, and need to be assessed on a case-by-case basis. While SZ and FAZ would align their advertising pricing strategies, thereby restricting competition, the FCO found that the cooperation would be justified by significant efficiencies and it expected that consumers would receive a fair share of the resulting benefits. In particular, the FCO considered that the cooperation would ease the organization of advertising campaigns, particularly in view of a large number of companies that usually advertise in both newspapers. Further, many advertisers even expected lower prices for advertisements due to reduced complexity and possible volume discounts. The decision could be a first sign of a more lenient attitude of the FCO towards horizontal cooperation and a greater willingness to accept efficiency arguments.
[1] Case B7-161/20. See FCO case summary of October 29, 2020, only available in German here and the press release of October 30, 2020, available in English here.
[2] While a cooperation between press publishers (outside editorial work) is generally exempt from German competition law, this type of agreement is still subject to EU competition law, if it may affect the trade between Member States. In the case at hand, the FCO found that this condition would be met because the cooperation covered newspaper adverts in all of Germany and directly affected companies in other Member States wishing to advertise in Germany.
The creation of the joint venture company that is supposed to carry out the joint marketing had already been approved separately under merger control aspects, Case B7-140/20, see press release of July 28, 2020, available in English here.
[3] While the FCO left open whether classified ads would constitute a separate market, it considered that advertisers could easily replace printed classified ads with online classified ads (except for obituaries), but not vice versa.