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Monopoly Money | CADE & Infoglobo

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Protestors hurl horse manure at Globo company logo in demonstration last night

Source: GGN 

In a historic decision reached on Wednesday, antitrust agency CADE prohibited certain practices of Infoglobo Comunicações e Participações S/A in the advertising market. This is the first time the agency has acted to rein in monopolistic practices by a media company.

Infoglobo maintained a policy of discounts for O Globo, Extra, and Expresso da Informação — all three of them Globo subsidiaries — in which it calculated and adapted ad discounts according to the available resources of the advertiser, including commercials aired on TV Globo. In return, it imposed exclusivity as a condition.

In this way, Infoglobo prevented competitors from competing on an equal footing in Rio , where Globo controls 75% of the  ad market.

The case began in 2005 with complaints filed by the Jornal do Brasil and O Dia.

It was not until 2012 that the case was judged by the SDE — Secretariat of Economic Justice — an agency of the Justice Ministry. SDE concluded that the practice was an infraction against the economic order, recommending the condemnation of the company.

CADE negotiatated a settlement with Infoglobo, according to which Infoglobo is prohibited from conceding discounts which, in the ad sales of its three newspapers, imply an amount inferior to that stipulated for an advertisement in a single newspaper.  The accord specified payment of a R$ 1.94 million “financial contribution.”

Between the filing of the case and its conclusion, the Jornal do Brasil dropped out of the market.

Telesintese provides a few additional details.

Infoglobo Comunicações e Participações will be obliged to adjust its policies regarding discounts offered to advertisers who buy ad space in the  dailies O Globo, Extra and Expresso da Informação, all three owned by Infoglobo. Because the rules adopted may limit competition in the newspaper market in Rio de Janeiro, CADE  ordered Infoglobo to cease and desist engaging in potentially anticompetitive effects.

Infoglobo will no longer be able to offer discounts based on the sum of the ad budget that the advertiser sets aside for ad space in O Globo, Extra and Expresso da Informação. It is also forbidden from granting discounts which, in the purchase of ads to run in the three newspapers, imply a lesser value than that stipulated for a advertisement running in one of the  three. To this end, CADE and Infoglobo negotiated a compliance agreement. The accord also provides for the payment by Infoglobo of a R$ 1.94 million “financial contribution.”

Withthe contract negotiated, CADE hope to put an immediate end to the conduct investigated in the administrative proceeding that investigated possible abuse of a dominant position by Infoglobo when it excluded competitiors in the print newspaper ad sales sector

The case began in 2005 based on a complaint by the dailies Jornal do Brasil and  O Dia. These parties claimed that the anticompetitive practice adopted by  Infoglobo consisted in (1) imposing exclusivity in the purchase of ad space, (2) granting discounts conditioned on the purchase of ad space in more than one newspaper owned by the Globo group, (3) concession of differentiated cconditions for TV advertising, given that Rede Globo de TV belongs to the same group as the accused,  (4) the pricing of the daily Extra priced below the  cost of production, and (5) supplying ad space in Extra below the paper’s costs.

In 2012, a the SDE — at the time, an agency of the Ministry of Justice — concluded that “the discounts related to the percentage of the advertising budget for Infoglobo publications” and “discounts for the sale of ad space” constituted infractions against the economic order,  and recommended the company be sanctioned.

SDE also found that the market affected by the conduct under investigation is highly unstable, among other reasons because of the competitive pressure that other media place on print media. Furthermore, companies in this sector find it difficult to sustain operations, which could lead some to exit the market, as did one of the plaintiffs in the Infoglobo case, Jornal do Brasil. … Because the market is so sensitive, anticompetitive practices that affect it can cause irreversible damage, making the conditions of survival of companies in this sector a critical issue.

At the time of the facts narrated in the case, Infoglobo controlled more than 70% of the circulation of periodicals in Rio de Janeiro.  “From this fact flows the seriousness of the potential for harm of the conduct in question. Practiced by an agent with undeniable economic power, this conduct has the capacity to significantly alter the conditions of competition in the sector, reinforcing the need for the negotiation of an accord with CADE that will prevent the repetition of similar case,” said CADE member Ana Frazão, rapporteur of the case.

In São Paulo, there is the problem of the 100% market share in print distribution by the Grupo Abril. But that is a tale for another time.