THE Games, a wholly owned subsidiary of Menzies, won an exclusive contract to distribute Nintendo product in the UK and Ireland in 1995.

 

 

THE Games refused to supply a small number of wholesalers distributing to other EU countries following heavy commercial pressure from Nintendo to maintain practices developed pre-1995.

 

It is important to note that the European Commission's decision is based on information provided by THE Games, and that THE Games co-operated fully with the Commission throughout.

 

 

The practices were inherited from the period when Nintendo did its own distribution in the UK.

 

 

During 1996 and 1997.  The practice was terminated as soon as the Menzies Group became aware of it. The European Commission has recognised that there was no deliberate intention on the part of Menzies to breach competition regulations.

 

 

Menzies took immediate steps to ensure that THE Games terminated the practices and to ensure that similar practices would not occur in future.  In particular, Menzies strengthened its competition law compliance programme with a view to ensuring the Group complied with all EU competition rules.

 

 

No.

 

 

This will be treated as an exceptional cost.  It should be noted that Menzies' last two Accounts have included a reference to this investigation.

 

 

The fine is Eur 8.64m (c.£5.4m).  The EC class infringements in three categories, based on their gravity (the nature of the infringements, their actual impact on the market and the size of this market) and duration.  A brief summary of the categories are:-

 

Minor infringements: such as trade restrictions with limited market impact and affecting only a substantial but relatively limited part of the EU.  Likely fines - up to €1million

 

Serious infringements:  covering both horizontal or vertical restrictions more rigorously applied, with a wider market impact, affecting extensive areas of the EU.  They could include abuses of dominant positions. Likely fines - €1 million to € 20 million.

 

Very serious infringements: generally horizontal restrictions such as price cartels, market-sharing quotas, or other practices which jeopardise the proper functioning of the single market such as partitioning of national markets and clear-cut abuses of dominant positions. Likely fines - above €20 million.

 

The EC may increase a fine based on the above factors if there are other aggravating circumstances involved.  They may reduce it if there are attenuating circumstances, such as the party involved playing a "follow my leader" role, or where there is full co-operation.

 

 

 

Any fine which the Commission may impose needs to be proportionate to the offence.  We do not believe that the fines imposed on this case pass that test.

 

In addition, the Commission is expected to maintain a common standard in the application of penalties, notwithstanding that the levels of penalties can over time be increased.  The Company will review carefully with its advisers whether the Commission have maintained this common standard based on precedent.

 

The Commission is also required to state its case against any defendant in a Statement of Objections, and to consider the defendant's responses as part of the process of reaching a Decision and of calculating any fine.  The Statement which was issued in April 2000 does not contain the full case on which THE Games has now apparently been penalised, and the Company will review carefully with its advisers whether it has thus not had the opportunity to defend itself properly.