Can a recruitment site with a dominant market position fairly refuse to carry vacancies from shareholders in a competitor?
Topic: Competition
Who: Jobserve Limited and Network Multimedia Television Limited
When: December 2001
Where: Court of Appeal, Royal Courts of Justice London
What Happened:
The verdict reported here was in an appeal in proceedings brought by IT job vacancy site Network Multimedia Television ("NMT") against competitor Jobserve. NMT claimed unfair competition/abuse of a dominant position by Jobserve. The appeal judges had to decide whether NMT's case should be allowed to continue through the courts or whether there was no serious question to be tried. Jobserve is one of the leading websites providing a service to recruitment agencies in the IT sector. Its site had for some time carried vacancies notified to them by almost all of the members of a trade association which represented the IT and communications recruitment industry. This association, ATSCo, accounted for 50% of the turnover of the UK IT recruitment market.
It was Jobserve's policy not to accept advertising from recruitment agencies who had an interest in other job sites apart from their own. This became a live issue when NMT, a competitor of Jobserve's, concluded an agreement with ATSCo to operate an IT recruitment website specifically for use by ATSCo members. This effectively gave the ATSCo members a stake in the NMT enterprise.
This resulted in Jobserve refusing any longer to carry vacancies notified to them by members of ATSCo. This in turn led to the issue of unfair competition proceedings by NMT against Jobserve.
At a previous hearing at which NMT asked the court to stop Jobserve from refusing to carry ATSCo members' vacancies, the court had granted NMT their injunction and taken the view that there was a serious question to be tried as to whether Jobserve was "abusing its dominant position." Jobserve appealed that decision and argued before the Court of Appeal that what they were doing was perfectly fair competition and should not be the subject of continuing litigation. They said that if the NMT and Jobserve sites were the only IT recruitment sites available, then there might have been an argument that NMT could run. Since there were numerous competing IT recruitment sites, however, there was no legal wrong being committed. The ATSCo members were perfectly free to use other, independent rival job boards and advertising media, but so long as they held a stake in the NMT operation, they were classified as a direct competitor of Jobserve's and therefore fairly caught by Jobserve's policy in this respect.
The Court of Appeal, however, was not persuaded and threw out Jobserve’s appeal. It held that there was a serious question to be tried as to whether Jobserve was abusing its dominant position. The judges felt it was arguable that Jobserve's conduct was aimed at destroying, distorting or restricting competition from the NMT site.
Why This Matters:
It does not appear that the Court of Appeal's decision will be appealed to the House of Lords. So NMT’s claim against Jobserve will now go to a full trail unless the matter is settled beforehand. The case is perhaps the first instance of the full application of the UK's relatively new Competition Act 1998 in an advertising context. It will be watched closely by media owners, since it's a dead cert that Jobserve is not the only advertising carrier operating a policy of this kind.
