Freshfields Bruckhaus Deringer
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(Decision of Federal Supreme Court of March 11, 1997, KVR 39/95)
In a highly disputed decision, the Federal Supreme Court held that the fixation of resale prices for CD-ROMs which contain softcopy versions of literature does not violate German antitrust law. The decision has far-reaching implications for the distribution of literature in softcopy form.
The case involved one of Germany's largest legal publishers which offers a collection of its law journals on CD-ROM. The CD-ROM does not only contain the complete text of several volumes of the respective law journals, but also a sophisticated index and search system for the selection and identification of court decisions or articles which takes about half of the space of the CR-ROM. Since July 1993, the publisher has sold such CD-ROMs only to distributors and resellers who agree to sell them at retail prices fixed by the publisher.
In a decision of May 1994, the Federal Cartel Office had enjoined the price fixation by the publisher on the basis of Section 15 of the German Act against Restraints of Competition ("GWB") (see endnote 1). Section 15 GWB provides for a general prohibition of contract clauses which limit the other party in its freedom to determine its own prices or terms and conditions. According to Section 16 GWB, however, "publishing products" are explicitly exempted from the prohibition of Section 15 GWB. The Federal Cartel Office nevertheless found that the publisher was in violation of Section 15 GWB as CD-ROMs would not constitute "publishing products" within the terms of Section 16 GWB. The Cartel Office based its distinction on the different manufacturing process, the partly different channels of distribution as well as the extensive index and search functions of the CD-ROM which made it similar to a software program. The decision of the Federal Cartel Office was confirmed by the Court of Appeal of Berlin in May 1995 (see endnote 2).
Upon further appeal by the publisher, the Federal Supreme Court overturned the ruling of the Court of Appeal of Berlin. The Supreme Court disagreed with the Cartel Office's and the Court of Appeal's finding that CD-ROMs did not constitute "publishing products" within the terms of Section 16 GWB. Even though the court conceded that Section 16 GWB was originally intended to cover printed material only, it expressed the view that the application of the statutory term "publishing products" had to be open for new technical developments. The term would therefore include all new technical products which substitute literature in printed form. As the publisher's CD-ROMs constituted a substitution product for its conventional law journals in printed form, Section 16 GWB would apply. Neither the different manufacturing process and distribution system nor the additional index and search function of the CD-ROM would justify an exclusion of CD-ROMs from the scope of Section 16 GWB.
It should be noted that the decision of the Federal Court was limited to pure text CD-ROMs. The Court left the question open whether Section 16 GWB would also apply to CD-ROMs which contain multimedia applications such as moving pictures or sound sequences.
By Dr. Jochen Dieselhorst, Bruckhaus Westrick Heller Lober
1 Decision of Bundeskartellamt of May 25, 1994 (B7-506000 P-128/93).
2 Decision of Kammergericht Berlin of May 17, 1995 (Kart 14/94).
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