European court upholds Norway Post antitrust fine

Norway Post has lost an appeal against a fine from European regulators for abusing its dominant position in the business-to-consumer parcel market. However, the EFTA Court did decide to lower the Post’s fine by 20%, from EUR 12.89m to EUR 11.112m.

Norway is not part of the European Union, but is part of the closely-associated European Free Trade Association (EFTA), facing some of the similar market rules as EU countries. Around 90% of Norway Post’s activities are open to competition from private sector rivals.

The EFTA Surveillance Authority ruled in July 2010 that Norway Post had broken competition rules by establishing an exclusive network of up to 1,534 in-store postal counters where consumers could collect items purchased online.

The fine related to framework agreements Norway Post made with companies including NorgesGruppen, Shell, COOP and ICA to form its Post-in-Shop network in 2000 and 2001. The deals, covering around 50% of all grocery store, kiosk and petrol station outlets in Norway, prevented the retailers from allowing competing parcel delivery firms to use their stores for parcel delivery. The agreements ran until 2006.

During this time, over-the-counter delivery was the “predominant” collection method for consumer online purchases, with Norway Post’s share of the market close to 98%.

The Surveillance Authority’s investigations were prompted by complaints from Norway Post’s rival Privpak, part of DB Schenker, and ran for five years and eight months. The Authority took another full year to issue a final decision once the Post had responded to its allegations.

On Wednesday, the EFTA Court agreed that the investigation had been of “excessive length”.

But while it lowered Norway Post’s fine by a fifth from the original NOK 100m, to reflect Norway Post’s “fundamental right” to have a case adjudicated in “reasonable time”, the Court upheld the main findings of the regulators.

The Court rejected the claim of Norway Post that the barrier to competitors agreeing terms with the retailers was already too high for new market entrants to cope, since it had to pay a relatively high price to have parcels picked up in the partners’ stores.

“ESA was correct to find that Norway Post’s conduct created disincentives (to retailers) to deal with Norway Post’s competitors during this period,” the Court concluded, also rejecting the claim that the regulator had not proven that the retail outlets were not readily available to competitors.

“A dominant undertaking cannot argue that entry would be too difficult for new entrants in order to justify conduct by which it raises market barriers even higher.”

“Disappointed”

Commenting on the EFTA Court ruling on Wednesday, Norway Post said it related to “old agreements” with around 4,000 of a possible 30,000 parcel pick-up sites in Norway.

Norway Post CEO Dag Mejdell said: “I am disappointed with the Court’s decision and take it under advisement, but am pleased that the ESA fine was reduced.”

Separately, Norway Post is facing ongoing legal action from DB Schenker over the issue, before the Oslo District Court, which had been awaiting the EFTA Court decision before moving forward.

DB Schenker’s Privpak entered the Norwegian market in 1998, having been in Sweden since 1992, but it was 2006 before it could begin to deliver to some of the outlets previously covered by the Norway Post framework agreements.

Norway Post said in the wake of the EFTA Court decision, Schenker has raised its demand for damages to NOK 460m (EUR 61m).

“We disagree wth Schenker’s claims and look forward to the proceedings of the case,” said Mejdell.