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Omnitron / Cryptovision A/S /Cablelink Ltd. / Tandberg A/S [1998] IECA 496 (1st April, 1998)
Competition
Authority Decision No. 496 of 1 April 1998 relating to a proceeding under
Section 4 of the Competition Act, 1991.
Notification
No. CA/801/92E - Omnitron Ltd/Cryptovision A/S/Cablelink Limited/Tandberg A/S
Introduction
1. Notification
was made of a supply agreement between Omnitron Limited, Cryptovision A/S,
Cablelink Limited and Tandberg A/S on 30 September 1992 with a request for a
certificate under Section 4(4) of the Competition Act, 1991 or, in the event of
a refusal by the Competition Authority to issue a certificate, a request for a
licence under Section 4(2).
The
Facts
(a)
The
subject of the notification
2. The
notification covers security for a supply arrangement. Under a separate
agreement, Omnitron has agreed to supply Cablelink and Cablelink has agreed to
purchase certain products from Omnitron. Omnitron obtains these products from
Cryptovision under an exclusive distribution agreement which was notified
separately to the Authority and granted a licence (Decision No. 393,
Notification No. CA/799/92E). The arrangements notified here provide Cablelink
with some security of supply for the relevant products in the event of Omnitron
or Cryptovision becoming insolvent.
(b) The
parties involved
3. Omnitron
is a privately owned Irish company, located in Athlone, which is a turnkey
manufacturer of electronic equipment. Cryptovision A/S is a wholly owned
subsidiary of Tandberg A/S, which is a publicly quoted Norwegian communications
company. Cablelink Limited is an Irish company and the largest provider of
cable television services in the State.
(c) The
products and the market
4. The
product is an encryption system for use in cable television and MMDS networks.
Omnitron also manufactures decoders for the system. According to Omnitron,
there are five suppliers of encryption and decoder systems on the Irish market.
Four of these market and support their own products directly. The product
which Omnitron manufactures and distributes is based on advanced technology
developed by Tandberg and sold through Cryptovision. The product is sold to
cable and MMDS operators who provide satellite television services and these
include Cablelink.
(d) The
notified agreement
5. The
notified agreement between Cryptovision, Tandberg, Erictron Ltd (now Omnitron)
and Cablelink Limited was made on 15 August 1990. It provides Cablelink with
certain rights in the event of the insolvency of Cryptovision or Omnitron.
Such rights include the right to demand supplies of the relevant products from
any court appointed receiver of Cryptovision or Omnitron and the right to
demand performance from the suppliers of components of the relevant products
which such suppliers have undertaken to Cryptovision or Omnitron.
6. In
addition, the agreement provides that Tandberg shall indemnify Cablelink for
any losses it may incur by the failure of Cryptovision or Omnitron to perform
their obligations under the Agreement.
Submissions
of the parties
7. The
parties note that the arrangement notified here contains no clauses which
restrict competition or involve any element of exclusivity of supply. The only
reason this agreement was notified was because this agreement forms part of the
business arrangements between the parties which are the subject of agreements
notified separately (CA/799/92 and CA/800/92).
Assessment
Applicability
of Section 4(1)
8. Section
4(1) of the Competition Act, 1991 prohibits and renders void all agreements
between undertakings which have as their object or effect the prevention,
restriction or distortion of competition in trade in any goods or services in
the State or in any part of the State.
The
Undertakings and the agreement
9. Section
3(1) of the Competition Act defines an undertaking as "a person being an
individual, a body corporate or an unincorporated body of persons engaged for
gain in the production, supply or distribution of goods or the provision of a
service." Omnitron, Cryptovision, Tandberg and Cablelink are corporate bodies
engaged in the manufacture and distribution of products for gain, and are
therefore undertakings. The agreement is an agreement between undertakings and
it has effect within the State.
Applicability
of Section 4(1)
10. The
Authority believes that the notified arrangements do not prevent, restrict or
distort competition. The arrangements give Cablelink some security for the
obligations of Omnitron and Cryptovision. The relevant obligations relate to
the supply of specialised equipment
which,
presumably, in the event of an interruption of supply from these parties,
Cablelink would find it difficult to obtain from other sources in the short
run. The consideration for these security arrangements is contained in the
other agreements entered into between the parties. The obtaining or providing
of security for contractual obligations in the circumstances as outlined here
do not restrict competition. Such arrangements contribute to the commercial
viablility of the relationship between the parties.
None of the provisions of the notified arrangement offend against
Section 4(1).
The
Decision
11. In
the Authority’s opinion Omnitron, Cryptovision, Tandberg and Cablelink
are undertakings within the meaning of
Section 3(1) of the
Competition Act and
the notified arrangements constitute an agreement between undertakings. In the
Authority’s opinion the arrangements do not have, as their object or
effect, the prevention, restriction or distortion of competition within the
State or any part of the State.
The
Certificate
12. The
Competition Authority has issued the following certificate:
The
Competition Authority certifies that, in its opinion, on the basis of the facts
in its possession, the security for supply arrangements between Omnitron
Limited, Cryptovision A/S, Tandberg A/S and Cablelink Limited (CA/801/92),
notified on 30 September 1992 under
Section 7 do not offend against
Section
4(1) of the
Competition Act.
For
the Competition Authority
William
Prasifka
Member
[
] April 1998
© 1998 Irish Competition Authority
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URL: http://www.bailii.org/ie/cases/IECompA/1998/496.html
