By: Andraž Grad
Zoran Janković has been ruling the Slovenian capital for many years. During this time, several scandals have accumulated. Among other things, the Ljubljana city municipality is said to control advertising spaces, making it difficult for smaller businesses.
Zoran Janković’s mayoralty in the Slovenian capital is known for various controversial scandals. As a representative of the left-wing faction, Janković likes to portray himself as someone who cares about the common person and, above all, for supposedly oppressed minorities. While he indeed supports these causes – from blessing LGBT parades to building a mosque in Ljubljana – the municipality’s treatment of the “common man” seems driven more by the ruthless capitalist principle of the stronger prevailing than by social solidarity. Among the areas dominated by Janković’s iron grip is advertising in Ljubljana, where small advertising companies stand little chance against large competitors. A group of smaller businesses from Ljubljana, which advertises on private plots with billboards, contacted us about this. We learned that the municipality has been pushing out smaller companies for years. Recently, however, the left-leaning government, aligned with Janković, changed the legislation in favour of the Municipality of Ljubljana (MOL), making the municipality responsible for virtually all advertising spaces. MOL leases most of its plots to a single company, while it has delayed announcing any new bids for years.
Abuse of a dominant position?
The companies that contacted us wish to remain anonymous out of fear of possible retaliation from Janković, who wields significant influence across various sectors, bodies, and institutions. According to them, the mayor runs the municipality like a corporation, which is also noted in a legal opinion on the compliance of MOL’s actions with competition law, prepared by prominent European competition law experts Dr Martina Repas and Dr Tomaž Keresteš. They wrote, “MOL’s actions in recent years do not ensure fair and effective competition in the outdoor advertising market”. Additionally, they note that the Ljubljana municipality, “which holds a dominant position in the relevant market for offering advertising spaces for outdoor advertising on public surfaces in Ljubljana, abuses this position in various ways”. This abuse, as the authors note, is also reflected in the 2010 public-private partnership MOL signed with the international corporation Europlakat, Ltd., which includes the well-known BicikeLJ public bike-sharing system in Ljubljana. In the article “Reflection on the Evolution of the BicikeLJ System” on the news portal dnevnik.si, we read that MOL pays for city bikes with the right to advertise on 440 public spaces. This arrangement grants Europlakat a monopoly on advertising, as the municipal spatial plan excludes all advertising spaces except those owned by the municipality. There are only a few rare exceptions, such as shopping centres. It is possible that Janković also has leverage over Europlakat, as he could, by granting this company its current monopoly, demand more money from them every year. If the company refused to pay, he could terminate the contract and assign the plots to another bidder.
Threat to consumer welfare
The legal opinion states that the entire process of establishing this partnership was “conducted completely non-transparently, as neither the concession act nor the tender documentation indicate that the public bike rental system is in any way connected to the leasing of advertising space”. Furthermore, such an agreement was reached without the knowledge of competitors, who thus could not apply to the tender. Additionally, the authors of the legal opinion point out that MOL could have awarded the advertising spaces to Europlakat through a public tender and “then offset its investment in the concession contract with the amounts of fees and compensation from this separate bike-sharing business,” or it could have leased the advertising spaces to other providers and used the collected fees to fund the bike rental system. The difference is that, in this case, the municipality would have had to conduct a public tender, which would allow competition from other advertising providers. The legal opinion thus asserts that by conducting the process non-transparently, MOL abused its position in the relevant market and “granted an unfair advantage to only one competitor at the expense of all others, which is contrary to the conditions of normal market competition”. Furthermore, the legal opinion warns that MOL’s actions also impact consumer welfare, as “abuses of MOL’s dominant position strengthen the market position of one of the providers of advertising services in the outdoor advertising market”. The dominance of one of the various providers also affects prices, as ineffective competition does not allow for the formation of the most favourable prices through market competition. As a result, outdoor advertising prices may be higher for clients, who then pass these costs on to consumers through products or services. Therefore, the agreement between the municipality and Europlakat has “anti-competitive effects by strengthening the market position of Europlakat, Ltd., at the expense of its competitors, who cannot acquire new advertising spaces in MOL area”.
Empty promises instead of tenders?
Due to complaints related to the advertising monopoly, which were allegedly also filed against the company Europlakat, the Slovenian Competition Protection Agency (AVK) should have acted; however, companies that contacted us claim that the agency’s response was very mild. In an opinion issued in 2013, the agency stated that “by not conducting a public tender for the allocation of locations since the adoption of the advertising ordinance, the municipality is restricting competition without justification by public interest”. However, it seems that, even ten years later, no tender has been conducted. The only result has been certain commitments to allocate ten percent to competitors, meaning approximately fifteen smaller advertising companies operating within the Ljubljana municipality. But even in this case, advertising billboards could only be placed on municipal land. The Competition Protection Agency is also said to have issued only one decision, which the municipality allegedly did not comply with. The decision reportedly stipulated that MOL must distribute the market among various companies through public tenders, rather than leaving it to a single company. Moreover, as previously mentioned, the municipality is believed to have Europlakat “in check” by adjusting the municipal plan so that billboards can only be placed on municipal land. While the municipality has supposedly made empty promises about tenders for years, it is reported that MOL has extended two contracts with Europlakat for an additional 15 years.
Advertising oversight should not be left solely to the municipality
Regarding the operations of MOL, its restriction of competition, and its monopoly over advertising in this area, it is worth mentioning a study and legal opinion on the municipal authority over simple advertising structures, prepared in 2017 by the Institute for Public Administration. This study states that when evaluating the constitutionality and appropriateness of municipal authority, it is important to consider that the placement of advertising spaces and oversight of them also regulate market conditions for advertising activity within a given area. Thus, this placement must be structured in a way that guarantees entrepreneurial freedom and equal protection of rights as defined by the constitution. It should be noted that the Slovenian Constitution “prohibits actions that restrict competition in ways contrary to the law”. This prohibition includes actions taken by government authorities. Furthermore, it is forbidden to restrict competition through “governmental acts or actions”. The study goes on to state that “the implementation and supervision of advertising within a space should not be left to the unlimited discretion of a municipality, which has its own economic interests in the execution of this activity”. However, it appears this has been happening in Ljubljana for years, with support from the current left-wing government, which allegedly aids Mayor Janković.
Golob’s government backs Janković
According to reports, Janković secured a regulation from Golob’s government that classifies all advertising objects in the municipality as “simple”, regardless of their size and dimensions. Such categorisation supposedly grants the municipal inspection authority (allegedly part of “Janković’s lobby”) jurisdiction over virtually all advertising spaces. This setup seems rather nonsensical, given that some advertising structures include enormous buildings measuring up to a hundred square meters. Nevertheless, the government regulation was modified in favour of MOL shortly after the left-wing government of Robert Golob took power. As a result, the Ljubljana inspection office is now authorised to dismantle private advertising spaces (constituting roughly 15 percent of all spaces), impose fines broadly, and restrict competition. Some have argued that the Ljubljana municipality’s actions violate constitutional rights in three key areas: free economic initiative, property rights (as private landowners are restricted from leasing their land for advertising, thus increasing the value of municipal land), and free choice in elections. During local election campaigns, Janković’s advertisements reportedly occupy 85 percent of prime spots, and in parliamentary campaigns, he promotes political parties that align with his views.
Is this a violation of the Slovenian constitution?
The most easily demonstrable of these alleged violations is the first one, as anyone can observe that, with few exceptions, advertisements in Ljubljana are dominated by Europlakat. This is clearly a case of eliminating competition, allegedly ongoing for 15 years. The municipality is said to infringe on property rights by preventing private owners from leasing their land for advertising, as private land has been excluded from the spatial plan for this purpose, while the municipality has reserved prime roadside locations. This restriction allegedly constitutes a violation of the free disposal of property, with the municipality effectively controlling 95 percent of available advertising locations. Only a few sites are left unregulated to avoid accusations of complete control. Finally, the municipality’s monopoly on advertising spaces is seen as a restriction on free choice in elections, as it enables them to control who receives the most advertising exposure. This situation draws a parallel to media reporting during election campaigns, where major media outlets consistently support and promote more liberal and left-leaning candidates.
Responses from the Slovenian Competition Protection Agency
We inquired with the Slovenian Competition Protection Agency (AVK) regarding complaints and possible violations. We learned that the agency received a complaint indicating that “MOL’s actions may be restricting access to advertising spaces in the outdoor advertising market,” as MOL reportedly still does not conduct public tenders for the allocation of advertising spaces. This prevents other advertisers, besides Europlakat, from accessing additional locations. According to the agency, complainants argue that the municipality influences advertising on private property by setting planning regulations and tightening inspections. The Competition Protection Agency is currently reviewing the market situation based on the complaint but cannot comment further on the matter, as it is still in the process of data analysis. The agency also confirmed that no formal proceedings to issue a decision have been initiated yet, pending “evidence of a likely violation of the Competition Act or the Treaty on the Functioning of the European Union”. We also asked the agency about potential sanctions against MOL if it is found to be abusing a dominant market position. They replied that “penalties for public authorities depend on the role or function they assume in the market”. The agency has the authority to sanction anti-competitive behaviour by entities deemed to be operating as businesses. This means that a public authority acting as a business can be subject to administrative penalties.
The hypocrisy of left-wing politics
As mentioned earlier, Zoran Janković, a prominent figure in left-wing politics, likes to present himself as someone who cares about the public good. In practice, however, he tramples on these values. Due to the advertising monopoly, several businesses have gone under, leaving only around ten small entrepreneurs in the market. Small businesses feel the impact directly and report that the disparity between “small” and “large” players is extreme. The municipality allegedly refuses to engage with smaller businesses or hold tenders. It appears Janković is indifferent to the fact that the municipality is not a business and should not be profiting from advertising plots, from which it allegedly collects monopolistic profits. The municipality refuses to communicate with small businesses or issue public tenders, effectively operating as a business and thereby abusing its position. Today’s left-wing figures, in practice, often act as some of the worst capitalists and exploiters. In conclusion, one might say that if we assume the Slovenian state is in any way “captured” by successors of the old communist regime, this would apply especially to MOL.