FK Distribution has abused its dominant position

The Danish Competition Council has decided that the largest distributor of print circulars, FK Distribution, has abused its dominant position. The Council has found that the distributor has had a conduct whereby it could harm competitors on the growing marked for digital circulars.

On 24th June 2020, The Danish Competition Council (“the DCCA”) has decided that FK Distribution has abused its dominant position by tying its sale of distribution of print circulars with its sale of viewing of circulars on its digital platform. FK Distribution obliged its customers of print circulars to also advertise and pay for said advertising through FK Distribution’s digital platform called “minetilbud”.

The DCCA has found that as the only national distributor of printed circulars - FK Distribution - has a special responsibility not to restrict competition. FK Distribution has abused its market power on the market for distribution of distribution of unaddressed mail (circulars) to obtain a advantage, not based on its own merits, on the relatively new, but growing market for digital platforms for circulars. This conduct could harm FK Distributions competitors as well as customers. Consequently, the DCC has ordered FK Distribution to cease the illegal conduct.

The DCC has found that FK Distribution has abused its dominant position in the period from January 2018 until October 2019. Since the 1st of January 2018, FK Distribution has been the only large distributor of unaddressed mail in Denmark. Postnord withdrew from the market from 1st of January 2018. Furthermore, FK Distribution owns a digital platform, “minetilbud”, that allows end users/consumers in Denmark to search, browse and read offers in circulars in digital formats from a large range of retailers. minetilbud is a web based service as well as an app solution.

The customers of FK Distribution are mainly retailers in Denmark, such as national supermarket chains. The investigation of the DCCA has shown that advertising in print circulars is an important marketing tool for many retailers in Denmark, and many of the retailers also advertise in digital circulars. Therefore, many retailers are dependent on distribution of unaddressed mail (circulars) via FK Distribution.

Nevertheless, the market for distribution of unaddressed mail (circulars) to households has been decreasing over the last decade, whereas the market for digital platforms for such circulars has been growing.

The Danish Competition and Consumer Authority has since 2019 increased its focus on digital platforms.

Furthermore, the DCC has decided to refer the case to the State Prosecutor for Serious Economic and International Crime, pending an eventual appeal to the Competition Appeals Tribunal.