OFT continues case against Aberdeen Journals for predatory pricing

PN 29/02 20 May 2002

The OFT proposes to make a decision that Aberdeen Journals Ltd, a subsidiary company of Daily Mail & General Trust plc, has infringed the Competition Act 1998.

The OFT has today written to Aberdeen Journals setting out why it proposes to find that the company sold advertising space in the Aberdeen Herald & Post newspaper in a predatory manner during March 2000. Given Aberdeen Journals' dominance on the market in question, the OFT proposes to make a decision that this conduct constituted an infringement of the Chapter II prohibition of the Competition Act 1998, which prohibits the abuse of a dominant market position in the UK.

The sending of this notice to Aberdeen Journals follows a judgment by the Competition Commission Appeal Tribunal, which set aside the OFT's previous decision on this matter (see notes 1 and 2).

Aberdeen Journals now has the opportunity to make oral and written representations in response to the proposed decision. These will be taken fully into account before any final decision is made.

NOTES

1. The issue of this notice (known as a 'Rule 14 notice') to Aberdeen Journals follows the company's appeal to the Competition Commission Appeal Tribunal ('CCAT') against the Director General's previous decision of 16 July 2001 (press release 32/01). The OFT then ruled that Aberdeen Journals had infringed the Competition Act 1998 by pricing advertising space in the Aberdeen Herald & Post at below average variable cost, with the intention of expelling a rival newspaper, the Aberdeen and District Independent, from the Aberdeen market.

2. The CCAT's judgment on 19 March 2002 said that the earlier decision should be set aside, on the basis that the market definition on which the Director General had relied in making that decision was not sufficiently reasoned. The CCAT judgment ruled that the Director General should issue any further Rule 14 notice within two months. Today's notice meets that deadline.

3. Powers under the Competition Act 1998
The Act gives the OFT powers to investigate suspected infringements of the Act's prohibitions:

the Chapter I prohibition prohibits agreements between undertakings, decisions by associations of undertakings or concerted practices which have the object or effect of preventing, restricting or distorting competition in the UK (or any part of it) and which may affect trade within the UK (or any part of it); and
the Chapter II prohibition prohibits conduct by one or more undertakings which amounts to the abuse of a dominant position in a market which may affect trade within the UK (or any part of it).

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