Supreme Court did not uphold the complaint of AS Eesti Post against the Competition Authority

In 2022, a court case involving the activities of postal undertakings was concluded in the Supreme Court of Estonia. AS Eesti Post filed a complaint with the Competition Authority, claiming that the undertaking had wanted to buy an early morning postal delivery service from AS Express Post to resell it to publishers. AS Express Post is engaged in the early morning postal delivery of periodicals in larger cities and the surrounding areas, primarily providing the service to its parent undertakings, ie publishing undertakings AS Ekspress Grupp and AS Postimees Grupp. AS Express Post allegedly requested a higher fee from AS Eesti Post than it did from its parent undertakings, as a result of which the postal undertakings were unable to reach an agreement. AS Eesti Post was of the opinion that AS Express Post held a dominant position on the market for early morning postal delivery of newspapers in urban areas and was in control of essential facilities. Pursuant to the Competition Act, it is prohibited for such an undertaking to treat its customers unequally.

The Competition Authority did not establish any violations and terminated the supervisory proceedings. The Authority took the view that AS Eesti Post, being a competitor of AS Express Post, could only challenge the discrepancy in pricing if AS Express Post was in control of essential facilities. Essential facility means a network or infrastructure that is necessary for operating on the market but which other persons cannot duplicate or for whom it is economically inexpedient to duplicate. In the opinion of the Authority, the postal delivery network of Express Post cannot be deemed an essential facility, as Eesti Post itself also has a nationwide postal service network. AS Eesti Post contested the notice of termination of supervision in the Administrative Court, which upheld the complaint and ordered the Authority to continue the proceedings, but the Circuit Court subsequently annulled the judgment. The Administrative Law Chamber of the Supreme Court came to the same conclusion, but changed the reasoning of the Circuit Court.

The Chamber determined that since the early morning postal delivery network of Express Post can be duplicated, it is not an essential facility that would have served as a basis for Eesti Post to demand the conclusion of a contract. The determination of an essential facility requires meeting a high threshold and the use of another undertaking's network must be essential in order for the access obligation to arise. The applicant failed to provide a convincing explanation as to why it could not modify or enhance the efficiency of its postal network to organise early morning postal delivery, for example, by combining the morning delivery of daily newspapers with some of its other deliveries.

At the same time, the Supreme Court pointed out that AS Express Post made a price offer to AS Eesti Post. Where an undertaking in a dominant position on the market is in principle willing to grant access to its infrastructure, sell goods or provide a service, it is prohibited from imposing or applying unfair trading conditions or discriminating against any of its trading partners, irrespective of the existence of an essential facility.

The Supreme Court, however, did not consider it necessary to provide a final verdict on whether the fees charged by AS Express Post were fair and non-discriminatory. AS Eesti Post admitted that the prices charged were comparable to those at which it offered its own newspaper delivery service. This suggests that the offer made to the applicant was at least near the economic value of the service and not unfairly high. AS Express Post is not necessarily obligated to provide the delivery service within the group at the same price as it does outside the group. Within the group, profits can be maximised at a particular segment that may not necessarily involve the distribution of periodicals, as long as there is no risk of competition distortion.

The Chamber concurred with the Competition Authority’s assessment that the actions of Express Post did not pose a significant risk of distorting competition that would have adversely affected the interests of consumers and the rights of the applicant. Moreover, the Supreme Court rejected the primary argument of the applicant that the Competition Authority did not have the right to terminate the supervisory proceedings without defining the relevant market. The Supreme Court clarified that although it is generally appropriate to commence the analysis of suspected abuse of a dominant position with the definition of the relevant market, there may be additional conditions to be met, beyond those that depend on market definition. If there are other factors that eliminate the need for continued supervision with a sufficient level of certainty, defining the relevant market may not be necessary.