Holding or acquiring a dominant position is not unlawful under EU competition law. A dominant company infringes article 102 of the TFEU only if it abuses its dominance to restrict competition.
Article 102 of the TFEU does not define the concept of abuse. Instead, it lists four categories of abusive behaviour:
- article 102(a) prohibits directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
- article 102(b) prohibits limiting production, markets or technical developments to the prejudice of consumers;
- article 102(c) prohibits applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; and
- article 102(d) prohibits making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations that, by their nature or according to commercial usage, have no connection with the subject of such contracts.
Broadly, the categories of abuse can be grouped into (i) exclusionary abuses (where a dominant company strategically seeks to exclude its rivals and thereby restricts competition), and (ii) exploitative abuses (where a dominant firm uses its market power to extract rents from consumers). Exclusionary abuses are by far the most common type of abuse (although the Commission and national authorities have recently begun to pursue more exploitative abuse cases).
The definition of abuse has largely grown out of the case law and been fleshed out in the Guidance Paper. The classic formulation of an abuse is behaviour ‘which, through recourse to methods different from those which condition normal competition in products or services on the basis of the transactions of commercial operator, has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition’ (Hoffmann-La Roche, paragraph 91).
Not all conduct that negatively affects rivals is anticompetitive. It is a normal and desirable part of the competitive process that companies that have less to offer customers leave the market. Accordingly ,the Courts have emphasised that ‘not every exclusionary effect is necessarily detrimental to competition. Competition on the merits may, by definition, lead to the departure from the market or the marginalisation of competitors that are less efficient’ (case C-209/10 Post Danmark I ECLI:EU:C:2012:172 (Post Danmark I), paragraph 22, case C-413 Intel EU:C:2017:632 (Intel), paragraph 134). This is because competition rules do not ‘seek to ensure that competitors less efficient than the undertaking with the dominant position should remain the market’ (Intel, paragraph 133).
The challenge for agencies and undertakings alike in abuse of dominance cases is therefore to distinguish between abusive conduct and vigorous competition on the merits.
Case law qualifies certain categories of conduct as ‘by nature’ abuses (such as exclusive dealing). The Intel judgment brings important clarity to the treatment of these abuses: by nature abuses remain presumptively unlawful, but if a dominant firm submits evidence that its conduct is not capable of restricting competition, the Commission must assess all the circumstances to decide whether the conduct is abusive. This entails, in particular, an assessment of rivals’ efficiency because competition law does not seek to protect inefficient rivals. In addition, even if the conduct does produce exclusionary effects, the Commission (or Court) must determine whether those effects ‘may be counterbalanced, or outweighed, by advantages in terms of efficiency which also benefit the consumer’ (Intel, paragraph 140). Accordingly, by nature abuses are not the same as per se infringements.
Outside the ‘by nature’ exceptions, the Commission has to perform a fully-fledged effects analysis. This will apply, for example, to tying, product design, pricing abuses and refusals to supply. An effects analysis for exclusionary conduct requires proving at least the following four elements.
First, the dominant company’s abusive conduct must hamper or eliminate rivals’ access to supplies or markets (Guidance Paper, paragraph 19). In other words, the abusive conduct must create barriers to independent competition (case T-201/04 Microsoft ECLI:EU:T:2007:289 (Microsoft), paragraph 1088).
Second, the abusive conduct must cause the anticompetitive effects (case C-23/14 Post Danmark II ECLI:EU:C:2015:651 (Post Danmark II), paragraph 47). Causation should be established by comparing prevailing competitive conditions with an appropriate counterfactual where the conduct does not occur (Guidance Paper, paragraph 21).
Third, the anticompetitive effects must be reasonably likely (Microsoft, paragraph 1089). If conduct has been ongoing for some time without observable anticompetitive effects, that suggests the conduct is not likely to cause anticompetitive effects in the first place (case T-70/15 Trajektna luka ECLI:EU:T:2016:592, paragraph 24).
Fourth, the anticompetitive effects must be sufficiently significant to create or reinforce market power (Guidance Paper, paragraph 11, 19). In the recent Servier judgment, the General Court found that it would be paradoxical to permit the Commission to limit its assessment to likely future events in a situation where the alleged restrictive conduct has been implemented and its actual effects observed (case T-691/14, Servier, EU:T:2018:922). While those findings relate to article 101 of the TFEU, the same reasoning should apply to article 102 of the TFEU because the concept of a restriction of competition is the same, as the English High Court found in Streetmap v Google  EWHC 253.
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