Prosecutor Examines Public Procurement Interim Measures Claim

Facts

Belgian Posters and Clear Channel claimed that JC Decaux had a dominant position (or even a monopoly) in the market for the provision of what is termed 'urban advertisement furniture' (eg, public transport shelters, signposts and billboards). JC Decaux was alleged to have abused its dominant position in order to win a tender contract from the regional authorities, thereby obtaining a dominant position in the market for bicycles for public use. Furthermore, it was claimed that JC Decaux had abused its position by tying these markets and using profits from its urban advertising activities to finance its public bicycle activities.

In Spring 2008 the regional government invited tenders to create and implement an automated bicycle hire system for public use in the Brussels region. Three offers were submitted and the contract was awarded to JC Decaux on December 5 2008. The two unsuccessful bidders immediately objected.

The tender document specified that offers which did not require financial intervention by the regional government would be preferred. It encouraged such offers by offering the successful bidder the right to sell advertising space on billboards to finance the system. All three bids were linked to the use of this outside advertising space.

In 1999 Brussels City Council had accepted a similar bid for the supply, installation and maintenance of urban furniture by JC Decaux. It awarded JC Decaux a 15-year contract, giving it the exclusive right to supply, install and maintain urban advertisement furniture. In 2006 the contract was amended to cover the supply and management of a network of locations where the public could hire bicycles.

Belgian Posters and Clear Channel claimed that JC Decaux had abused its dominant position in several ways and sought interim measures.

Decision

The prosecutor first investigated whether the regional government could be considered an 'undertaking' under Belgian competition law. Without conclusively defining the markets, the prosecutor ruled that the regional government had been active in at least two markets for urban outdoor advertising and the provision of bicycles to the public. The prosecutor found it unlikely that the regional government had been pursuing an economic objective in granting the concession for the provision of bicycles, but stated that it had indirectly acted as an economic participant - in granting the concession, the region had denied itself the right to receive the income from the billboard advertisements. In the prosecutor's opinion, the Competition Act could not be circumvented simply by combining the two markets. Consequently, the regional government could be regarded as an undertaking for the purpose of the tender procedure.

In a relatively short analysis, the prosecutor ruled that the link between the two markets was based on a political choice by the regional government, which was aiming to reduce its costs. On this basis, the prosecutor concluded that the decision to link the markets did not at first sight fall within the scope of the prohibition in Article 2 of the act (ie, the national equivalent of Article 81 of the EC Treaty); nor was there any other prima facie infringement of the tender procedure under this article.

Despite the fact that the arguments brought by Belgian Posters and Clear Channel were also based on JC Decaux's abuse of its dominant position, the prosecutor simply stated that the investigation had revealed no abuse of a possible dominant position. Therefore, the requests for interim measures based on these grounds were dismissed.

The prosecutor did not even attempt to define the relevant market. However, Clear Channel and JC Decaux have previously opposed each other in proceedings before the competition authorities. In a similar case in 2002, Clear Channel requested interim measures to stop JC Decaux's alleged predatory pricing practices when bidding for urban furniture contracts. The president of the Competition Council investigated whether JC Decaux had a dominant position. He stated that the market was national and could be defined as being between the market of outdoor advertisement, which was the broadest definition, and the market of advertisements on urban furniture obtained by tender, which was the strictest interpretation. He concluded that JC Decaux appeared not to have a dominant position.(1)

The prosecutor dismissed the requests for interim measures in full. No decision has yet been taken in the proceedings on the merits of the case.

For further information on this topic please contact Louise Depuydt or Carmen Verdonck at Altius by telephone (+32 2 426 1414) or by fax (+32 2 426 2030) or by email (louise.depuydt@altius.com or carmen.verdonck@altius.com).

Endnotes

(1) The French Competition Council has considered the question. It ruled in July 1998 - and confirmed in 2004 - that the market for urban non-advertisement furniture should be distinguished from the market of urban advertisement furniture because of differences in financing. While urban advertisement furniture is traditionally made available to the public without cost in return for the exploitation rights of the advertising space, non-advertisement furniture is usually paid for by the authorities.