Source: EURLEX
Language: en
Format: md

[**Avis juridique important**](http://europa.eu.int/eur-lex/lex/en/editorial/legal_notice.htm)

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# 32000J0045

**COMMISSION DECISION of 12/05/2000 declaring a concentration to be compatible with the common market (Case No IV/M.0045 - \* BERTELSMANN/KOOPERATIVA FÖRBUNDET/BOL NORDIC) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)** 
  
*Official Journal C 212 , 25/07/2000 P. 0015 - 0015*

  

COMMISSION DECISION of 12/05/2000 declaring a concentration to be compatible with the common market (Case No IV/M.0045 - \* BERTELSMANN/KOOPERATIVA FÖRBUNDET/BOL NORDIC) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

Brussels, 12.05.2000 SG(2000) D/103632

To the notifying parties

Dear Sirs,

Subject: Case No COMP/JV.45 - Bertelsmann/ Kooperativa Förbundet (KF)/BOL Nordic

Notification of 07.04.2000 pursuant to Article 4 of Council Regulation (EEC) No 4064/89

1. On 07.04.2000, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EEC) No 4064/89 [1] by which Bertelsmann AG ("Bertelsmann") and Kooperativa Förbundet ("KF") acquire joint control over the company Bokus AB ("BOL Nordic"), a currently wholly-owned KF subsidiary.

[1] OJ L 395 p. 1; corrigendum: OJ L 257 of 21.9.1990, p. 13; as last amended by Regulation (EC) No 1310/97, OJ L 180 of 9.7.1997, p.1; corrigendum: OJ L 40 of 13.2.1998, p. 17.

2. After examination of the notification, the Commission has concluded that the notified operation falls within the scope of Council Regulation (EEC) No 4064/89 and does not raise serious doubts as to its compatibility with the common market.

I. THE PARTIES

3. Bertelsmann heads a group of companies that operate internationally and form the Bertelsmann group. The main activities of the group are printing, publishing and distribution of books and magazines, book clubs, publishing and distribution of music and records and private television and related services in the multimedia sector.

4. KF is the Swedish cooperative union, which operates consumer cooperative retail outlets in Sweden. The business is divided into two main areas KF retailing and KF coordination and development. These two divisions are complemented by the media group KF Media and the investment company KF Invest.

5. BOL Nordic is a stock corporation under Swedish law. Its business activity is the online sale of books in the Nordic countries (Sweden, Finland, Norway and Denmark) covering the Nordic and English languages. It is an existing company currently wholly owned by KF under the name of Bokus AB. It will be renamed BOL Nordic within six months from the completion of the merger. BOL Nordic will be part of a worldwide system of BOL companies, which will offer on-line book sales in various countries.

II. THE OPERATION

6. The basic structure of the proposed transaction can be described as follows:

7. Bertelsmann and KF will each have a 50% participation in the joint venture BOL Nordic. The parties will establish the joint venture by Bertelsmann acquiring a 50% stake in Bokus AB.

8. The parties will concentrate in BOL Nordic their on-line sale activities in the Nordic countries concerning books in the Nordic and English languages. The main purpose of this operation is the migration of the Bokus site to the BOL profile, which offers additional interactive content.

III. CONCENTRATION

9. The proposed operation constitutes a concentration within the meaning of Article 3(1)(b) of the Merger Regulation.

Joint control

10. BOL Nordic was before the notified operation under the sole control of KF. After the transaction, BOL Nordic will be equally held between Bertelsmann and KF (50/50).

11. Pursuant to the Shareholders Agreement, the Board of BOL Nordic will have an equal number of directors from Bertelsmann and KF. Each director has one vote and decisions of the board are passed by a simple majority of the board members, however requiring at least the vote of one director of each party. Deadlock situations are to be resolved by mutual call options for the shares of the other party without a casting vote for the chairman of the board. The chairman of the board will be designated by the shareholders on a one-year basis, the designating right alternating between KF and Bertelsmann.

12. Therefore, the joint venture will be under the joint control of KF and Bertelsmann.

Autonomous economic entity acting on a lasting basis

13. BOL Nordic is an existing company, having become active in 1997, with sufficient assets and personnel at its disposal. After the transaction the joint venture will continue to have all necessary tangible and intangible assets to perform all functions required for an autonomous economic entity active in on-line retailing of books, including an unlimited licence to use the trade mark "BOL", the technology, corporate image and other know-how of BOL International GmbH, a company of the Bertelsmann group. In conclusion, BOL Nordic will be able to perform on a lasting basis all the functions of an autonomous economic entity.

IV. COMMUNITY DIMENSION

14. The combined worldwide turnover of the undertakings concerned is more than EUR 5 000 million (Bertelsmann: EUR 13 199 million, KF: EUR [ ] million).

15. Each of them has an aggregate Community-wide turnover in excess of EUR 250 million (Bertelsmann: EUR 7 201 million, KF: EUR [ ] million), but they do not achieve more than two-thirds of their aggregate Community-wide turnover within one and the same Member State. The notified operation therefore has a Community dimension.

V. COMPETITIVE ASSESSMENT

A. The relevant market

16. Pursuant to its decisions of 06.05.1999 in Case No IV/M.1459 - Bertelsmann/ Havas/BOL, and of 03.12.1999 in Case N° COMP/JV 24 - Bertelsmann/Planeta/BOL Spain, the Commission considers that the following product markets could be considered relevant for the assessment of this operation: (a) the market for distant sales of consumer books (including book clubs, mail order and sales by Internet), (b) the market for the Internet sales of books. According to the parties, the merger will not create any horizontally or vertically affected markets because Bertelsmann is not active in the Nordic countries. Consequently, there is no market share addition.

17. However, for the purposes of the present assessment the precise scope of the relevant product market can be left open, since on the basis of all plausible market definitions considered, the operation will not lead to the creation or strengthening of a dominant position.

18. The parties submit that the geographic market for the distant sales of books (including on-line sales via the Internet) is national. With regard to the market for on-line sales of books, the parties submit that, even if the sales can be addressed to customers on a worldwide basis, the relevant geographic market is also national. Today, Bokus sells to all Nordic countries but via national subsidiaries necessary both for purchasing and for distribution because the on-line sales need a national logistic system of storage and next-day delivery. Even for books written in English the geographical market seems to remain national, because there is no significant trade between the different Nordic countries or with non-member states. This is probably due to longer terms of delivery and higher costs for the consumer in relation to cross-border payments and exchange rates.

19. However, the exact determination of the geographic scope of the market can be left open because even in the narrowest market definition possible, i.e. national markets, the operation will not lead to the creation or strengthening of a dominant position.

B. Dominance

1. The market for distant sales of consumer books (including book clubs, mail order and sales by Internet)

20. KF is active in the field of book clubs, mail order and sales by Internet. Bertelsmann has no activity in these fields in the Nordic countries. The parties estimate the market share in the different Nordic countries as follow: Sweden [ ]% ([ ]% BOL Nordic and [ ]% concerning KF's remaining activities outside the joint venture), Finland [ ]%, Denmark [ ]%, Norway, insignificant). Given that position, the operation will not lead to the creation or strengthening of a dominant position.

2. The market for the Internet sales of books

21. The Internet sale of books in the Nordic countries is an emerging market. It represents 4% of the total market for the retailing of books in Sweden, 1.7% in Finland and 1% in Denmark and Norway. It is also a fast-growing market with an annual growth rate up to 75%.

Bertelsmann is not active on this market in the Nordic countries. In Finland, Denmark and Norway, KF is only active on the market through Bokus. Its market share in these countries is respectively [ ]%, [ ]% and [ ]%.

In Sweden, KF has another on-line activity through Akademibokhandeln AB, a bookseller chain, which has its own on-line sales facilities. It holds a 4% market share. Bokus has a market share of [ ]%. The KF's total market share is [ ]% in Sweden.

22. In the market for the Internet sales of books, there are already a significant number of specialised Internet booksellers as well as e-commerce ventures including bookshops. In addition, many bookshops also offer the possibility to order books on-line. Market entry barriers are low as the total costs of establishing an on-line bookshop are relatively low and there are no legal or regulatory barriers to entry. In addition, the online book market segment functions as a completely transparent market and therefore is fiercely competitive. This is due to the availability of so-called "meta search engines" comparing prices for specific books across multiple online bookshops.

23. For the reasons referred to above and because there is no addition of market shares, Bertelsmann being not active in the relevant geographical market, the operation will not lead to the creation or strengthening of a dominant position.

C. Coordination of competitive behaviour: assessment under Article 2(4)

24. In the Nordic countries, Bertelsmann is not active in the market of the joint venture nor in upstream markets like book publishing. Due to language barriers Bertelsmann's publishing and retail activities in the other European national markets do not have competitive effects on the Nordic markets.

Therefore, the operation will not lead to any co-ordination of the parents' competitive behaviour in a market outside the joint venture.

VI. ANCILLARY RESTRICTIONS

25. The parties have notified the following clauses as ancillary restrictions:

26. (i) A non-competition clause binding the parties, including all undertakings under their control, not to engage in the joint venture's business during the validity of the agreement and for a period of one year after a shareholder's exit. Excluded from this non-competition clause are only ancillary Internet activities conducted by KF prior to the execution of the Agreement. KF commits itself not to compete aggressively and to limit to less than [ ]% of its marketing expenses, the budget allocated to this site.

27. According to the parties, the non-competition clause serves to concentrate the parties' efforts in the joint venture, to give the joint venture an unimpeded chance of brand migration to BOL and avoid free-riding by the parties. The parties also argue that the clause is necessary to secure their investments and to ensure the future economic success of the joint venture.

28. The Commission considers that the non-competition clause is, indeed, directly related and necessary for the joint venture's penetration of the market during a start-up period of five years. Beyond this period, the parties have failed to justify the need for this clause. It is, therefore, only covered by the present decision for a period of five years.

29. (ii) The provisions in the Franchise Agreement with BOL International GmbH which oblige BOL Nordic to accept certain conditions of the franchise network to allow it to make use of its business ideas (global trademark/branding, marketing and advertisement strategies, website design, e-commerce software developments including the IT, order and customer management services offered by BOL International GmbH).

30. These clauses in the Franchise Agreement provide to the joint venture the necessary assets to implement the joint venture's business by ensuring world-wide branding, economies of scale and high quality of customer care, and to protect the franchiser's intellectual property rights and maintain the common identity and reputation of the franchise network. BOL Nordic has concluded this agreement in order to benefit from the BOL trademark/branding, e-commerce know-how and marketing strategy. The notified clauses are directly related and necessary for the implementation of the concentration. Insofar as they could constitute a restriction of competition, they are, therefore, covered by the present decision.

VI. CONCLUSION

33. For the above reasons, the Commission has decided not to oppose the notified operation and to declare it compatible with the common market and with the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of Council Regulation (EEC) No 4064/89.

For the Commission,

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