Банкеръ Weekly

Briefs

DAVID HAS DEFEATED GOLIATH ON THE VIDEO MARKET

The Commission for Protection of Competition (CPC) has imposed one of the biggest fines in its history. On Wednesday (April 14) CPS's press service announced that the most powerful company on the domestic video market - Alexandra Group Holding - has been sanctioned to pay BGN210,000 for violating article 18, item 1 of the Protection of Competition Act. The CPC has allowed advance fulfilment of the decision due to apprehensions that it might be impeded. Therefore, even if the fine is litigated in court, the company should first of all pay it. Thus, during the second hearing of the Alexandra Group Holding case, the CPC backed the holding's partners, i.e. the owners of video cassettes (VC) rental shops in the country. In October 2001, Unit Video - the Association of Independent Owners VC Rental Shops - filed to the CPC a claim against the trade policy of Alexandra Video. The Association's members are about a dozen of sole traders and limited liability companies, which at the time of the claim owned no more than fifty VC rental shops in the country. According to data of the CPC, this makes less than 5% of the employed in that sphere. Unit Video complained that the top distributor in the country (until the autumn of last year, again as per CPC's estimates, Alexandra Group Holding owned the rights for VC distribution of over 80% of the world's movie titles) did not allow the owners of VC rental shops to set themselves the rental prices in their clubs, buy the video carriers for recording, chose the films and the number of copies they want to possess. The owners of VC rental shops also complained that their partner obliged them to keep accounts of their proceeds with software, supplied by Alexandra Video, by which it was able to trace their other deals too. In that way Alexandra Video was forcing VC rental shops to pay 50% not only on their turnover from their titles, but on others as well. In 2002 CPC's then team (chaired by the former deputy from the UDF-coalition Nikolay Pavlov) rejected the claim of VC rental shops and ruled in favour of the distributor. A new protest followed, this time at the Supreme Administrative Court. A few months ago Themis ruled that CPC's former decision was irregular and that the case should be returned for a new consideration. During the week CPC's new team, chaired by the former head of PA's Supervisory Board Petko Nikolov, imposed a record high fine to Alexandra Group Holding. According to observers, CPC's previous sanctions for violations of that article within its several-years existence could be counted on one hand's fingers. When imposing a fine of BGN210,000 the CPC was guided by the understanding that the abuse of a dominant position on the market is one of the greatest violations of the rules of competition, the motives for levying it read. The use of market power on the part of Alexandra in order to get benefits, which it would not enjoy in a strongly competitive medium, is a gross violation of the fair trade practice.

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