Competition Does PubliGroupe give preferential treatment to publishers and titles in which it holds a stake when placing advertisements? The Competition Commission has long been circulating rumors that it is scrutinizing PubliGroupe's minority shareholdings in Swiss publishers. What's more, it was said that the ComCo wanted to prevent conflicts of interest on the part of the market-powerful P by demanding that the advertising giant sell off some of its holdings. In some places, a connection was also suspected with the Weko complaint filed by the intermediary AdX against PubliGroupe (see WW 40/06). It was rumored that this case had been dragging on for over five years because P was reluctant to comply with the Weko's wishes, but a few days ago some things became clear: the Weko did indeed investigate P's minority shareholdings in Swiss publishers in a preliminary investigation. Specifically, the question was "whether PubliGroupe concentrates its advertising marketing activities on newspaper publishers in which it holds a minority stake." No, the Competition Commission Secretariat now states in its recently published final report. There are "no indications" that P favors those publishers in which it holds minority interests. Furthermore, no unlawful restriction of competition was discernible, nor did P's minority shareholdings contravene the Cartel Act.
As a result, the Competition Commission Secretariat decided back in July to close the preliminary investigation without any consequences. An acquittal across the board. And the all-clear for all publishers in which P holds minority interests: There is currently no pressure on P from the competition authorities to sell any shares.
Complaints from various publishersThe trigger for the preliminary investigation was P itself, which had notified the Competition Commission in March 2005 of a publishing participation. But there were also complaints from various publishers without a stake in P, who felt disadvantaged by P. "We saw that there was a certain amount of interest in the issue in the industry, so we decided to look into the matter," says Patrik Ducrey, Deputy Director of the Competition Commission. He denies any connection to the AdX case.
In the report, the ComCo states that P has acquired most of its publishing interests in the range of 11 to 37 percent within the last ten years - mostly at the request of the companies concerned. P in turn states that it enters into such participations for financial and strategic reasons. The ComCo concludes from this that the motive to hold minority shareholdings as a capital investment could "constitute an incentive to favor certain companies" when placing advertisements. This is because if P favors these companies, their profits - and thus also the return on equity - increase.
Does P really act accordingly? The P annual reports for 2003 and 2004 that were consulted raise doubts in the ComCo because it notes that P's income from minority shareholdings "clearly plays a subordinate role" compared to that from the advertising business. P therefore appears to be "not a financial investor", it says cautiously. The report therefore concludes that there appears to be no conflict of interest (literally, the ComCo speaks of a "trade-off") between income from minority shareholdings and the placement of advertisements, or only "in a weak form". Consequently, there is also no evidence of tactical behavior on the part of P to "eliminate" certain publishers or titles.
This was not the first time that minority interests were examined in1993.
PubliGroupe has already been the subject of an investigation. At the time, the Cartel Commission (CC) was investigating press concentration and made recommendations to P in this context. According to these recommendations, PubliGroupe should withdraw from publishing participations as soon as the companies in question were in a position to buy back the shares "at a reasonable price". Where this was not possible, the P was "invited not to influence the editorial offices and the (marketing) strategy of the company". As a result of the report, KK and P drew up a code of conduct which P was prepared to follow. However, when the then new Cartel Act came into force in 1996, the code was repealed by the Competition Commission "due to a lack of legal basis". Why is P remaining silent?
on the P minority shareholdings in connection with the pending AdX case? Patrik Ducrey, Deputy Director of the ComCo, denies this. Nothing else can be inferred from the report either, although it does make brief reference to the case - namely with regard to the question of how P's position in the advertising market should be classified. The report calculates a market share of 64 to 65 percent for P in print advertising sales (2002 to 2004) and then refers to the AdX case, in which the Competition Commission described such a market share as "an indication of Publigroupe's dominant market position". Interestingly, George von Csernatony, Head of Strategic Planning and member of the PubliGroupe Management Board, does not wish to comment on the preliminary investigation, which was discontinued without any consequences - despite the positive result from P's point of view. Nor will he reveal anything about the status of the AdX case (WW 40/06). "P is currently obliged to remain silent," says von Csernatony. However, he makes it clear that he does see a connection between the AdX case and the preliminary investigation.
Markus Knöpfli