The Competition Authority has cleared the Drogheda Independentnewspaper of predatory conduct in the market for local newspaper advertising.
The Authority's investigation was prompted by complaints from the publisher of the Drogheda Leaderalleging that the Drogheda Independentwas abusing a dominant position by billing advertising at below cost since 1997 and offering discounts in the Drogheda Independent Weekend Extra.
The Authority judged that the advertising rates could not plausibly be considered predatory and is not in breach of Competition Act 2002.
The competition watchdog deemed that the Drogheda Independent is not dominant in the local market and even if it were dominant, its alleged conduct could not constitute an abuse.
The Authority eschews a market share approach to defining dominance for an approach based on a company's ability to profitably raise price.
Though the Drogheda Independentaccounts for between 65-75 per cent of its local newspaper advertising market. But low barriers to entry and expansion, low customer switching costs, and the relative size of rival publications constrain the Independentfrom profitably rising its prices.
The Authority said offering discounts on advertising is arguably pro-consumer and more indicative of intense competition in the market than predatory conduct by a dominant undertaking.
The Authority added that the conduct of the DIC represents a move to meet the competitive threat from an innovative low cost operator and as such consumers have benefited due to an increase in choice and quality of newspapers available.
The judgment is the first time the Competition Authority has published details of an investigation into allegations of predatory conduct. The Authority decided to do so in this case to provide guidance on its approach to interested economic and legal practitioners as well as the general public.