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According to the notifying party, in 2006, [>70%]* of DoubleClick's contracts, representing […%]* of its revenues for that year, had a duration of 2 years and less102 and [>50%]* of DoubleClick DFP contracts only have a duration of one year. This suggests that customers frequently have the opportunity to renegotiate contracts and to switch if they obtain better terms with a competing supplier of ad serving tools.

166. Finally, the ability to switch at manageable cost and the frequent renegotiation of contract terms implied by short contract durations is consistent with the evidence that prices have been consistently decreasing in this market (see details below in paragraphs 168-175). As explained in paragraphs 168-169, the parties have provided evidence that DoubleClick is offering significant price reductions to prevent customers from switching to competitors.

167.

In view of the evidence presented in paragraphs 137-166, it appears

reasonable to conclude that, while switching costs are not insignificant, they not prevent publishers/customers from actually switching between providers.

do

Evolution of prices in the provision of ad serving tools

168.

The fact that the ad serving market is currently competitive is also evidenced

by the significant price decline of DoubleClick’s products for advertisers and publishers, during a period of increasing demand: between January 2003 and May 2007, prices fell by around [>70%]* on the advertiser-side and [>60%]* on the publisher-side103.

169.

The data on price decreases relates to the average CPM paid by DoubleClick

customers. A complainant argued that it is not surprising that average CPMs have been decreasing as the market is characterised by volume-tiered usage based discounts and publishers have been growing. Moreover, CPMs are in any case "not an economically meaningful measure of price in this market" (while CPMs can decrease with volume tiers, the value of money extracted from publishers can increase)104. The Commission considers that the evidence provided by the parties is convincing in showing that DoubleClick has had to reduce prices in response to competitive constraints by its rivals. As explained below, the parties' data shows that CPMs have decreased within volume-tiers (and hence the fall in average CPM is not primarily driven by increases in volumes) and data on price reductions offered during renegotiations with specific customers at the time of contract renewals suggests that DoubleClick has responded to competitive pressures.

170.

The price decreases observed since 2003 are not primarily driven by volume

effects due to customers getting larger and benefiting from better conditions at

102

Source: The notifying party's economic advisers.

103

Source: The notifying party's economic advisers.

104

To prove its point, the same complainant claimed that margins (EBIDTA) have in fact been stable over time but the stability of DoubleClick's margins was not confirmed by the information gathered by the Commission.

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