The case between the French-speaking brand Payot and the French holding company Madrigall illustrates the findings made in Switzerland: according to the State Secretariat for the Economy, “ the price level of goods and services consumed by households is in total 60% higher than that of the EU-15 “. And books were no exception.
An additional cost that weighs
Legally, the concept of “ relative market power », introduced in 2022 extended the law on cartels: from now on, companies exercising economic control over a partner fell within its scope. This is how, in September 2022, Payot alerted and referred the discriminatory prices imposed for the purchase of books to the Competition Commission (COMCO).
Thus the former CEO of Payot, Pascal Vandenberghe, launched into the matter: he criticized Madrigall for refusing to supply him directly under the usual French pricing conditions, thus forcing him to incur additional costs. The famous tabelle, also practiced in Belgium, and which was definitively abolished on January 1, 2021.
However, it remained to convince the authority of economic dependence, which skews the entire commercial relationship. And in fact, no viable alternative exists. It is indeed impossible to find another source of supply of books other than… the one who produces them, in the necessary quantities. Likewise, giving up Madrigall's works… you might as well pack up. And COMCO understood that the sale of books from other publishers would in no way compensate for the losses. In fact, we do not replace one Kamel Daoud with two Yasmina Khadra, as we would with canned carrots.
The conclusion is therefore indeed that of an imbalance of power, because Madrigall has various options for marketing his books in Switzerland. Payot, on the other hand, has no other option for sourcing than through the group's exclusive network. This situation sealed the recognition of a “ relative market power » by Madrigall on Payot.
In fact, the abuse was well identified, but above all only partly justified. The publisher defended its pricing policy by citing additional costs specific to Switzerland, such as higher logistics costs and labor costs. But the justifications put forward by the publisher were deemed insufficient by COMCO: they represented only a small portion of the costs advanced by the group.
Discussions in procedure
In September 2022, Antoine Gallimard defended himself in Time: «Our distribution structure – which goes through an independent Swiss company – allows us to have nearly 400,000 books in storage in Fribourg, which can be delivered within 24 hours to French-speaking booksellers without them having to worry about the logistics chain. from France or customs questions. »
Not ” opposed to direct supply in France with booksellers who wish it », he even mentioned current discussions. But which will have turned sour, reported the bookseller, in view of the proposals made.
This is probably why Madrigall's boss interpreted the complaint as an attempt to “strengthen its market power vis-à-vis its competitors and improve the commercial conditions obtained from its suppliers“. And then accuse the brand of acting “ in my opinion in a purely financial logic“. In fact, trying to obtain a supply of books at prices identical to those practiced in France has fairly obvious economic foundations.
The fact remains that for the moment, and despite our requests, Antoine Gallimard nor his legal department nor Bruno Caillet, president of Sofédis, Madrigall's distribution subsidiary abroad, have not returned our requests for reactions. In the middle of winter, we shout “hyémal” at Madrigall?
Falling prices?
In a press release issued the same day as the report, Payot's general management, made up of Maud Poncé-Hubier and Bénédicte Kuchcinski, expressed its complete satisfaction. It remained to be implemented, and therefore, to propose “a fair price for our customers, while maintaining quality bookstores in French-speaking Switzerland ».
So, books sold at a lower price? According to estimates, these would be revised prices of between 10 and 15%, no more: booksellers are facing the strength of the Swiss franc, which has further consolidated against the euro. Not really good news. So, from what date will the sale price of books decrease for Swiss customers? “We estimate that it will take a few months for direct procurement to be implemented», Assure the managers of the brand to ActuaLitté.
However, the discussions have not yet started: “We have had no contact with Madrigall today», They assure.
Caution is advised
On the side of LivreSuisse, an inter-professional organization bringing together booksellers, distributors and publishers in French-speaking Switzerland, we welcome the COMCO verdict with more consideration. Oliver Babel, general secretary, does not see “a big surprise. We knew that the decision was close and that the law on the island of high cost opened a breach. In this way, all the reasons were there for the denunciation to be admissible.»
READ – Switzerland: Gallimard condemned for abusive pricing practices
From there to saying that we were convinced of Madrigall's defeat, there would only be one step: the arguments deployed before the Swiss authority showed that in the French ranks, we did not fight in the hope of success . Nor with the panache of Cyrano de Bergerac, “rather by being quite sure of losing», slips an observer.
However, breaking the champagne would be hasty, believes the inter-professional organization, highlighting the terms of paragraph F of the decision. Because, certainly Madrigall is constrained “to apply to Payot in the event of direct supply in France the same conditions as those enjoyed by French booksellers“. But there remains the possibility “to increase the purchase prices to the extent of the justified additional costs or to reduce the discount accordingly ».
A lesser decision
Likewise, by not fixing “definitively the authorized purchase prices or the Payot discount”, fluctuations and changes would occur in the future. But what LivreSuisse fears above all are possible future disputes involving both parties. “They would be referred to the civil courts (of France and Switzerland), and this attenuates the overall impact of the decision», underlines the secretary general.
However, specifies COMCO, in the event of non-compliance with the measures, a new investigation and sanctions would be initiated. And, this time, with a new, significantly faster procedure. However, on the Payot side, we are much less worried: “This paragraph frames and clarifies the decision», we are told laconically. Above all, if the law does not provide for a fine, it establishes constraints, which, in the event of non-compliance, will this time lead to reprisals.
The investigation exclusively targeted the Madrigall group, but the rules on relative market power concern all publishing houses: other investigations cannot be ruled out. Through this decision, COMCO thus presents a reference framework and a preventive effect for other publishers. And although Payot is expressly cited, “the measure will be valid for all French-speaking points of sale», guarantees Olivier Babel.
The independents in the middle
That all bookstores benefit from it, there is no doubt on this point, the former CEO of Payot had already indicated this to ActuaLitté: the action he was carrying out concerned Payot but would benefit all French-speaking points of sale, while applying to all distributors. “That independent bookstores are housed in the same boat does not imply that they have the same resources as Payot», continues Olivier Babel.
« In terms of sales volume and market share, sufficient weight is needed to embrace what the COMCO decision allows. And obtain supplies directly from France, small structures will simply not be able to. » Reason why the OLF (distribution structure) would be called upon as an intermediary on behalf of French-speaking bookstores. Mathieu Fehlman, its general director, has not yet responded to our requests for details.
There also remain a number of unknowns: by losing the connection with the leading book seller in French-speaking Switzerland – to whom we readily lend 50% market share – what will be the attitude of distributors? “We need to maintain structures on the territory», continues Olivier Babel. In fact, for daily work, “and not simply visits from representatives, but special operations, returns, events or institutional orders», this relationship proves necessary.
The ready header
But how will the French subsidiaries bear their costs and charges with such a disappearing scope? Dargaud Suisse, Interforum Suisse and others — Madrigall, obviously — need to revise their pivot tables in Excel: “It is becoming dangerous to consider that the independent bookstore market will be sufficient for the future», sweats an employee.
A veteran of the sector analyzes more specifically “The COMCO decision will reduce the table at Payot for Madrigall and the other broadcasters will align – we will go from 1.5 to 1.2 of the discount coefficient. But will subcontracting with the OLF bring the same advantage to independents? And how would broadcasters maintain a 1.5 coefficient without introducing a distortion of competition? »
With an ludicrous, but implacable conclusion: “Independent bookstores would be forced to sell their books more expensively than at Payot?» Closure, in the short or medium term, therefore seems inevitable. Madrigall, however, has 30 days to file an appeal, and perhaps other appeals are to be feared: the selling price for Payot customers may not change very quickly…
The COMCO decision can be found below for consultation and/or download.
The origins of the tabelle in Switzerland
It was in 1990 that Hachette Distribution Services, a subsidiary of the Lagardère group, acquired a majority stake in Payot, then held by the Edipresse group. An investment which led to a reorganization of Payot's supply chain, with centralization of purchases via Swiss broadcasters and distributors, often affiliated with French publishers. The restructuring will have limited Payot's autonomy in terms of supply, restricting its ability to negotiate directly with French publishers.
This change had the consequence of increasing the prices of books in Switzerland, with Swiss distributors applying higher margins. Over time, Swiss booksellers, including Payot, have expressed concerns about these practices, calling them a “cartel” due to the lack of competition and unilateral price setting by distributors.
In response to these concerns, the Competition Commission (COMCO) has carried out investigations into the practices of book distributors in Switzerland. In 2013, it sanctioned several companies for obstructing parallel imports, confirming that agreements between broadcasters and publishers had prevented Swiss retailers from sourcing directly from France, thereby contributing to higher prices in Switzerland.
In 2013, COMCO sanctioned ten publishers-distributors of French books active in Switzerland for obstructing parallel imports, with fines totaling approximately 16.5 million Swiss francs.
Several companies concerned challenged these sanctions before the Federal Administrative Court (TAF). In 2019, the TAF confirmed the sanctions for five of the broadcaster-distributors and reduced the fines for four others, bringing the total amount of sanctions to approximately 14.3 million Swiss francs.
Photo credits: ActuaLitté, CC BY SA 2.0
By Nicolas Gary
Contact : [email protected]
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