ABUSE OF DOMINANCE BY ZELKA
The Competition Council has found that Zelka has abused its dominant position by setting excessively high prices for the cable television service in Zalaegerszeg and Tapolca, by putting two Hungarian TV channels (TV2 and RTL Klub) into the most expensive program package in Tapolca. The Competition Council has obliged Zelka to transfer TV2 and RTL Klub into a less expensive program package and also imposed a fine of HUF 5 million on it. In addition, Zelka was obliged to inform its subscribers in Zalaegerszeg and Tapolca about this decision within 30 days from date of delivery.
I. Facts of the case
Reception possibilities of TV programmes
The Competition Council examined first the reception possibilities of TV programmes. It found that there are several services similar to those that are provided by Zelka, namely services offered by other cable television network providers, TV aerial, satellite receiver, the combination of the formers and UPC Direct service. However these reception possibilities are either more expensive or provide a smaller number of channels than Zelka.
II. Legal evaluation
The relevant product market of cable television providers are programme packages provided by Zelka and their reasonable substitutes.
The services provided by Zelka`s programme packages can technically be substituted by numerous different services. The services that are technically able to substitute Zelka`s service must be compared by their content and by the programmes they offer. The price (especially the switching costs) and quality (the number of channels, the quality of reception, the connecting services etc.) of substitutes must also be taken into account.
The Competition Council found that cable TV network as a programme package provider could not be reasonably substituted by other broadcasting techniques, regarding prices, quality and choice. From this point of view, it is also important that a TV network is able to provide broadband internet access.
The relevant geographical market is Zelka`s operating territory.
According to the Competition Council, the following two behaviours were abusive:
the application of unjustified high prices in Tapolca and Zalaegerszeg since 1 January 2002,
the placement of the channels RTL Klub and TV2 in more expensive packages in the system of Tapolca.
Concerning the setting of unjustified high prices, the Competition Council pointed out that the price increase was not justified on the basis of the costs.
In connection with the programme packages, the Council found that a cable television network provider`s conduct was unlawful and arbitrary when the undertaking changed the content of the programme packages without the consumers needed it. An undertaking in dominant position should give possibility to the consumers to express their opinion on the proposed changes, if it increased its prices. The alteration or extension of packages is unlawful, if the majority of consumers oppose it. If this possibility is not ensured, the provider could force consumers to buy a more expensive product, which they do not need.
Concerning the two commercial channels the Competition Council established that the placement of the two most popular channels into the Package No II force the majority of consumers to buy the most expensive package. This tie-in sale has a disadvantageous effect on consumers because they have to subscribe to such expensive channels which they do not necessarily wish to watch. The placement of RTL Klub and TV2 into the most expensive package would have only been legal, if subscribers had had the possibility to express their opinion on this step.
III. Decision on the merits
The Competition Council found that Zelka has abused its dominant position and therefore imposed a fine of HUF 5 million on it. The undertaking was also obliged to change its behaviour and to inform subscribers of this decision and its consequences.