Abuse of dominance (Art. 102 TFEU)

Question 1

Field of application of Art. 102 TFEU

Answer 1

if …

• parties: undertakings
• position: dominance within (substantial part of) internal market
• behaviour: abuse
• EU dimension: trade between Member States may be affected

… then
- prohibited as incompatible with internal market

Question 2

Comparison of Art. 102 with Art. 101 TFEU

Answer 2

Differences:

• no condition of plurality
• not applicable to associations of undertakings
• no mention of nullity
• no mention of exemptions/ exceptions

-> 101 and 102 are autonomous to each other

Question 3

Definition of dominance

Answer 3

• no legal definition in EU law
• economic strength (not market power per se)
• hindering effective competition on RELEVANT market
• power to behave independently (from competitors, customers, ..)
• origin of dominance irrelevant
• joint dominance possible

Question 4

Joint dominance

Answer 4

Two or more legally independent undertakings present themselves on the market as a single, dominant, entity (e.g. Compagnie Maritime Belge, 2000).

NOT: concerted practice, oligopoly, or legally independent entities actually forming one undertaking

Structure of the market (e.g. Airtours, 2002):

• members can monitor each other
• tacit coordination sustainable over time
• foreseeable reaction of current/ future competitors, customers

Question 5

FIFA case

Answer 5

Laurent Piau (2005): complaint against "Players' Agent Regulation"
 -> but: exempted decision of ass. of undertakings + no abuse established -> EC allowed to reject the complaint

Question 6

“Market” definition

Answer 6

• definition is essential (also for 101 and concentration control)
• relevant PRODUCT market
• relevant GEOGRAPHIC market
• [temporal factor]

Question 7

Relevant product market

Answer 7

• (smallest possible) market where neither demand nor supply are substitutable with products from outside
• substitutability: method -> product characteristics + price
• SSNIP test: ‘Small but Significant Non transitory Increase in Prices’

Question 8

Relevant geographical market

Answer 8

• largest possible area where conditions of competition are sufficiently homogeneous
• usually entire EU, unless special factors
  • transport costs, lack of transport facilities
  • regulatory barriers (e.g. tariff provisions, legal monopolies)
  • cultural barriers (habits, commercial preferences)
• chain of substitution

Question 9

Determinations for Market Power

Answer 9

1. Market share (only indicative, compared to competitors)
   - +40% = suggestive of dominance
   - +50% = presumption of dominance
   - super dominance = position approaching monopoly
2. Countervailing buyer power
3. Barriers to entry (superior technology, capital strength, reputation advantages, …)

Question 10

“Abuse” definition

Answer 10

• no definition in TFEU
• GC/ECJ: objective concept relating to behaviour needed; methods different from those which condition normal competition

Question 11

Categories of “Abuse of dominance”

Answer 11

• exploitation: directly harmful to consumers

- exclusion: harmful to competitors, actual or potential (indirectly harmful to consumers)

Question 12

Exploitative abuse

Answer 12

1) Pricing: excessive pricing, discriminatory pricing

2) Non-pricing: unfair contractual terms

Question 13

Exclusionary abuse

Answer 13

1) Pricing: predatory pricing, discriminatory pricing & rebates, margin squeeze
2) Non-pricing: tying, exclusive dealing, refusal to supply

Question 14

Predatory pricing presumed abusive, if..

Answer 14

ECJ: Akzo Chemie (1986)

• price below average variable costs
• price below average total costs, but above average variable costs + plan to eliminate competitor

Question 15

Margin squeeze

Answer 15

Undertaking A sells on upstream market and on the downstream-market directly (or through subsidiary) to end-user

Squeezing through:

• increasing its wholesale charges; or
• lowering its retail price, forcing competitors to do the same
• > as efficient competitor (AEC) test

Question 16

Price discrimination

Answer 16

• e.g. through selective price cuts (Post Danmark, 2012)

- rebate scheme: loyalty-inducing rebates are unlawful (Post Danmark, 2015; Intel, 2009)

Question 17

As Efficient Competitor (AEC) test

Answer 17

Could the dominant company’s own downstream operations trade profitably on the basis of the upstream price charged to its competitors

Question 18

Price discrimination - 3 categories of rebates

Answer 18

1. quantity rebates (presumptively lawful)
2. exclusivity rebates (‘by their very nature’ capable of restricting competition) (no requirement to carry out AEC test by EC) [Intel v Commission, 2017: more clarification required]
3. ‘3rd category’ of loyalty inducing rebates (depends on circumstances)

Question 19

Definitions of tying and bundling

Answer 19

tying = making the sale of one product (tying product)
conditional upon the ‘purchase’ of another distinct
product (tied product)

pure bundling = offering a fixed package of two or
more goods (cannot be purchased separately)

Question 20

Conditions of tying and bundling

Answer 20

– dominance on the tying market
– distinct products, i.e. with separate demand
– likely foreclosure effects in the tying or tied market

Case law: e.g. Hilti nail guns: explosive cartridges + nails

Question 21

Mixed bundling/multi product rebates

Answer 21

Components are also sold separately, but at a higher price
–> anti competitive: if so large that equally efficient competitors offering only some of the components cannot compete against the discounted bundle

Question 22

Defence: objective justification

Answer 22

• no (block) exemptions as under 101 (3) TFEU
• conduct may not be deemed abusive if dominant
  company can show that it is justified
  -> objectively necessary
  -> substantial efficiencies which outweigh any
  anticompetitive effects (‘efficiency defence’)