Abuse PDF

OFFICE FOR COMPETITION AND CONSUMERS’ PROTECTION
Abuse of a dominant position

in the light of legal provisions
and case law of the European
Communities
Publication prepared and published with financial support from the European Union
Abuse of a dominant position

in the light of legal provisions
and case law of the European
Communities
WARSAW 2003
The study was prepared by Dariusz Tokarczuk i Wspólnicy
Kancelaria Prawna GLN spółka komandytowa
under PHARE Project PL99/IB/OT/02
Publication financed with the support from European Union

under PHARE Project PL0004.03.
OFFICE FOR COMPETITON AND CONSUMERS' PROTECTION

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Contents
1. Article 82 of the EC Treaty - basic issues 5

1.1 Definition of the relevant market for the purposes of article 82
of the EC Treaty 5
1.1.1 The product market 5
1.1.2 The geographical market 8
1.1.3 The temporal aspect 10
1.2 Definition of the dominant position for the purposes of article 82
of the EC Treaty 10
1.3 Definition of abuse for the purposes of article 82 of the EC Treaty 12
1.3.1 General issues 12
1.3.2 Examples of abuse of a dominant position in the light of the
Commission’s decision practice and the judgments of European
courts 13
2. Collective dominance in oligopoly markets - basic issues 21
2.1 Collective dominant position in the decisional practice and the case
law of European competition authorities - examples 22
2.1.1 Nestlé/Perrier - the first decision of the Commission concerning
collective dominance issued on the basis of Regulation 4064/89 22
2.1.2 Italian Flat Glass - development of the concept of collective
dominance on the basis of provisions of articles 82 and 81
of the EC Treaty 23
2.1.3 Kali & Salz - The ECJ issues a decision concerning the application
of collective dominance to mergers 24
2.1.4 Gencor and Compagnie Maritime Belge - settlements concerning
the importance of economic links 25
2.1.5 Airtours/FirstChoice - a new definition of collective dominance 28
2.2 Relations between article 81 and 82 of the EC Treaty in the context
of abuse of a dominant position by several entrepreneurs 31
2.2.1 Italian Flat Glass and Compagnie Maritime Belge - European
Courts confirm the possibility of the joint application of articles
81 and 82 of the EC Treaty to the same actual situation 32
3
2.2.2 Relations between economic links in the light of the case law
developed under article 82 of the EC Treaty and agreements,
decisions and concerted practices within the meaning of article
81 of the EC Treaty 35
2.2.3 Application of articles 81 and 82 of the EC Treaty in the light
of the case law concerning conscious parallelism 36
2.3 Conclusions concerning the application of the concept of collective
dominance 37
4
1.
Article 82 of the EC Treaty - basic issues
The basic objective of provisions included in article 82 of the EC Treaty is to

create the mechanism of control of the economic power of enterprises
operating in the Common Market. It is applicable if a dominant undertaking
abuses its market position, e.g. by means of unfair price practices, refusal of
supply etc.
Article 81 of the EC Treaty prohibits contracts, decisions and concerted

practices that affect the trade between Member States and disturb competition
in the Common Market while article 82 of the EC Treaty bans actions with
similar consequences but being the symptoms of abuse of economic power at
the disposal of enterprises dominant a market:
”Any abuse by one or more undertakings of a dominant position with a common

market or in a substantial part of it shall be prohibited as incompatible with the
common market in so far as it may affect trade between Member States.
Such abuse may, in particular, consist in:
a) directly or indirectly imposing unfair purchase or selling prices or unfair trading

conditions;
b) limiting production, markets or technical development to the prejudice of
consumers;
c) applying dissimilar conditions to equivalent transactions with other trading
parties, thereby placing them at a competitive disadvantage;
d) making the conclusion of contracts subject to acceptance by the other parties of
supplementary obligations which, by their nature or according to commercial
usage, have no connection with the subject of such contracts.”
5
According to the decisional practice and judgments of the European

competition authorities the provisions of article 82 of the EC Treaty may apply
to one or more entrepreneurs1 and the list of banned trade practices included
in the content of that article is only an example. In no way is it an exhaustive
definition of abuse of a dominant position.
In their decisions and judgments based on article 82 of the EC Treaty, the

Commission and European courts stress that Community law does not
prohibit anyone from having a strong market position or even a monopoly; it
only prohibits the abuse of such a position. Entrepreneurs are encouraged to
compete in the market and those most effective cannot be punished. Although
article 82 of the EC Treaty speaks of abuse of a dominant position and not
dominance as such, this distinction is much more difficult to make in practice
as monopolists have the most natural tendency - from the economic point of
view -to use their privileged position to maximize profits.
1.1 Definition of the relevant market for the purposes of article 82

of the EC Treaty
The application of article 82 of the EC Treaty requires the Commission to
prove that an entrepreneur or entrepreneurs accused of illegal practices
occupy the dominant position. However, due to the lack of any formalistic
definition of dominance, its ascertainment always requires detailed economic
analyses to be conducted.
Firstly, an economic analysis of the market has to be conducted in order to

define the relevant market, in which a given entrepreneur or entrepreneurs
operate. Three elements are important for such an analysis: product market,
geographical market and the time factor. An entrepreneur can have market
power only in the context of the supply of particular goods or services.
Because of this, the product market has to be defined first.
1.1.1 The product market

In principle, the approach of the Commission and European courts to the
definition of the product market has focused upon interchangeability: the
extent to which one product can be replaced in the market by another because
of its features, application or usefulness for a specified purpose2. This issue
should be examined from the point of view of supply and demand. From the
demand side the idea of interchangeability requires some investigation of
1 The definition of an entrepreneur is the same as in the context of article 81 of the EC Treaty - it includes
every sort of economic activity regardless of its legal form and method of financing: cases T-128/98
Aeroports de Paris v Commission [2000] ECR II-3929; definition for the purpose of article 82 of the EC
Treaty included in the case C-364/92 SAT Flugellschafts mbH v Eurocontrol [1994] I-43 [1994] 5 CMRL
208;
2 E.g. the case 27/76 United Brands Company and United Brands Continentaal BV v Commission [1978] ECR
207;
6
cross-elasticity of the product in question. Cross-elasticity is high if the
increase in the price of a product, e.g. beef, will lead to a situation in which the
majority of customers decide to replace it with a cheaper product, e.g. pork or
mutton. High flexibility indicates that examined products are part of the same
market. If it is difficult to obtain reliable data the Commission bases the
analysis on other factors to state whether products are really interchangeable.
Among other things, prices and physical features of products are taken into
account. The degree of interchangeability can also be influenced by supply
factors. Even if entrepreneurs conduct businesses that are not identical, each
is able to adapt his production lines to manufacture a competitor’s products
relatively easily. In such a situation, both products can be considered as part
of the same market.3
An example of the conduct in which the definition of the product market

constituted a vital disputed issue is that of ‘United Brands’ (20)4.
United Brands, a company exporting bananas, was accused of various illegal

practices in breach of article 82 of the EC Treaty. The dispute was related,
among other things, to the definition of the relevant product market. United
Brands argued that bananas constitute part of a larger market in fresh fruit
presenting analyses proving that there is high cross-elasticity between bananas
and other fresh fruit. The Commission maintained that cross-elasticity was in
fact low. According to the Commission, bananas constituted a separate market
partly because they met the food requirements of a material group of
consumers and partly because they have special features due to which other
kinds of fruit cannot be considered as substitutes.
The Tribunal accepted the arguments presented by the Commission stating

that bananas form a product market separate from the fresh fruit market. The
excerpt from the sentence given in the case of United Brands (55) cited below
shows the argument with which the ECJ backed its statements.
”22. For the banana to be regarded as forming a market which is sufficiently

differentiated from other fruits it must be possible for it to be singled out by such
special features distinguishing it form other fruits that it is only to a limited
extent interchangeable with them and is only exposed to their competition in
a way that is hardly perceptible.
23. The ripening of bananas takes place the whole year round without any season
having to be taken into account.
(...)
3 The case 6/72 Europeamballage Corporation and Continental Can Co Inc v. Commission [1973] ECR 215,
the case T-65/96 Kish Glass & Co Ltd. v Commission [2000] ECR II-1885, par. 68;
4 Information concerning signatures and publications of described decisions and judgments is included in
the footnotes at the end;
7
27. Since the banana is a fruit which is always available in sufficient quantities the
question whether can be replaced by other fruits must be determined over the
whole of the year for the purpose of ascertaining the degree of competition
between it and other fresh fruit.
28. The studies of the banana market on the Court’s file show that on the latter
market there is no significant long term cross-elasticity any more than... there is
any seasonal substitutability in general between the banana and all the
seasonal fruits, as this only exists between the banana and two fruits (peaches
and table grapes) in one of the countries (West Germany) of the relevant
geographical market.
29. As far as concerns the two fruits available throughout the year (oranges and
apples) the first are not interchangeable and in the case of the second there is
only a relative degree of substitutability.
30. This small degree of substitutability is accounted for the specific features of the
banana and all the factors which influence consumer choice.
31. The banana has certain characteristics, appearance, taste, softness, seedlessness,
easy handling, a constant level of production which enable it to satisfy the constant
needs of an important section of the population consisting of the very young.
32. As far as the prices are concerned two FAO studies show that the banana is only
affected by the prices - falling prices - of other fruits (and only of peaches and
table grapes) during the summer months and mainly in July and then by an
amount not exceeding 20 per cent.
(...)
34. It follows from all these considerations that a very large number of consumers
having a constant need for bananas are not noticeably or even appreciably
enticed away from the consumption of this product by the arrival of fresh fruit
on the market and that even the seasonal peak periods only affect it for
a limited period of time from the point of view of substitutability.”
Another example illustrating the methodology applied by European

competition authorities to define the product market is the case of Michelin
(47).
The Commission initiated procedures against the Michelin group in

connection with the practice of discounts on tire sales. According to the
Commission, discounts granted were not related to the objective difference in
costs. The allegation was that discounts were aimed at the permanent binding
of customers to the Michelin brand. The Commission ascertained that
Michelin had a dominant position in the market for tires for lorries, buses and
similar vehicles. Michelin argued that the definition of the product market
adopted by the Commission was arbitrary and that it had been created
artificially for the needs of the procedures. According to Michelin, the relevant
product market that should be referred to included also tires for passenger
cars and vans as well as retreads.
8
The ECJ stressed again that ”...for the purposes of investigating the possibly
dominant position of an undertaking on a given market, the possibilities of
competition must be judged in the context of the market comprising the totality of
the products which, with the respect to their characteristics, are particularly suitable
for satisfying constant needs and are only to a limited extent interchangeable with
other products”.
Having discerned all the arguments presented by the parties, the ECJ decided
that there is no elasticity of supply between tires for heavy vehicles and tires
for passenger cars due to material differences in the production technology,
equipment or tools necessary to manufacture them. The fact that the
adaptation of light tire production lines to the production of heavy tires and
vice versa requires material expenditure of time and funds means that these
products are not similar enough to adapt their production in the scope of
varied market demand.
Because of this, the Commission was right to assume that the appropriate
product market is the market of tires for lorries, buses and similar vehicles and
exclude tires for passenger cars and vans from consideration.
Some examples of decisional practice and judgments of European agencies in

the scope of competition protection show that the definition of the product
market adopted pursuant to article 82 of the EC Treaty can be very narrow5.
The Commission formulated one of the best known and, at the same time,
most controversial definitions of the product market in the Hugin / Lipton (10)
case.
The Commission held Hugin guilty of the violation of article 82 of the EC

Treaty because of the refusal to supply spare parts for its cash registers to
Lipton. Lipton competed with Hugin in servicing’s Hugin cash registers. The
Commission defined the relevant market as the market for spare parts for
Hugin cash registers necessary to independent repairers. However, Hugin
maintained that the proper product market includes cash registers in general
and was a very competitive market.
The ECJ backed the position taken by the Commission explaining that:
”...there exists a separate market for Hugin spare parts at another level, namely that
of independent undertakings which specialize in the maintenance and repair of cash
register, in the reconditioning of used machines and in the sale of used machines and
the renting out of machines. The role of those undertakings on the market is that of
businesses which require spare parts for their various activities. They needs such
parts in order to provide services for cash register users in the form of maintenance
and repairs and for the reconditioning of used machines and for re-sale and renting
5 Among other things, the case 26/75 General Motors Continental NV v Commission [1975] ECR 1367;
9
out. Finally, they require spare parts for the maintenance and repair of new or used
machines belonging to them which are rented out to their clients. It is, moreover,
established that there is a specific demand for Hugin spare parts, since those parts
are not interchangeable with spare parts for cash registers of other makes”. Because
of this, the ECJ decided that the relevant market to be taken into account in
the case initiated on the basis of article 82 of the EC Treaty was the market for
Hugin spare parts used by independent repairers. However, many
commentators were critical towards such a narrow approach to the product
market in that particular case.6
1.1.2 The geographical market

In order to define for the purposes of article 82 of the EC Treaty whether an
entrepreneur holds a dominant position it is also necessary to define the
geographical market. Some goods or services can be sold in an unlimited area
while others are available in a relatively small market as their more widespread
sales are difficult for technical or practical reasons.
A material indicator of the geographical range of the market includes transport

costs. Due to the lack of any such indicators in the Hilti7 case the relevant
geographical market adopted was the whole area of the European
Community. The case of United Brands (55) described above also provides
guidance in the scope of interpretation of this issue by the ECJ.
One of the charges the United Brands formulated against the Commission in
the course of appeal procedures with the ECJ was an objection concerning the
incorrect definition of the geographical market. The Commission excluded
France, Italy and Great Britain from the geographical market considering that
special trade conditions prevail in these countries. United Brands accepted
this statement but suggested that trade conditions are different in each of the
countries which had been treated by the Commission as a single geographical
market.
The ECJ assumed the following attitude to this argumentation:
”44. The conditions for the application of Article 86 to an undertaking in

a dominant position presuppose the clear delimitation of the substantial part of
the Common Market in which it may be able to engage in abuses which hinder
effective competition and this is an area where the objective conditions of
6 Definitions of the product market were also questioned in the following cases: the case 6&7/73 Institutio
Chemioterapico Italiano SpA and Commercial Solvents v Commission [1974] ECR 223; the case Continental
Can; the case 85/76 Hoffman-La Roche and Co. AG v Commission [1979] ECR 461; the case C-333/94P
Tetra Park International S.A. v Commission [1996] ECR I-5951;
7 Decision 88/138, [1988] OJ L65/19. [1989] 4 CMLR 677, sustained in the appeal: the case C-53/92P, Hilti
AG v Commission [1994] ECRI-667;
10
competition applying to the product in question must be the same for all trades.
45. The Community has not established a common organization of the agricultural
market in bananas.
46. Consequently import arrangements vary considerably from one Member State to
another and reflect a specific commercial policy to the States concerned.”
The ECJ analyzed the special agreements concerning the trade in bananas in
France, Italy and Great Britain concluding that these States apply preferential
import terms for bananas from their overseas territories and the
Commonwealth and stated the following:
”51. The effect of the national organization of these three markets is that the
applicant’s bananas do not compete on equal terms with the other bananas sold
in these States which benefit from a preferential system and the Commission
was right to exclude these three national markets from the geographic market
under consideration.
52. The other hands six other States are markets which are completely free, although
the applicable tariff provisions and transport costs are of necessity different but
not discriminatory, and in which the conditions of competition are the same for
all.
53. From the standpoint of being able to engage in free competition these six States
from an area which is sufficiently homogenous to be considered in its entirety.”
However, there are also markets whose geographical range is defined without
the need for complicated economic analyses. In the case of British
Telecommunications8 concerning the abuse by British Telecommunications of
its dominant position in the sector of some telecommunications services in
Great Britain, the geographic market was Great Britain in which the party to
the procedures had the monopoly for services of that kind. Similarly to the
case of Napier Brown - British Sugar (15), the Commission considered Great
Britain the appropriate geographic market as the interested entrepreneurs
operated in the market of sugar production and sales. It was ascertained in the
course of procedures that the import of sugar into Great Britain is rather
limited and has to be considered as a supplement to domestic production
rather than its alternative.
1.1.3 The temporal aspect

The temporal factor should also be considered in the analysis of the market
appropriate for the application of article 82 of the EC Treaty. It happens that
an entrepreneur has material economic power in the market only in
a particular time period, e.g. when the competition of other entrepreneurs is
8 Decision 82/861 [1982’ OJ I 360/36 [1983]1 CMLR 457, in the appeal, the case 41/83 Italy v Commission
[1985] ECR 873 (36)
11
smaller as their products are available only seasonally. Besides, the time
element plays an important role in the definition of product markets as the
technological development and changes in consumer behavior taking place
with time influence the modification of borders between markets.
1.2 Definition of the dominant position for the purposes of article 82 of

the EC Treaty
After the definition of all the elements of the relevant market, the Commission
has to check whether an entrepreneur occupies the dominant position in such
a defined market. Thus, the assessment of the market power of that
entrepreneur is necessary. The ECJ mentioned the criteria of such assessment
in the ruling concerning United Brands (55) cited below:
”The dominant position referred to in this Article relates to a position of economic

strength enjoyed by undertaking which enables it to prevent effective competition
being maintained on the relevant market by giving it the power to behave to and
appreciable extent independently of its competitors, customers and ultimately of its
consumers.”
That position was reiterated in the case of Hoffman - La Roche (45) where the
ECJ supplemented it with the following argument: ”Such a position does not
preclude some competition, which it does where there is a monopoly or a quasi-
monopoly, but enables the undertaking which profits by it, if not to determinate, at
least to have an appreciable influence on the conditions under which that
competition will develop, and in any case to act largely in disregarded of it so long
as such conduct does not operate to its detriment. A dominant position must also be
distinguished from parallel courses of conduct which are peculiar to oligopolies in
that in an oligopoly the courses of conduct interact, while in the case of undertaking
the dominant position the conduct of undertaking which derives profits from that
position is to a great extent determined unilaterally. The existence of a dominant
position may derive from several factors which, taken separately, are not necessarily
determinative but among these factors a highly important one is the existence of
very large market shares”.
ECJ judgments clearly show that an entrepreneur having the statutory

monopoly in the market can be considered as occupying the dominant
position for the purpose of article 82 of the EC Treaty. In more frequent
situations where regulations do not grant monopoly to any entrepreneur, the
ECJ defines the dominant position on the basis of two types of evidence: (i)
the market share possessed by the entrepreneur and (ii) the presence of other
factors promoting the dominance.
However, it has to be stressed here that there is no specified market share

threshold that would entail implicitly the existence of the dominant position.
12
In the case of United Brands (55), the ECJ considered United Brands’ 40-45%
of the market as sufficient to establish dominance in the banana market
although features of that very market also support that dominance. However,
in another case, Hoffman - La Roche (45), the ECJ annulled the decision of the
Commission which stated the existence of the dominant position in the
market of B3 vitamins while the entrepreneur who was reprimanded had
a market share amounting to ca. 43%. This was because the Commission did
not prove that there were other factors sustaining the conclusion that the
entrepreneur had dominance. In the same case, the ECJ explained that, save
in exceptional circumstances, very large shares in the market maintained
over a prolonged period of time always indicate the existence of the
dominant position. They create a freedom of action for the entrepreneurs
they are related to regardless of their competitors, which is one of the basic
features of the dominant position. In the case of Akzo (33), the ECJ stated that
a 50% market share is very high and thus shows the existence of a dominant
position. This position was also reiterated in other case, among other things,
in Irish Sugar (14).
In its analysis, the ECJ also considers other factors decisive for the presence
of dominance. Even if an entrepreneur has a high market share, his strong
position can be very fragile because of the possibilities of new entrants on to
the market. The ECJ approach considering factors other than the value of the
market share is well illustrated in the case of Hoffmann - La Roche (45). This
had to do with the alleged abuse of a dominant position by an entrepreneur
dealing in vitamins. Having defined appropriate markets, the ECJ attempted
to state whether the party occupied the dominant position in these markets.
At first, it assessed market shares and then, it analyzed other factors that
could indicate the existence of the dominant position. In the decision
questioned by Hoffman-La Roche, the Commission showed a range of such
factors, some of which were adopted and some rejected by the ECJ. For
example, the ECJ decided not to consider the fact that the party had
maintained its share in the market for a long time because this could have
resulted from its competitive market activities. The ECJ also rejected the
argument that Hoffmann-La Roche manufactured a wider range of vitamins
than other entrepreneurs as the Commission itself has stated that each group
of vitamins constituted a separate market. The fragment of the sentence cited
below shows those circumstances that the ECJ considered material when
ascertaining the potential dominance:
”On the other hand the relationship between the market shares of the undertaking
concerned and of its competitors, especially those of the next largest, the
technological lead of an undertaking over its competitors, the existence of a highly
developed sales network and the absence of potential competition are relevant
factors, the first because it enables the competitive strength of the undertaking in
13
question to be assessed, the second and the third because they represent in
themselves technical and commercial advantages and the fourth because it is the
consequence of the existence of obstacles preventing new competitors from having
access to the market”.
1.3 Definition of abuse for the purposes of article 82 of the EC Treaty

1.3.1 General issues
An entrepreneur can be punished under article 82 of the EC Treaty only if it
has been proven that he has abused his dominant position. As mentioned
above, the very fact that someone has the dominant position is not prohibited
in the light of Commission practice and court judgments.
Because of this, it is vital to define precisely what should be understood as

‘abuse’. References concerning this issue indicate four problems which must be
taken into account when checking whether some behavior constitutes ‘abuse’.
Firstly, it has to be decided who is covered by the protection pursuant to

article 82 of the EC Treaty - whether they are consumers, competitors or both
groups. It has to be stressed here that the interests of these groups do not
always converge, what is more, the behavior of an entrepreneur occupying the
dominant position, harmful for his competitors, can be advantageous for
consumers in specific cases.
Secondly, it is assumed that, although having a dominant position is not illegal

as such, an entrepreneur occupying such a position has a special
responsibility for his behavior, which should not worsen competitive
conditions in the market. The differentiation adopted in the literature has to
be stressed here: it is acceptable for an entrepreneur occupying a dominant
position to take steps aimed at the protection of his interests if threatened by
activities initiated by competitors but the strengthening of the dominant
position is illegal and shall be considered an abuse. It is stressed that the
practical application of such a differentiation is difficult and should always
depend on the detailed analysis of the circumstances of a specific case.
Thirdly, the problem of ‘abuse’ always refers to specific market behavior. One
should be able to distinguish illegal actions from normal market strategy. It is
not correct to assume that normal and rational price policy of a dominant
entrepreneur is a symptom of abuse of the dominant position. Such an
assumption would mean the sanctioning of each activity of the entrepreneur
occupying the dominant position. On the other hand, classification of specific
behavior in the market which can constitute a symptom of abuse of the
dominant position is not sufficient, as such, to decide that such an abuse has
taken place. A complete analysis of specific types of behavior as well as
existing market conditions in which such behavior occurs is necessary.
14
Fourthly, one has to remember that the abuse of a dominant position in one
market can be sanctioned due to the effects of that abuse in other markets, in
particular, when the entrepreneur occupying the dominant position in
a particular market controls access to another market.
Finally, commentaries to the Treaty distinguish two types of situation, in

which the previsions of article 82 of the EC Treaty are applicable, i.e.
exploitation (behavior harmful to the interests of the consumer) and anti-
competition practices (behavior harmful to competitors). However, it has to be
stressed that this division should not be treated as separate because specific
behavior by the dominant entrepreneur can result in both types of effect
mentioned above.
1.3.2 Examples of abuse of a dominant position in the light of the

Commission’s decision practice and the judgments of European courts
(a) Concentration of undertakings as an abuse of a dominant position
The meaning of the term ‘abuse’ as understood in article 82 of the EC Treaty
is reflected in the ECJ sentence in the case of Continental Can (38), in which
the regulations concerning abuse of a dominant position were applied in the
control of concentration9. Continental Can with headquarters in the United
States was a manufacturer of metal packaging. In Europe, it operated via
a German affiliated company (SLW). In 1970, Continental Can planned to
buy, via its Europemballage Company, the controlling interest in the Danish
company, TDV. The Commission stated that Continental Can had a dominant
position in Europe for some types of packaging and the acquisition of TDV
was an abuse of that position. Continental Can appealed the decision of the
Commission questioning the qualification of the acquisition of company
shares as a symptom of the abuse of the dominant position.
The ECJ asked whether the term ‘abuse’ used in the content of article 82 of the
EC Treaty applied only to such practices that can have a negative impact on
the market and are harmful to production or sales, for customers or
consumers, or whether the term also covers changes in the structure of an
entrepreneur leading to a considerable disturbance of competition in
a material part of the Common Market.
Answering that question, the ECJ stressed that the interpretation of article 82
of the EC Treaty should be based on general assumptions of the whole Treaty
with particular consideration of the maintenance of undisturbed competition
expressed in article 3 (f) of the Treaty. Providing an interpretation of the
9 However, it has to be stressed that, when the sentence concerning this case was issued in 1973 r.,
Community law did not have a separate regulation referring to the control of concentration. The ECJ tried
to fill that gap in the law controlling the concentration on the basis of article 82 of the EC Treaty and even
- at a later date - article 81 of the EC Treaty;
15
purpose, the ECJ considered that, in spite of the lack of clear provisions in that
scope, it was not possible to assume that the Treaty prohibiting agreements
limiting the competition in article 81 simultaneously permitted the
achievement by an entrepreneur of such a dominant position that any effective
competition would become impossible in article 82. According to the ECJ,
such an interpretation would be in breach of the basic assumptions of the
Common Market. The ECJ also stated that article 82 of the EC Treaty includes
only an example list of behavior that can constitute an abuse of the dominant
position. According to ECJ, article 82 of the EC Treaty does not only apply to
practices that can cause harm directly to consumers but also those that are
harmful for them because of their influence on the structure of competition in
the market. Abuse can also occur if an entrepreneur occupying the dominant
position strengthens it in such a way that the degree of acquired dominance
materially limits the competition. It is vital that the ECJ also rejected the
argumentation of plaintiffs stating that a causal relationship should exist
between the dominant position and its abuse.
Commentators considered that the argument of the ECJ was a signal that
article 82 of the EC Treaty is applicable to activities threatening for the
structure of competition in the market. It was considered that article 82 of the
EC Treaty should also be applied to anti-competition practices harmful
directly to and mainly to the competitors. This is also reflected in the ECJ
statement that the causal relationship between a dominant position and its
abuse is not necessary to ascertain the abuse of the dominant position.
(b) Refusal to supply as an abuse of a dominant position

The Commission relatively often considers refusal to supply goods or services
to be a form of abuse of a dominant position. Such practices are discriminatory
and as such covered by the prohibition defined in article 82 of the EC Treaty.
The position of European competition authorities on the refusal to supply is
illustrated in the ECJ decision concerning the case of Commercial Solvent (46).
Commercial Solvents Corporation (CSC) manufactured raw materials,

nitropropane and aminobutanol used in the production of ethambutol. CSC
controlled 51% of an Italian company, Istituto, which bought raw materials
from CSC and sold them to another Italian company, Zoja. The latter used raw
materials to manufacture products based on ethambutol. After the failed
Istituto attempt to take over Zoja, the former increased the price of raw
materials sold to Zoja, which forced Zoja to find alternative suppliers (other
CSC customers). Alternative sources of supply soon dried up (mainly because
CSC forbade its customers to sell raw materials to Zoja). CSC then decided to
give up the sales of raw materials and vertically integrate its operations to use
raw materials for own production. At the same time, CSC refused to deliver
raw materials to Zoja.
16
The ECJ stated that CSC behavior was in breach of the principles expressed in
article 3 (f) of the EC Treaty and further detailed in article 81 and 82 of the EC
Treaty. According to the ECJ, an entrepreneur occupying a dominant position
in the market for raw materials, who refuses deliveries to an independent
manufacturer in order to reserve these raw materials for its own production
thereby creating the possibility of the complete liquidation of competition on
the part of such a manufacturer, abuses his dominant position as understood
in article 82 of the EC Treaty.
The issue described above is an excellent illustration of the problem of the

subjective scope of protection provided for in article 82 of the EC Treaty and
answers the question as to whether that article protects consumers or
competitors. It has been observed that, in some cases, vertical integration of
the market can be economically justified and advantageous for consumers
regardless of the degree in which it influences the situation of the competitors.
According to commentators, the ECJ backed the application of article 82 of
the EC Treaty for the purpose of protection of competitors and the competitive
structure of the market in that case.
Another case in which the ECJ expressed its position on the legality of the
refusal to supply was the case of United Brands (55). United Brands was
accused of abuse of its dominant position in the form of discontinuance of
deliveries to the Olesen Company being its distributor in Denmark. United
Brands defended itself stating that it discontinued co-operation with Olesen
because the latter had not managed to guarantee preferential treatment in the
Danish market to United Brands and later, it started to distribute competitors’
products and neglect the sales of United Brands products.
ECJ stated that the entrepreneur occupying a dominant position which

cashes in on the reputation of a brand name cannot discontinue deliveries
to his customers with whom he maintained long-term relationship and who
apply normal trade practice and their orders do not deviate from the
standard.
The ECJ stressed that such behavior was not in line with the principles
expressed in article 3 (f) of the EC Treaty and further detailed in article 82 of
the EC Treaty considering that the refusal to supply would limit markets to the
detriment of the consumers and entail the discrimination of the customer
which could finally lead to his elimination from the market.
At the same time, the ECJ agreed that an entrepreneur occupying a dominant
position could take any steps he considers useful to protect his interests when
they are threatened. However, such steps cannot be approved of it their true
objective is to strengthen its dominant position.
17
The ECJ also stressed the fact that steps taken by the entrepreneur occupying
the dominant position in order to protect his interests should be proportional
to the threat considering the economic power of the customer. The ECJ
considered the activities of United Brands not to be proportional to the threat.
In the case of RTE (29), the Commission considered the refusal to provide
information about programs broadcast by the dominant undertaking to an
independent entrepreneur an abuse of the dominant position.
As a public unit rendering broadcasting services in Ireland, RTE reserved the

sole right to the weekly publication of TV programs it broadcasted. Magil, an
Irish company, planned to publish a weekly guide to TV programs in all the
available channels. RTE tried to thwart the publication of the competitor
referring to its copyrights. To this end, it accused Magil of the violation of
copyright. The Commission stated that the prohibition of RTE program
publication by Magil should be classified as a violation of article 82 of the EC
Treaty. RTE appealed to the CFI.
The CFI decided that RTE, reserving the sole right to the weekly publication
of its TV programs, made it impossible to introduce a new product onto the
market, i.e. an independent guide to all TV programs. Because of that, RTE
used its right to maintain the monopoly in the associated market being the
market for publications of TV programs.
The CFI stated that RTE behavior was in breach of article 82 of the EC Treaty
and exceeded the scope of execution of rights to intellectual property, and thus
was not covered by the protection available to these rights in Community law.
(c) Price discrimination as an abuse of a dominant position

Article 82 (c) of the EC Treaty clearly forbids the application of diverse trade
terms in analogical situations, i.e. discrimination of customers.
The provision referred to also includes price discrimination that occurs if

goods/services are sold or purchased at prices not considering differences in
the costs entailed in manufacturing them. Thus, price discrimination can take
place when a single product is sold at different prices not related to costs
borne and when goods are sold at the same price even though there are real
differences in costs.
Price discrimination can take different forms:
- it can be of a geographical nature, when the discriminating entrepreneur

applies different prices in various local markets, at the same time trying to
isolate them from one another to avoid sales between the markets;
18
- it can take the form of price reductions and discounts not related to costs,
aimed at ‘binding’ customers to the discriminating entrepreneur to
a degree that would make it difficult or impossible for other entrepreneurs
to enter a market;
- it can take the form of the application of discriminating prices by means
of ‘predatory pricing’ involving the initial reduction of prices to some limit
to discourage potential competitors from entering a market in order to
drive profits later from monopolistic prices after the elimination of
competition in the market.
Price discrimination can also be classified according to the division into units
that have borne losses because of it or have felt its negative effects, i.e. first of
all, competitors of the discriminating entrepreneur operating in the same
market and, secondly, units operating on another level of turnover, i.e.
customers and consumers.
The ban on price discrimination does not mean that the application of varied
prices with regard to a single type of goods is unfair as such or that it is
disadvantageous economically. One has to remember that the evaluation of
production costs of goods is often very difficult, in particular, when predatory
pricing is applied. In a way, it is natural that the dominant entrepreneur
already present in the market reacts in a specific way to the introduction of
a new competitor to the market. Such reactions form the core of competition
and it is not easy to assess (in the case of product price reductions) when an
undertaking goes beyond the limits of fair competition.
Besides, one should also indicate the argument often stated by economists
that counteraction to price discrimination can be unfair from the social
point of view if we consider that its effect can be the redistribution of profits
and goods from poorer consumers to the wealthier ones. This results from
the fact that, if the dominant entrepreneur is forced to fix a uniform price for
all customers in the Common Market (and cannot, as often happens, fix
a lower price for those EU markets where customers are usually poorer and
a higher price for markets with wealthier consumers who, in a way,
”compensate” the entrepreneur for lower prices on other markets), then the
new uniform price will probably be an average, i.e. will be higher than the
previous price applied to poorer consumers and will be lower for wealthier
consumers.
The Tribunal extensively examined price discrimination, among other things,

in the case of United Brands (55) where United Brands was accused of abusing
its dominant position, among other things, by means of the application of
differentiated prices in various member countries with regard to the same
product, i.e. bananas, without an objective justification. United Brands
19
maintained that differences in prices reflected the market situation, i.e. the
average expected price in each country and, that it was impossible to avoid
differences in the individual supply/demand trends in various countries.
The Tribunal stated, among other things, that ”Once it can be grasped that
differences in transport costs, taxation, customs duties, the wages of the labuor force,
the conditions of marketing, the differences in the parity of the currencies, the
density of competition may eventually culminate in different retail selling price
levels according to the Member States, then it follows that those differences are
factors which UBC only has to take into account to a limit extent since it sells
a product which is always the same and at the same place to ripener/distributors
who -alone-bear the risks of the consumers’ market.” [...] ”This discriminatory
prices, which varied according to the circumstances of the Member States, were just
so many obstacles to the free movement of goods and were intensified by the clause
forbidding the resale of bananas while still green and by reducing the deliveries of
the quantities ordered.”
In the sentence cited above, the Tribunal avoided answering the question
whether price discrimination could be advantageous. The settlement in the
case of United Brands (55) was also criticized because the Tribunal assumed
that differences in production were really considered by distributors only and
that United Brands had borne no risk related to them.
Another case, in which the Tribunal examined price discrimination, was the
case of Hoffman-La Roche (45) related to the abuse by Hoffman La Roche of its
dominant position in the vitamins market, among other things, because of
discounts granted. The Tribunal maintained that a dominant entrepreneur
who forces his customers (even at their request) to cover the major part or the
whole of their demand with him, e.g. via loyalty discounts, abuses his position
as understood in article 82 of the EC Treaty. The Tribunal also stated that
loyalty programs that do not condition a discount granted with the quantity
of goods ordered have no economic grounds but are aimed solely at the
limitation of the customer’s opportunity to purchase goods from other
suppliers and the limitation of competitors’ access to the market, and as such,
they are not compliant with article 82 of the EC Treaty. According to the ECJ,
such loyalty programs discriminate since two different units pay different
prices for an identical product depending on whether they satisfy their whole
demand with the dominant entrepreneur or not.
The Tribunal concluded that the concept of abuse of a dominant position is

an objective criterion related to such behavior by the entrepreneur occupying
the dominant position that can influence the structure of the market where
the competition has been weakened as a result of his presence.
20
(d) Predatory pricing as an abuse of a dominant position
As indicated above, predatory pricing involves, to a great extent, temporary
price reduction aimed at the elimination of a competitor from part of or the
whole market. The most known case illustrating this problem is Akzo Chemie
BV (33).
Akzo, a company with headquarters in Holland, and ECS, a smaller company

from Great Britain, manufactured organic peroxides including benzoyl
peroxide used in the flour market as well as the plastics market. Initially, ECS
operated only in the former market but it gradually extended its operations to
the plastics market taking over some customers of Akzo. As a result, Akzo
threatened that it would conduct an aggressive price action if ECS would not
withdraw from the plastics market. As the threat was ignored, Akzo took the
steps it had threatened, i.e. suggested prices lower than previous rates and, at
the same time, lower than average general costs to chosen ECS customers in
the flour market. The financing of these activities was ensured with means
generated by Akzo in the plastics market and, as a result, the position of ECS
was considerably weakened.
The Tribunal stated that article 82 of the EC Treaty prohibits a dominant

entrepreneur from eliminating a competitor from the market and thus
strengthen its position, by methods other than competition on the basis of
product quality.
The application of prices lower than average variable costs (i.e. depending on
the number of products manufactured) by a dominant entrepreneur in order
to eliminate the competitor should always be considered an abuse of
a dominant position. There is no other objective with the application of such
reduced prices than to eliminate a competitor in order to increase prices later
thanks to the position of monopoly since earlier losses caused by the sales of
goods at below cost must be covered. The application of such prices can force
other entrepreneurs out of the market who are equally effective as stronger
entrepreneurs but who are unable to counteract the scale of anti-competition
activities directed against them due to smaller financial resources.
In the Akzo case, one of the directors even prepared an aggressive strategy in
writing aimed at competitor elimination from the market, giving the
Commission sure evidence of deliberate action against ECS. However, the
obviousness of the case discussed should not obscure doubts emerging in
connection with the prohibition of predatory pricing. The literature shows
that the existence of total prohibition to apply such prices bears the risk that
a competitor willing to enter a market shall use such prohibition as an effective
protection from the natural reduction of product prices applied by a dominant
entrepreneur to react to his appearance in the market. Stronger units can also
21
abstain from competition with the use of prices, fearing that they would be
accused of predatory pricing. Even if these accusations prove to be unjustified,
the high costs of procedures can discourage them from initiating a dispute.
This argument is extremely material if prices are lower than fixed costs and
higher than variable costs. The question of intent driving the stronger
entrepreneur when applying lower prices becomes pivotal in such a situation.
It could turn out that it is extremely difficult to distinguish the will to compete
effectively from the plan to eliminate a competitor.
Regardless of the doubts presented above, the judgments of European courts

confirm that predatory pricing is covered by article 82 of the EC Treaty. And
thus, e.g. in the case of Tetra Pak (54), it has been considered that the party
having a dominant position in the market of aseptic packaging abused its
dominant position using profits acquired in that market to subsidize sales in
the market for other types of packaging. The Tribunal rejected the Tetra Pak
argument that it should be considered whether the entrepreneur had a real
opportunity to subsequently cover the losses borne in the market of other
types of packaging. According to the Tribunal, there has to be a chance to
sanction predatory pricing in each case bearing the risk of competitor
elimination and one should not wait for the true achievement of that effect.
(e) Discrimination of independent undertakings in relation to affiliated

companies as an abuse of the dominant position
According to the practice of European competition authorities, enterprises
occupying a dominant position in the market often have the tendency to apply
other trade terms in relations with affiliated units and in relation to
independent units. Such actions can take the form of preferential treatment of
affiliated units or discrimination of independent units. Regardless of the form
and type of such behavior, they are considered in breach of the provisions of
article 82 of the EC Treaty, which forbids dominant enterprises from
discriminating their trade partners on the basis of subjective criteria.
The approach of European competition authorities to this problem is

illustrated by the case of Aeroports de Paris (22) described below. As a result of
a complaint lodged by Alpha Flight Service (AFS), the Commission initiated
procedures against Aeroports de Paris (ADP), an entrepreneur controlled by
the French State Treasury managing airports in Paris (Orly and Roissy Charles
de Gaulle). AFS was a company rendering catering services on behalf of
airlines. In order to conduct such a business, AFS had to use the infrastructure
of the Orly airport and pay various charges on behalf of ADP by virtue of that
use. OAT, a company belonging to the Air France group, also controlled by the
French State Treasury, operated on the same market for catering services.
Charges collected by ADP from OAT were much lower than charges collected
from AFS. The application to AFS of the same rate as the rate applied for OAT
22
would allow it to reduce the charges of the former by ca. 3.5 million francs.
Besides, ADP did not usually collect any charges from other airlines, which
also rendered catering services for their own needs. Where such charges were
collected, they were much lower than charges from the independent service
supplier. Such practices did not have any objective justification and
considerably increased the costs of some entrepreneurs operating in the
catering market. The Commission decided that ASF discrimination in
comparison with units affiliated with ADP and Air France not only disturbs
effective competition between entrepreneurs rendering catering services but
also between entrepreneurs operating in the air transport sector. According to
the Commission, ADP practices also influenced the costs of airline activities,
as some of them were treated preferentially while others suffered the
consequences of the discrimination of their independent suppliers.
Both CFI and ECJ agreed with the position taken by the Commission stating
that ADP was in breach of article 82 of the EC Treaty because of application of
discriminatory rates of charges for the use of the airport infrastructure by ASF.
According to the ECJ, if the entrepreneur being the recipient of services
operates in the market other than the market of the entrepreneur rendering
these services, it is sufficient that the recipient of the service is economically
dependent on the service supplier because of the dominant position of the
latter to apply the provisions of article 82 of the EC Treaty. It is not necessary
for both entrepreneurs to operate in the same market. It is sufficient that the
service offered by a dominant firm is necessary for the service recipient to
conduct his business.
23
2.
Collective dominance in oligopoly markets
- basic issues
The concept of collective dominance was introduced by the Commission in

procedures conducted on the basis of articles 81 and 82 of the EC Treaty, i.e.
directed against cartels and enterprises abusing their market position, as well
as in cases in the scope of the control of concentration on the basis of
Regulation No 4064/89 concerning the control of concentration.
Although the issue of control of concentration is beyond the subjective scope

of this document, it is considered below in the scope necessary to present the
concept of collecting the dominant position in the light of the decisional
practice of the Commission and European courts. Decisions of the
Commission and judgments of the CFI and the ECJ issued on the basis of
Regulation 4064/89 considerably contributed to the development of the
concept of collective oligopolistic dominance and, indirectly, also to its
application to procedures conducted on the basis of provisions of article 82 of
the EC Treaty.
The theory of collective dominance is applied ex ante on the basis of

Regulation 4064/89, i.e. in the procedures in which the Commission
examines the potential influence of the planned transaction on competition in
the Common Market. If the concentration is considered compatible with the
Common Market, the only instrument helpful for restraining entrepreneurs in
oligopoly markets from abusing their market position are the decisions issued
on the basis of article 81 of the EC Treaty concerning contracts and concerted
practices (commonly referred to as cartels) or on the basis of article 82 of the
EC Treaty concerning abuse of a dominant position. Activities of
entrepreneurs mentioned in provisions referred to above are difficult to prove,
which is why the Commission’s burden of evidence is a material hindrance in
the sanctioning of anti-competition market activities. Because of this, the
Commission adopted an extensive interpretation and application of the
24
theory of collective dominance in preventive procedures concerning the
control of concentration. In this way, the Commission gained a relatively
effective instrument for the protection of competition in non-competitive
oligopoly markets. However, the latest decision of the CFI concerning the case
of AirTours (63) put an end to the developing interpretation of the collective
dominant position and defined the limits of its application with regard to
concentration in oligopoly markets.
2.1 Collective dominant position in the decisional practice and the case
law of European competition authorities - examples
A summary of the development of the concept of collective dominance in the
decisional practice of European competition authorities - considering
decisions and sentences issued in cases from the scope of the control of
concentration (from Nestlé/Perrier to AirTours) and in cases conducted on the
basis of articles 81 and 82 of the EC Treaty (from Hoffman-La Roche to
Compagnie Maritime Belge) is presented below.
2.1.1 Nestlé/Perrier - the first decision of the Commission concerning

collective dominance issued on the basis of Regulation 4064/89
The Commission applied the concept of collective dominance to procedures
in the scope of control of concentration for the first time in the case of
Nestlé/Perrier (60) in 1992.
Having examined the consequences of the transaction in question, the

Commission stated that the prohibition of concentration on the basis of
provisions of article 2(3) of the Regulation 4064/89 is not limited to
situations, in which only one entrepreneur can occupy or strengthen the
dominant position. According to the Commission, provisions of Regulation
4064/89 are also applicable when the transaction can lead to a situation in
which two entrepreneurs achieve such a market position that it gives them an
opportunity to jointly behave to a great degree independently from other
participants in the market. Before the transaction, three main entrepreneurs
operated in the oligopoly market proper: Nestlé, Perrier and BSN. Nestlé
decided to sell the Volvic brand belonging to Perrier to BSN as the newly
created Nestlé/Perrier group would be close to the achievement of the
forbidden dominant position if it were to maintain that brand. However, the
Commission stated that the sale of that brand to a competitor would not
clarify all doubts with regard to the planned concentration.
The Commission ascertained that the relevant market, i.e. the French mineral
water market, is characterized by low price competition resulting from the
similarity of prices applied by all manufacturers and the enforcement of a high
commercial margin compared with production costs. Considerable barriers
were also found concerning entrance into the market due to the limited
25
number of sources of mineral water. After the transaction, the degree of

market concentration would be very high, as concentrating entrepreneurs
would control nearly 95% of the whole mineral water market. The
concentration would entail parallel anti-competition behavior, which would
constitute a collective abuse of market position. Such an abuse would be
possible due to market transparency thanks to which entrepreneurs would be
easily able to unify their activities within the framework of ‘tacit collusion’, and
monitor their mutual behavior. Suppliers of mineral water in France achieved
full transparency of market rules facilitating their ‘tacit collusion’ with regard
to price practices. What is more, these enterprises have developed
instruments enabling them to control and monitor mutual behavior. The
transparency in itself had a double objective: to facilitate ‘tacit collusion’ and
to monitor such collusion. On the basis of these facts, the Commission proved
that the market structure resulting from the concentration would create
a double-pole dominant position which would considerably influence
competitive conditions. However, the Commission finally approved the
transaction after the parties had taken the appropriate remedial measures.
2.1.2 Italian Flat Glass - development of the concept of collective

dominance on the basis of provisions of articles 82 and 81 of the EC
Treaty
In the case of Nestlé/Perrier (60), the Commission stated that the control of
concentration in the European Union should also consider counteraction to
oligopoly dominance. Arguments included in the decisions clearly indicated
the Commission’s position in that scope. Due to the high degree of market
concentration, the Commission analyzed a long list of structural factors to
assess whether the market favored the development of ‘tacit collusion’ or, as
defined in the decision, parallel anti-competitive behavior. After the decision in
the Nestlé/Perrier (60) case it became obvious that the Commission would
analyze issues in the scope of control of concentration taking into account the
problem of the potential emergence or strengthening of the oligopolist or
collective dominant position. The issue of the application of Regulation
4064/89 to such a situation was earlier the topic of many discussions.
However, the Commission’s position had not yet been confirmed by the ECJ
at that stage. Due to the lack of a court decision, the Commission initially took
a relatively cautious position. In the issue of Alcatel/AEG Kabel (59), the
Commission rejected the application of the German Federal Cartel Office,
which applied for the statement that the concentration analyzed would result
in oligopolist dominance. There were still doubts whether Regulation
4064/89 covered collective dominance, in particular, due to the skeptical
approach to this concept initially assumed by the ECJ, even on the basis of the
provisions of article 82 of the EC Treaty, which explicitly referred to the
dominant position of ”a single - or several - entrepreneurs”.
26
The ECJ was relatively unwilling to accept the control of oligopolies through
article 82 of the EC Treaty. In the case of Hoffman-La Roche (45) in 1976, the
Court decided that to be oligopolist but parallel market behavior not agreed
upon is not covered by article 82 of the EC Treaty: ”a dominant position must
also be distinguished from parallel courses of conduct which are peculiar to
oligopolies in that in an oligopoly the courses of conduct interact, while in the case
of an undertaking occupying the dominant position the conduct of the undertaking
which derives profits from that position is to a great extent determined unilaterally”.
The first decision confirming the possibility of ascertaining collective

dominance on the basis of article 82 of the EC Treaty was that concerning the
case of Italian Flat Glass (26) in 1992. Three Italian manufacturers of flat glass
concluded agreements which the Commission considered in breach of the
provisions of article 81 of the EC Treaty. In principle, the Commission also
stated the occurrence of collective dominance in breach of the provisions of
article 82 of the EC Treaty on the basis of the same actual situation. The case
of Italian Flat Glass (26) was the first case in which court procedures
confirmed that a collective dominant position can take place in oligopolist
markets when ”two or more undertakings jointly have, through agreements or
licences, a technological lead affording them the power to behave to an appreciable
extent independently of their competitors, their customers and ultimately of their
consumers”.
However, the CFI did not agree that the three dominant entrepreneurs in the
market really adopted the same behavior and annulled the Commission’s decision
in that scope. Although the Commission did not manage to prove the collective
dominant position in the case of Italian Flat Glass (26), this case confirmed the
possibility of the parallel application of articles 81 and 82 of the EC Treaty.
2.1.3 Kali & Salz - The ECJ issues a decision concerning the application
of collective dominance to mergers
In December 1993, the Commission stated that concentration between
Kali&Salz and Mitteldeutsche Kali AG (62) could be completed without the
risk to the rules of the Common Market but only after the parties fulfill the
conditions defined in the decision issued by the Commission. The
Commission decided that the transaction influences two appropriate markets
- the German market and the European market (except for Germany). In
Germany, the concentration resulted in the emergence of a single dominant
entrepreneur in the technical potassium carbonate market - mineral fertilizer.
Although the collective market share amounted to 98% the Commission
accepted ‘failing firm defense’ stating that the merger will not have any
materially negative consequences for that market. However, considering the
second market - the European market - the Commission argued that the
proposed concentration would create the situation of oligopolist dominance
27
of the merged unit and the French manufacturer, Societe Commerciale des
Potasses et de l’Azote. As a prerequisite of concentration, the Commission
ordered Kali&Salz to terminate its connections with Societe Commerciale des
Potasses et de l’Azote, which was its main distributor in France, i.e. it should
withdraw from the joint venture, dealing mainly with the exports. These
resolutions were opposed by both parties who appealed against the decision
of the Commission.
In March 1998, the ECJ annulled the decision stating the Commission did not
prove that the oligopolist dominant position could emerge or be strengthened
as a result of concentration. This sentence considerably promoted the
development of the European control of concentrations considering the
theory of oligopolist dominance. Firstly, the Kali&Salz (65) decision finally
confirmed that Regulation 4064/89 is applicable to concentration resulting in
the emergence of collective dominance in markets with an oligopolist
structure. Secondly, the ECJ statement supplied the Commission with
guidance for the economic assessment of oligopolist dominance in the future.
Thirdly, the Tribunal confirmed the concept of ‘failing firm defense’.
The ECJ decision in the case of Kali&Salz (65) also confirmed that the
Commission has relatively large freedom of assessment as to whether the
concentration causes the risk of oligopolist dominance. In particular, the
Commission is not obliged to apply the criteria adopted in earlier cases when
assessing concentration.
As article 82 of the EC Treaty expressis verbis gives the Commission the right
to act against ”one or more undertakings” abusing their dominant position, the
application of the concept of collective dominance to procedures conducted
on that basis did not require the material over-interpretation of regulations, as
was the case in the procedures on the basis of Regulation 4064/89. The
Commission first justified its decision with the concept of collective
dominance in the case of Italian Flat Glass (12) in 1992.
However, in the case of Kali&Salz (66) the ECJ considered that the
Commission is not bound by judgments based on article 82 of the EC Treaty
in cases in the scope of control of concentration referring to collective
dominance. For example, the Tribunal did not explicitly refer to the objections
of the French government stating that the Commission incorrectly applied the
concept of oligopolist dominance as it based its analyses on criteria not
recorded in the judgments referring to article 82 of the EC Treaty. Such
a flexible ECJ position resulting probably from the complexity of the
economic analyses required in the assessment of oligopolist market relations
indicated that the Commission should apply the casuistic approach
conditioned with the circumstances of each individual case.
28
2.1.4 Gencor and Compagnie Maritime Belge - settlements concerning the
importance of economic links
Before the ECJ decision concerning Compagnie Maritime Belge (36) and the
CFI decision concerning Genco (64) the statement of the collective dominant
position was based on the existence of economic links understood as
structural relations or other factors that could cause relations between the
entrepreneurs examined. The question whether the concept of collective
dominance can be applied with regard to the oligopolist market when no
relations exist between manufacturers appeared for the first time in the case of
Gencor (64). The procedures concerned the correctness of the decision issued
by the Commission on the basis of Regulation 4064/89 prohibiting
concentration because it could result in the creation of a duopoly market
leading to the situation of oligopolist dominance.
According to the Commission, the creation of a joint venture by the parties

would result in the creation of collective dominance in the market, where two
entrepreneurs would control platinum resources in South Africa. These
resources were estimated to constitute 90% of the known world resources of
platinum. The concentration would reduce differences between entrepreneurs
in that market, which would encourage them to co-ordinate their activities.
The Commission stressed the importance of precise economic analysis for the
definition of factors promoting the co-ordination of market activities within
the framework of the oligopoly. It indicated the high level of concentration
between them, the permanent and symmetrical divisions in the market,
similar cost structure, stagnation and the lack of elasticity of demand, the
uniform nature of products and the low level of technological changes.
During procedures before the CFI, the parties argued that the Commission did
not prove that ”relations” existed between members of the duopoly as
understood in previous sentences.
The CFI rejected the appeal stating, among other things, that no previous
sentence limited the concept of ‘economic relations’ to the concept of structural
relations between the entrepreneurs examined. According to the CFI ”there is no
reason whatsoever in legal or economic terms to exclude from the notion of economic
links the relationship of interdependence existing between the parties to
a tight oligopoly within which, in a market with the appropriate characteristics, in
particular in terms of market concentration, transparency, and product homogeneity,
those parties are in a position to anticipate one another’s behaviour and are therefore
strongly encouraged to align their conduct in the market, in particular in such a way
as to maximize their joint profits by restricting production with a view to increasing
prices. In such a context, each trader is aware that highly competitive action on its part
designed to increase its market share (for example a price cut) would provoke identical
action by the others, so that it would derive no benefit from its initiative. The conclusion
29
is all the more pertinent with to the control of concentrations, whose objective is to
prevent anti-competitive market structures from arising or being strengthened”. As the
Court has proved, market condition can be such that ”those structures may result
from the existence of economic links in the strict sense argued by the applicant or from
market structures of an oligopolistic kind where each undertaking may become aware
of common interests and, in particular, cause prices to increase without having to enter
into an agreement or resort to a concerted practice”.
The Court stated that the concentration would have a direct and immediate
effect in the form of the emergence of market conditions, in which the abuse of
the market position by dominant entrepreneurs would not only be possible but
also economically rational. If there are only two companies with a very similar
cost structure in the market, parallel anti-competition behavior constitutes
a more rational strategy for them, from the economic point of view, than
competition, which makes the maximization of combined profits impossible.
The input of Gencor (64) in the development of judgments concerning

collective dominance involves the combination of that concept with the
economic concept of ‘tacit collusion’. The importance of relations between
entrepreneurs was reduced to a material but not a necessary criterion. The
Court explained that explicit collusion should be assessed on the basis of
article 81 and 82 of the EC Treaty. The objective of the control of
concentration is only to evaluate whether concentration would increase the
potential of ‘tacit collusion’.
Argument included in the CFI sentence concerning Gencor (64) was

developed by the ECJ in the case of Compagnie Maritime Belge (36), in which
the Tribunal provided further guidance with regard to the understanding of
the concept of collective dominance and conditions that have to exist so that
collective dominance can be proved.
The case concerned members of the Cewal shipping conference who had the
dominant position in the market for some types of line transport in Africa. The
Commission accused them, among other things, of the understatement of
freight charged in order to eliminate their only competitor from the market.
In the course of appeal at the CFI and subsequently at the ECJ, the party
argued that collective dominance can take place only for entrepreneurs, each
of whom has the dominant position, which was supposed to indicate that the
concept is not applicable to the position of an entrepreneur in the structure of
the market and competition conditions in that market, but only the behavior
of that entrepreneur. However, the CFI stated that provisions of article 82 of
the EC Treaty can be applied in a situation where several companies combined
have a dominant position. Besides, the party argued, the abuse of combined
30
(collective) dominance can take place only when all entrepreneurs take steps
covered by the hypothesis of article 82 of the EC Treaty. The Commission did
not agree with this statement. Collective dominance exists if one or more
entrepreneurs abuse their market power although not all entrepreneurs
having the combined dominant position behave in such a way.
For a long time, European judgments required that the Commission should
provide evidence of relations between entrepreneurs on the basis of article 82 of
the EC Treaty. In the case of Italian Flat Glass (26), the Court confirmed that the
existence of economic relations is the necessary condition to give evidence of
collective dominant position. However, the degree and type of such relations
required, issued in the scope of control of concentration, was unclear. The
sentence of the Court concerning the case of Gencor (64) brought the long
awaited clarification. Relations ceased to the element necessary to give evidence
of collective dominant position in cases in the scope of control of concentration.
However, a doubt appeared whether that sentence can be applied respectively in
procedures conducted on the basis of article 82 of the EC Treaty. In March 2000,
the ECJ issued a decision having examined the appeal of the parties from the
CFI decision concerning the case of Compagnie Maritime Belge (36). The
sentence maintained that a dominant position can also occur when two or more
entrepreneurs, independently of one another occupy it, but, from the economic
point of view, they appear or act in a particular market as a collective unit.
According to the Tribunal, to prove that two or more enterprises occupy

a collective dominant position, it is necessary to consider whether these
enterprises jointly create a collective entity for their competitors, trade
partners and customers in a particular market. Such a situation takes place
when (i) there is no true competition between enterprises examined (ii)
enterprises perform the same actions or conduct joint policy in the market.
Only if the result of these considerations is positive, should one check
whether such a collective entity really occupies a dominant position. In
particular, one should state whether economic relations exist between
enterprises examined making it impossible for them to initiate actions
independently from their competitors, customers and consumers. The
Tribunal decided that the agreement executed, decision or concerted practice
(regardless of whether it is subject to exemption by virtue of Article 81 (3) of
the EC Treaty) can undoubtedly result in such relations between the
enterprises interested, that cause their perception in a particular market as
a collective unit in relation to their competitors, trade partners and customers.
However, the very fact that two or more entrepreneurs are bound by an
agreement or concerted practice as understood in article 81 (1) of the EC
Treaty is not, as such, a necessary basis for the existence of a collective
dominant position. In order to find out whether it exists, one should check the
31
economic relations that build the relationship between the enterprises

examined. Such relations can result from the conclusion of a mutual
agreement but ”...the existence of an agreement or, of other links in law is not
indispensable to a finding of a collective dominant position”. As the Tribunal
pointed: ”such a finding may be based on other connecting factors and would
depend on an economic assessment and, in particular, on an assessment of the
structure of the market in question”.
Decisions passed in the cases of Gencor (64) and Compagnie Maritime Belge
(36) clearly indicated that the existence of any structural relations can form
a basis for the existence of a collective dominant position; it can also refer to
unrelated entrepreneurs operating in markets creating conditions making
‘tacit collusion’ possible.
2.1.5 Airtours/FirstChoice - a new definition of collective dominance

However, the most material decision with regard to collective dominance
referred to the case in the scope of control of concentration and not based on
article 82 of the EC Treaty. On June 6, 2002, the CFI annulled the decision of
the Commission prohibiting concentration between Airtours and First Choice
- two foreign tour operators in Great Britain.
Airtours and First Choice concentrated their operations on the sales of

complex holiday offers in the countries of Southern Europe controlling 21%
and 11% of the British market for tourist services respectively. Their main
competitors included the companies, Thomson - controlling 27% of the
market and Thomas Cook - 20% of the market.
On April 29, 1999, Airtours announced the public offer of the takeover of First
Choice notifying the Commission of the planned concentration.
In the decision dated September 22, 1999, the Commission considered the
planned operation incompatible with the Common Market as it would lead to
excessive concentration in the sector and the ensuing collective dominant
position of the three main operators would encourage them to limit supply,
increase prices and profits even without the conclusion of informal
agreements or the creation of a cartel. According to the Commission’s
estimates, Airtours/First Choice and its main competitors - Thomson and
Thomas Cook would have a joint share in the market amounting to 79%.
The Commission believed that the three operators would be able to unify their
operating methods in a tacit manner (without formal agreements) and, thanks
to the adoption of the same strategy, enforce tariffs higher than those resulting
from actual competition. Because of that, smaller independent operators
would be even more marginalized by the newly created structure.
32
Questioning the findings and conclusions of the Commission, Airtours
appealed to the CFI applying for the annulment of the decision prohibiting
concentration. Airtours argued that the Commission provided an incorrect
assessment and did not prove sufficiently in which way the concentration
would promote the situation of collective dominance.
In the Airtours (63) decision, the CFI confirmed that the concentration can be
blocked on the grounds that the direct and immediate result of the
concentration would be the creation or strengthening of the position of
collective dominance materially and permanently hindering effective
competition in the market. However, the CFI believed that the European
Commission had not proved that the concentration would promote the
creation of the position of collective dominance limiting competition in the
sector of the British tourist market related to the sale of complex holiday offers
in nearby countries.
The CFI distinguished 3 factors whose occurrence would allow it to state

whether the merger would create a position of collective dominance.
Firstly, each member of the oligopoly should know the activities of other
members to adopt the same strategy in the light of features characteristic for
an relevant market.
Secondly, the long-term maintenance of ‘tacit collusion’ is necessary, which

means that there should exist measures encouraging members of the
oligopoly not to deviate from the joint strategy of operations in the relevant
market. The concept of ‘retaliatory measures’ appears here - they can be used
towards members of an oligopoly in breach of an existing market situation.
Thirdly, one should prove that the expected objectives of a joint strategy
cannot be threatened by remaining or potential competitors.
The CFI assessed that the Commission did not prove as it should that the
planned concentration would make the three large operators cease to compete
with one another. The three above-mentioned features characterizing the
situation of collective dominance were not, in fact, verified or proved.
Firstly, the Commission faultily assumed that the concentration would allow
large operators to interpret mutual commercial strategy easier and adopt the
same one. According to the CFI, faulty statements in that scope resulted from
an incorrect market assessment including the assumption of (i) stability of
market shares, (ii) demand increase, (iii) demand flexibility, (iv) market
transparency and the statement that these features would lead to the
emergence of collective dominance.
33
Secondly, retaliatory measures that could be applied towards one of the oligopoly
members as a result of deviation from a common operating strategy were not
clearly identified and proved by the Commission. The CFI considered that,
although the Commission does not have to prove the occurrence of specific
retaliatory measures and their scale, it should prove that appropriate retaliatory
measures are available to the interested entrepreneurs with regard to activities in
breach of ‘tacit collusion’. According to the CFI, a collective dominant position is
maintained only when each of the participants in the dominant oligopoly is
aware that each of his activities aimed at the increase of his market share (i.e.
deviation from the common market policy) will provoke similar activities in other
participants, as a result of which he will not achieve the initially expected results.
Thirdly, the CFI stated that the Commission made a mistake evaluating the
reaction of small operators, potential competitors and British consumers. In
fact, the Commission underestimated their role as the countermeasure for the
creation of a position of collective dominance. The Court believed that small
operators, after potential limitation of supply by dominant companies, could
extend their offers effectively taking advantage of the demand surplus, the
more so because they would also be able to acquire additional customers,
discouraged with the increase in prices applied by leading operators. What is
more, operators active in other geographical regions or other sectors of the
tourist market would be encouraged to enter more quickly markets
characterized by demand surplus.
As for the consumers, the Commission stated that they do not have the
material purchasing power. According to the CFI, it was most important to
assess whether they can react to the increase in prices caused by the limitation
of supply in the market by leading operators. Consumers could react to
a decrease in capacity and concomitant increase in price by turning to small
tour operators or switching to a different type of holiday package.
The CFI stated that, as a result of that faulty analysis, the decision taken by the
Commission is incorrect with regard to basic principles allowing the fact of
existence of the position of collective dominance to be stated. The CFI
believed that the Commission prohibited the operation not having proved that
it would really influence competition.
Many commentators considered the decision in the case of Airtours (63) as the
breakthrough in the development of the concept of collective dominance in
the practice of European competition protection institutions. For the first time,
the CFI indicated clear and material criteria for the assessment of the situation
in oligopoly markets defining the limits of control over these markets to the
Commission. According to the CFI, a collective dominant position can be
talked about only with regard to the classical oligopoly susceptible to market
34
behavior in the form of ”tacit collusion”. Such behavior is encouraged by the
uniformity of the product, market maturity, high entrance barriers, low
purchasing power, low technological level, considerable market clarity and the
opportunity for dominant entrepreneurs to apply countermeasures to
discipline other participants in the oligopoly.
Undoubtedly, the decision of the SPI in the case of Airtours (63) will also
influence the application of the concept of collective dominance on the basis
of article 82 of the EC Treaty.
2.2 Relations between article 81 and 82 of the EC Treaty in the context

of abuse of a dominant position by several entrepreneurs
The problem of relations between article 81 and 82 of the EC Treaty appeared
in the decision practice of the Commission with the concept of collective
dominance. As stated above, the ECJ initially maintained that it is not possible
to talk about the dominant position with regard to two or more independent
entrepreneurs. Article 82 of the EC Treaty was supposed to apply only to
individual market behavior while all collective activities regardless of whether
they resulted from agreements or concerted practices, were covered by article
81 of the EC Treaty. In the case of Hoffman-La Roche (45), the Court stressed
that: ”a dominant position must also be distinguished from parallel causes of
conduct which are peculiar to oligopolies in that in an oligopoly the causes of
conduct interact, while in the case of undertaking occupying a dominant position
the conduct of the undertaking which derives profits from that position is to a great
extent determined unilaterally”.
This position was reiterated in the case of Züchner (57) when ECJ stated that ”one
of the hallmarks of a dominant position covered by Article 82 is its unilateral nature”.
The Court’s approach to collective dominance and, at the same time, to

mutual relations between provisions of article 81 and 82 of the EC Treaty was
soon subjected to gradual changes. In the Ahmed Saeed case (32), General
Attorney Lenz stated that: ”...it is clear simply from the wording of Article 86 that
a dominant position in the common market can be held by several undertaking
jointly. For instance, members of a cartel of parties to an agreement contrary to
Community law under Article 85 may jointly occupy a dominant position.” Te
Court cautiously backed this position stating that ”the possibility that Articles
81 and 82 may both be applicable cannot be ruled out”
2.2.1 Italian Flat Glass and Compagnie Maritime Belge - European Courts
confirm the possibility of the joint application of articles 81 and 82
of the EC Treaty to the same actual situation
The first case in which the Commission decided upon the parallel application
of both these articles was Italian Flat Glass (12) in 1988. As a result of
35
a complaint by an Italian glass wholesaler, Cobelli, the Commission verified

the operations of three flat glass manufacturers in Italy, Societa Italiana Vetro,
Fabbrica Pisana and Venrante Pennitalia. Cobelli stated that manufacturers
were violating the provisions of the Treaty maintaining agreed price lists and
identical sales terms. Furthermore, it accused two of them of the initiation of
activities aimed at the takeover of full control, not only over the production of
glass panels but also their distribution, by means of the elimination of
independent wholesalers / distributors from the market. The Commission
decided that the objections concerning the manufacturers were well
grounded. In its decision issued after completion of the anti-monopoly
procedures, the Commission stated that article 81 of the EC Treaty was
violated because Societa Italiana Vetro, Fabbrica Pisana and Venrante
Pennitalia had been applying illegal market practices for a long time -
involving the application of agreed prices and sales terms. In spite of the lack
of evidence that any formal agreement existed in that scope, the Commission
sanctioned the manufacturers with financial fines considering that their
meetings, conversations and public statements clearly indicated that mutual
agreements existed. What is more, the Commission considered that Societa
Italiana Vetro, Fabbrica Pisana and Venrante Pennitalia abused their dominant
position violating the provisions of article 82 of the EC Treaty.
According to the Commission, the parties to the procedures operating in the

oligopoly market with a high degree of concentration had significant market
power providing them with the opportunity of acting independently from
other participants in the market. The combined share of Societa Italiana Vetro,
Fabbrica Pisana and Venrante Pennitalia in the Italian flat glass market was
estimated at 95% in the sector of automotive glass and 79% in the sector of
other glass. The shares of individual manufacturers have remained on the
same level for a few years while the market itself was stable. The Commission
considered the fact that the parties belonged to international capital groups
controlling over half the production and deliveries of flat glass in the
Community market, which protected them from potential external
competition. According to the Commission, the abuse of the understood
collective dominant position by Italian manufacturers involved the limitation
of consumers’ right to choose supply sources and the closure of the market to
other manufacturers of flat glass operating in the Community. The
Commission considered that the same behavior could constitute illegal
concerted practice - violating the provisions of article 81 of the EC Treaty, as
well as abuse of the collective dominant position - violating the provisions of
article 82 of the EC Treaty.
The CFI questioned the findings of the procedures related to article 81 of the
EC Treaty stating that the Commission had not proved the existence of an
agreement or agreed practice among the three manufacturers - necessary to
36
apply this article. At the same time, the CFI stated that there were no grounds
for the assignment of a different interpretation to the term ‘entrepreneur’
used in article 82 of the EC Treaty than that which this term had in article 81
of the EC Treaty. According to the CFI, there are no obstacles making it
impossible for two or more entrepreneurs connected by specific economic
relations thanks to which they occupy a collective dominant position in
comparison with other participants operating in the market. Thus, the CFI
accepted the possibility of the existence of a collective dominant position for
the first time. However, the Court explained that ”(...) for the purposes of
establishing an infringement of Article 86 EEC, it is not sufficient, as the
Commission’s agent claimed at the hearing, to ”recycle” the facts constituting an
infringement of Article 85, deducing from the finding that the parties to an
agreement or to an unlawful practice jointly hold a substantial share of the market,
that by virtue of that fact alone they hold a collective dominant position, and that
their unlawful behaviour constitutes an abuse of that collective dominant position.
Amongst other considerations, a finding of a dominant position, which is in any
case not in itself a matter of reproach, presupposes that the market in question has
been defined (Case 6/72, Continental Can, Case 322/81, Michelin). The Court
must therefore examine, first the analysis of the market made in the decision and,
secondly, the circumstances relied on in support of the finding of a collective
dominant position.”
Finally, the CFI annulled the decision taken by the Commission in the scope
concerning the statement of the violation of article 82 of the EC Treaty
maintaining that its justification bears faults concerning the definition of the
relevant market and the assessment of evidence in favor of an alleged
collective dominant position. Despite the Commission’s failure, the decision
of the CFI in the case of Italian Flat Glass (26) confirmed the possibility of the
application of the concept of collective dominance on the basis of article 82 of
the EC Treaty. Furthermore, the CFI did not negate the parallel application of
articles 81 and 82 of the EC Treaty to the same actual situation.
Another case concerning collective dominance and mutual relations between

article 81 and 82 of the EC Treaty is Compagnie Maritime Belge (36).
Compagnie Maritime Belge was a member of Associated Central West Africa

Lines (”Cewal”), a shipping conference in the meaning as understood in
article 1 (3) (b) of the Council Regulation 4056/86 concerning the block
exclusion in the sector of marine transport. The conference included ship-
owners servicing regular shipping lines between the ports of Zaire (currently
the Democratic Republic of Congo), Angola and Northern Europe. Dafra, the
second party which appealed against the decision of the Commission was also
a member of Cewal.
37
In the Cewal (5) decision issued in 1993, the Commission stated the violation of
articles 81 and 82 of the EC Treaty by Cewal and a few of its members including
CMB and Dafra. Cewal, the ship-owners constituting it and two other shipping
conferences (Cowak and Unkwal) violated article 81 of the EC Treaty concluding
an anti-competition agreement, in which each member of Cewal undertook not
to act as an independent ship-owner in the area of operations of the two other
shipping conferences. The agreement aimed at the geographic division of the
market for line transport between Northern Europe and West Africa.
The Commission also found out that, due to the close economic relations
between three members of Cewal (Dafra, CMB and CMBT) they occupied
a collective dominant position in the market of all shipping lines served by
Cewal members between Zaire and the Northern Europe. The ship-owners
abused their dominant position participating, among other things, in the
implementation of the co-operation agreement with a unit created by the
government of Zaire in order to promote Zairian sea trade (called the Ogefrem
Agreement) including the application of illegal pricing practices and forcing
customers to take advantage of their services on lines between Northern
Europe and Zaire to conclude loyalty agreements. Pricing practices applied by
members of Cewal included the reduction of collected freight fees on some
lines at the same, sometimes lower, level as applied by their main competitor
- GCC. An interesting thing was that the Commission, the CFI, the Attorney
General and the ECJ classified these practices as illegal although they did not
bring losses to Cewal members. The parties maintained that their activities did
not meet the classical criteria of ‘predatory pricing’ defined in the case of
AKZO (33) and, because of that they should not be punished as they had been
unable to foresee that the Commission would decide to apply a completely
new concept. However, this argument was rejected.
CMB and Dafra appealed to the CFI against the decision taken by the
Commission, which sustained the position taken by the Commission
(although it reduced the amount of the fines). The CFI summed up that
members of Cewal were, first of all, bound by agreements between ship-
owners creating the shipping conference that - as such -very close economic
relations were created between them. Regardless, the CFI considered that even
if this fact was not to be taken into account, there were relations between the
parties resulting from the adoption of identical market behavior. Dafra, CMB
and CMBT denied the accuracy of the collective assessment of the position of
Cewal members in the appropriate market and appealed to the ECJ.
The appeal was mainly based on the objection that CFI did not prove what
type of economic relations existed between Dafra, CMB and CMBT. The
plaintiffs also maintained that the CFI committed an abuse stating that the
collective dominant position existed by means of a simple ‘recycling’ of facts,
38
on the basis of which it has been defined that ship-owners applied agreed
practice according to article 81 of the EC Treaty. Finally, the plaintiffs
maintained that the mutual relation between article 81 and 82 of the EC Treaty
does not allow for the statement that entrepreneurs could act as a single unit
abusing their dominant position and, at the same time, remain parties to
agreed mutual practice for the purpose of article 81 of the EC Treaty.
The ECJ had to settle whether the Commission had the right to base the
statement of abuse of the dominant position only on the facts or
circumstances such as the agreement, decision or concerted practice as
understood in article 81 of the EC Treaty.
The ECJ stated that it did not see any technical limitations in the content of
article 82 of the EC Treaty that would limit its application to the market
behavior of legal persons independently of one another operating in
a specified market as a collective entity and, for that reason, occupying the
collective dominant position. According to the sentence passed by the ECJ, the
definition of the collective dominant position of two or more entrepreneurs
has to be preceded by the examination whether these entrepreneurs act as a
collective entity towards their competitors, trade partners and consumers. If
activity as a collective entity is ascertained, one should conduct the economic
analysis of the position occupied by these entrepreneurs in the appropriate
market. Only when the collective entity created de facto by these entrepreneurs
has the dominant position in the market can the Commission verify whether
an abuse of the dominant position as understood in article 82 of the EC Treaty
has taken place. The ECJ reiterated that the very ascertainment of the
dominant position is not a basis for the formulation of an objection based on
article 82 of the EC Treaty.
Finally, the ECJ considered that the Commission was right to classify applied
price practices and the fact that customers were forced to conclude loyalty
agreements as an abuse of the dominant position by the plaintiffs. However,
the decision of the Commission was annulled for procedural reasons in the
scope of financial penalties. The Commission violated the right of the parties
to a court hearing in the course of anti-monopoly procedures. Regardless of
that settlement, the ECJ sentence confirmed the possibility of the application
of articles 81 and 82 of the EC Treaty to the same actual situation.
2.2.2 Relations between economic links in the light of the case law
developed under article 82 of the EC Treaty and agreements,
decisions and concerted practices within the meaning of article 81 of
the EC Treaty
As indicated above, the ECJ considered that the content of articles 81 and 82
of the EC Treaty does not rule out the thesis that the same anti-competition
39
practices can constitute a violation of both regulations; however, one should

distinguish the purposes they serve.
The very fact that two or more entrepreneurs are bound by an agreement,
decision or agreed practice in the understanding of article 81 (1) of the EC
Treaty is not sufficient to state that relations exist between them, thanks to
which they can act in the market independently from their competitors,
customers and consumers. However, the Tribunal stated that:
”On the other hand, an agreement, decision or concerted practice (whether or not
covered by an exemption under Article 85(3) may undoubtedly, where it is
implemented, result in the undertakings concerned being so linked as to their
conduct on a particular market that they present themselves as a collective entity vis-
a-vis their competitors, their trading partners and consumers. (36)”
Thus, it seems that an agreement, decision or concerted practice subject to the

provisions of article 81 of the EC Treaty can, at the same time, form
a constitutive relation for collective dominance if it causes specific enterprises
to act as a collective entity in the market. Such a situation took place in the
above-mentioned case of Compagnie Maritime Belge (36).
The Tribunal considered that shipping conferences obviously requiring some

degree of co-operation between their participants were, due to the contribution
in the provision of safe and effective marine transport services, exempt from
the prohibition defined in article 81 of the EC Treaty on the basis of Regulation
4056/86. However, the Tribunal stated that it was ”the very nature and objective
of a liner conference that resulted in it being characterised as a collective entity which
presents itself as such on the market vis-a-vis both users and competitors”.
The agreement establishing the Cewal shipping conference to which all

entrepreneurs accused of the abuse of the dominant position belonged,
created between them relations sufficient to consider them a collective entity.
However, this fact does not automatically entail that they occupied the
dominant position and abused it. This statement was only possible after the
ascertainment of other circumstances of the matter. The Tribunal stressed that
the acquisition of the exemption based on article 81 (3) of the EC Treaty for
the agreement does not exclude the application of article 82 of the EC Treaty.
2.2.3 Application of articles 81 and 82 of the EC Treaty in the light of the

case law concerning conscious parallelism
For a long time, the Commission and the ECJ have agreed that the very fact of
the parallel behavior of entrepreneurs in the market is no evidence of co-
operation and, as a consequence, does not allow the application of article 81 of
the EC Treaty. The application of identical market practices by competitors can
40
result from economic rules of the market and not necessarily from mutual
agreements. In its decision practice, the Commission admits that the conscious
parallelism of market behavior occurs naturally in some markets without any
agreements between their participants. From the economical point of view, it is
natural that entrepreneurs operating in oligopoly markets observe each other
and monitor their operations to calculate and forecast competitors’ behavior
and adapt their own behavior accordingly - this is so-called conscious
parallelism. In such situations, entrepreneurs depend on one another, which is
not illegal as such. For example, in the case of Suiker Unie (53), CFI stated that
the requirement that everybody should operate independently in the market
does not deprive entrepreneurs of the right to intelligently adapt their
operations to the parallel or future behavior of their competitors. In the
Dyestuffs (6) case, the Commission defined cases, in which conscious
parallelism of entrepreneurs can be considered legal and not in breach of the
provisions of article 81 of the EC Treaty. Such a situation takes place when:
- only a few competitors control the market,

- the product is the same or easily replaceable, at least from the consumer’s
point of view,
- the price structure is shaped in such a way that a competitor immediately
feels a change of in price applied by another competitor,
- all participants in the market bear similar production costs,
- the market is mature with experienced entrepreneurs operating in it, who
know one another and are generally satisfied with their share of the
market, frequently also unwilling to disturb the status quo with surprising
price modifications,
- the market is characterized by long-term agreements between suppliers
and customers,
- purchasers easily replace one supplier with another.
Decisions passed in cases concerning Compagnie Maritime Belge (36) and

previously Italian Flat Glass (26) and Gencor (64) clearly show that the
parallelism of market behavior ceases to be a wholly innocent phenomenon for
European competition protection institutions. However, it still cannot be
sanctioned on the basis of article 81 of the EC Treaty which puts the
Commission under the obligation to give evidence of actual agreements
between entrepreneurs; conscious parallelism will be applied to prove the
existence of a collective dominant position on the basis of article 82 of the EC
Treaty. Although the case of Airtours (63) provided the Commission with the
material limits of the application of the concept of collective dominance based
on Regulation 4064/89, the scope of control over oligopoly markets on the
basis of article 82 of the EC Treaty after Compagnie Maritime Belge (36) remains
an open question.
41
2.3 Conclusions concerning the application of the concept of collective

dominance
The ECJ position expressed in the decision passed for Compagnie Maritime
Belge (36) gave rise to the question whether the understanding of the concept
of collective dominant position in the light of the control of concentration can
be understood as equivalent to the understanding of the concept of collective
dominance based on article 82 of the EC Treaty. An adequate answer to this
question can only be provided by further judgments of the European Courts.
However, the example of Compagnie Maritime Belge (36) shows without doubt
that judgments concerning article 82 of the EC Treaty evolve in the direction
of a more structural approach deviating from the initial behavioral approach.
It seems that the ECJ adopts a position considering the structure of the
appropriate market to a greater degree. That structure is the basic prerequisite
analyzed in cases that have to do with the scope of control of concentration.
However, the treatment of the problem of economic relations in cases
concerning the control of concentration and cases concerning the abuse of the
dominant position remains controversial. In particular, it is difficult in the
light of article 82 of the EC Treaty to consider that it is possible to apply a wide
definition of economic relations included in the sentence concerning Gencor
(64).
There is a principal difference between the concept, scope and prerequisites of

the control or concentration on the one hand, and the counteraction to anti-
competitive practices on the other. In procedures conducted on the basis of
article 82 of the EC Treaty, it is not sufficient to ascertain the existence of
a dominant position - one should also give evidence of its abuse. It is possible
to assume that the very structure of the market automatically results in the
creation of specific economic relations between enterprises operating there
but it is not permitted to assume only on the basis of that fact that the
existence of such a market structure is equal to the existence of abuses in the
scope of the above-mentioned economic relations.
Decisions in cases concerning the control of concentration refer to judgments

issued on the basis of article 82 of the EC Treaty. However, it is still unknown
whether it is possible in the procedures conducted on the basis of that article
to apply the decision concerning Gencor (64), where the structure of the
market is identified with economic relations. According to many
commentators, the concept of collective dominance can be understood in the
same way in the light of both these regulations with no prejudice to
differences in its application. The criticism of the Commission’s decision
concerning Airtours (63) expressed by the CFI showed for the first time that
excessive freedom in the application of the concept of collective dominance
can lead to a violation of the legal safety of entrepreneurs operating in
oligopoly markets.
42
The list of abbreviations used in this document:
the EC Treaty - The Treaty establishing the European Community dated March 25,
1957 i.e. the Rome Treaty, one of the founding treaties of the European
Communities, the basic sources of Community law;
Commission - European Commission, the chief executive agency of European
Communities, responsible, among other things, for the supervision of the
application of Community law;
CFI/Court - Court of ‘First Instance’, the court of European Communities created
pursuant to the Uniform European Act dated 1986; it settles, among other
things, disputes between legal persons, individuals and Community agencies
in the scope of application of Competition law;
ECJ/Tribunal - European Court of Justice, the court of European Communities
established pursuant to the Treaty establishing the European Coal and Steel
Community, i.e. the Paris Treaty dated 1951; it is, among other things, the
court of appeal with regard to decisions of the Court of ‘First Instance’;
Regulation No 4064/89 - the Regulation of the European Council concerning the
control of concentrations between undertakings dated December 21, 1989
legal act being the basis for control of the concentration of undertakings
operating in the common market;
OJ - Official Journal of the European Communities;
ECR - European Court Reports;
CMLR - Common Market Law Reports.
43
Texts and materials used to prepare this outline:

1. Case law:
proceedings under articles 81 and 82 of the EC Treaty
1.1 Commission decisions:
(1) Aeroports de Paris/Alpha Flight Services (Case IV 35.613) [2002] OJ C323/20
(2) Akzo Chemie BV Re (Case IV 30.698), [1986] CMLR D35; [1985] OJ L374/1
(3) Re British Telecom (Case IV 29.877), [1983] 1 CMLR 457; [1982] OJ L 360/36
(4) British Brass Nabd Instruments v Boosey & Hawkes (Case IV 32.279), [1988] 4 CMLR 67; [1987] OJ
L286/36
(5) Cewal (Case IV 33.48 - 33.450), [1983] OJ L34
(6) Dyestuffs: Re Aniline Dyes Cartel [1969] CMLR D23; [1969] OJ L195/11
(7) Flopak Italia Srl v Tetra Pak (Case IV 31043), [1992] OJL72/1; [1992] 4 CMLR 551
(8) General Motors Continental NV (Case IV/28.851), [1975] 1 CMLR D20; [1975] OJ L29/14
(9) GVL (Case IV 29.839), [1981] OJ L370/P49
(10) Hugin v Liptons (Case IV 29.132), [1978] OJ L022
(11) Hilti AG v Eurofix Bauco (Case IV 30.787), [1988] OJ L6519, [1989] 4 CMLR 677
(12) Italian Flat Glass Societa Italiana Vetro (Case IV 31.906), [1990] 4 CMLR 535, [1989] OJ L33/44
(13) Irish Continental Group v CCI Morlaix (Case IV/35.388), [1995] 5 CMRL 177
(14) Irish Sugar plc. (Case IV 34.621, 35.059/F3), [1999] 5 CMLR 1300
(15) Napier Brown-British Sugar (Case IV 30.178), ), [2000] ECR II
(16) Nedelandsche Banden-Industrie Michelin (Case IV 29.491), [1983] OJ L353/33
(17) Sea Containers Ltd v Stena Sea Link Ports and Stena Sealink Line (Case IV/34.689) [1994] OJ L15/8
[1995] 4 CMRL 84
(18) Suiker Unie (Case IV/26.918), [1973] OJ L140 P/17
(19) Tetra Park International S.A (Case IV 31.043), [1992] 4 CMLR 551, [1992] II OJ L72/1
(20) United Brands Company and United Brands Continental BV Re [1976] 1 CMLR D28
(21) Re Zoja v Commercial Solvents Corpn (Case IV 26.911), [1973] CMLR 850
1.2 Court of First Instance judgments:
(22) Aeroports de Paris v Comission (Case T-128/98) [2000] ECR II-3929
(23) BBC and BBC Enterprises Ltd v Commission (Case T-70/89), [1991] ECR II-535
(24) Compagnie Maritime Belge Transports SA, Compagnie Maritime Belge SA & Dafra Lines A/S v Comission
(Case T-24-6 & 28/93), [2000] ECR I-1365
(25) Gencor Ltd. v Commission (Case T-102/96), [1999] ECR II-753
(26) Italian Flat Glass : Societa Italiana Vetro v Comission (Cases - T-68 & 77-78/89), [1992] ECR I-1403
(27) Kish Glass & Co Ltd. v Komisja (Case T-65/96), [2000] ECR II-1885
(28) Napier Brown & Co. Ltd. v Commission (Case T-207/98), [2000] ECR II
(29) RadioTelefis Eireann (RTE) and Independent Television Publications Ltd. (ITP.) v Commission (Cases T-69
& 76/89), [1991] ECR II-485; [1991] 4 CMLR 586
(30) Tierce Ladbroeke SA v Commission (Case T-504/93), [1997] ECR II-923; [1997] 5 CMLR
(31) Tetra Pak International SA v Comission (Case T-83/91), [1994] ECR II-755
1.3 European Court of Justice judgments:
(32) Ahmed Saeed Flugreisen & Silver Line Reiseburo GmbH v Zentrale zur Bekampfung Unlauteren Wettbewerbs
eV (Case 66/86), [1989] ECR 803; [1990] 4 CMLR
(33) Akzo Chemie BV v Commission (Case C-62/86); [1991] ECR I-3359
(34) British Telecommunications Italy v Commission (Case 41/83); [1985] ECR 873; [1985] 2 CMLR 368
(35) BPB Industries plc British Gypsum v Commission (Case C-310/93P), [1985] ECR I-0865
(36) Compagnie Maritime Belge Transports SA, Compagnie Maritime Belge SA & Dafra Lines A/S v Comission
(Cases C-395&396/96P), [2000] ECR I-1365
(37) DIP SpA v Commune di Bassano del Grappa (Cases C-140-2/99), [1995] ECR I-3257
(38) Europeamballage Corporation and Continental Can Co. Inc. v Commission (Case 6/72), [1973] ECR-215;
[1973] CMLR 199
(39) Flopak Italia SRL Tetra Pak v Commission (Case C-333/94P), [1996] ECR I-5951; [1997] 4 CMRL 662
(40) General Motors Continental NV v Commission (Case 26/75), [1975] ECR 1367; [1976] 1 CMLR 95
(41) GVL v Comission (Case 7/82), [1983] ECR 483
(42) Hilti AG v Commission (Case C-30/89P), [1992] 4 CMLR 16
(43) Hilti AG v Commission (Case C-53/92P), [1994] ECR I-667; [1994] 4 CMLR 614
(44) Hugin Kassaregistser AB and Hugin Cash Registrers Limited v Commission (Case 22/78), [1979] ECR
44
1869; [1979] 3 CMRL 345
(45) Hoffman-La Roche & Co. AG v Commission (Case 85/76), [1979] ECR 461; [1979] 3 CMLR 211
(46) Istututio Chemioterapico Italiano SpA and Commercial Solvents v Commission (Case 6&7/73), [1974] ECR
223
(47) Michelin v Comission (Case C322/81), [1983] ECR 3461
(48) Municipality of Almelo v Energieberijf Ijsesemij (Case C-393/92), [1994] ECR I-1477
(49) Nederlandsche Banden -Industrie Michelin NV v Commission (Case 322/81), [1983] ECR 3461 [1985],
CMLR 282
(50) Oscar Bronner GmBh & co KG v Mediaprint Zeitungd und Zeitschiftenverlang Gmbh (Case C-7/97), [1998]
ECR I-7791
(51) RadioTelefis Eireann (RTE) and Independent Television Publications Ltd. (ITP.) v Commission (Cases C-241
& 242/91P), [1995] ECR I-743
(52) SAT Flgellschaft mbH v Eurocontrol (Case C-364/92), [1994] ECR-I 43, [1994] 5 CMLR 208
(53) Sugar Cartel Case: Suiker Unie v Comission (Case 40/73), [1975] ECR 1663
(54) Tetra Park International S.A. v Commission (Case C-333/94P), [1996] ECR I5951; [1997] 4 CMLR 662
(55) United Brands Company and United Brands Continental Bv v Commission (Case 27/76), [1978] ECR 207;
[1978] 1 CMLR 429
(56) Volvo AB v Erik Veng (Case 238/87), [1988] ECR 6211; [1988] 4 CMLR 122
(57) Zuchner Gerard v Bayerische Vereinsbank AG (Case 172/80), [1981] ECR 2021; [1982] 1 CMLR 313
proceedings under Regulation nr 4064/89
1.4 Commission decisions:
(58) Airtours/First choice (Case IV/M 1524), [2000] OJ L93/1
(59) Alcatel/AEG (Case IV/M 165), [1992] OJ C6
(60) Nestlé SA/ Source Perrier SA (Case IV/M24), [1992] OJ L356/1 [1993] 4 CMLR M17
(61) Gencor/Lonrho (Case IV M.619) [1997] OJ L11/30
(62) Kali&Salz/Mdk/Treuhand (Case IV/M.308), [1998] OJ C275
1.5 Court of First Instance judgments:
(63) Airtours/First Choice (Case T-342/99), ECR II-02585
(64) Gencor Ltd. v Commission (Case T-102/96), [1999] ECR II-753
(65) Société Commerciale des Potasses et de l’Azote and Entreprise Miniere et Chimique v Commission (Case T-
88/94), [1994] ECR II-263
1.6 European Court of Justice judgments:
(66) French Republic v Commission of the European Communities i Société Commerciale des Potasses et de l’Azote
(SCPA) and Entreprise Miniere et Chimique (EMC) v Commission of the European Communities (Cases C-
68/94 and C-30/95), [1998] ECR I-01357
2. Legal provisions:
- The Treaty establishing the European Community dated March 25, 1957 i.e. the Rome Treaty, one of
the founding treaties of the European Communities, the basic sources of Community law,
[10/11/1997] OJ C 340
- the Regulation of the European Council concerning the control of concentrations between
undertakings dated December 21, 1989 legal act being the basis for control of the concentration of
undertakings operating in the common market [30/12/1989] OJ L395
- Commission guidelines on market analysis and the assessment of significant market power under the
Community regulatory framework for electronic communications networks and services) 11/07/2002
[2002/C 165/03] OJ
3. Publications:
- Craig P., De Burca G.: ”EC Law-Text, Cases & Materials”, Clarendon Press, Oxford 2003
- Skoczny T.: ”Prawo konkurencji wspólnoty europejskiej- źródła tom 1 : Reguły generalne wybór
i opracowanie”, WNWZ Uniwersytetu Warszawskiego, Warszawa 2000
- Steiner J. & Woods L.: ”Textbook on EC Law”, Blackstone, Londyn 2000
- Olsson C.: ”Collective Dominance - Merger Control on Oligopolistic Markets”, Juridiska Institutionen
Handelshogskolan vid, GŲteborgs Universitet, 2000
- Neven D. J.: ”Collusion under Art.81 and the Merger Regulation”, opracowanie przygotowane na
prezentację na 3 Konferencji Nordyckiej dot. Polityki Konkurencji ”Zwalczanie karteli - dlaczego
i jak?”, Univeristy of Lausanne oraz CEPR, październik 2000
- Withers Ch. i Jephcott M.: ”Where to now for E.C. oligopoly control?”, [2001] European Competition
Law Review, Sweet&Maxwell Ltd (and Contributors)
- Kloosterhuis E.: ”Joint Dominance and the Interaction between Firms”, [2001] European Competition
Law Review, Sweet&Maxwell Ltd (and Contributors)
45
- Niels G.: ”Collective Dominance: More than Just Oligopolistic Interdependence”, [2001] European
Competition Law Review, Sweet&Maxwell Ltd (and Contributors)
- Dussart-Lefret C.: L’arret Aéroports de Paris, Competition Policy Newsletter, number 2, June 2001
- Justyński J.: ”Podstawy prawne polityk gospodarczych”, TNOiK Toruń 2001
- Lasok D.: ”Zarys prawa Unii Europejskiej, cz. druga: prawo gospodarcze”, TNOiK Toruń 1998
46

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OFFICE FOR COMPETITION AND CONSUMERS’ PROTECTION

Abuse of a dominant position

Abuse of a dominant position

Publication financed with the support from European Union

OFFICE FOR COMPETITON AND CONSUMERS' PROTECTION

© Copyright by Office for Competition and Consumers’ Protection

1. Article 82 of the EC Treaty - basic issues 5

The basic objective of provisions included in article 82 of the EC Treaty is to

Article 81 of the EC Treaty prohibits contracts, decisions and concerted

”Any abuse by one or more undertakings of a dominant position with a common

Such abuse may, in particular, consist in:

a) directly or indirectly imposing unfair purchase or selling prices or unfair trading

According to the decisional practice and judgments of the European

In their decisions and judgments based on article 82 of the EC Treaty, the

1.1 Definition of the relevant market for the purposes of article 82

Firstly, an economic analysis of the market has to be conducted in order to

1.1.1 The product market

An example of the conduct in which the definition of the product market

United Brands, a company exporting bananas, was accused of various illegal

The Tribunal accepted the arguments presented by the Commission stating

”22. For the banana to be regarded as forming a market which is sufficiently

Another example illustrating the methodology applied by European

The Commission initiated procedures against the Michelin group in

Some examples of decisional practice and judgments of European agencies in

The Commission held Hugin guilty of the violation of article 82 of the EC

1.1.2 The geographical market

A material indicator of the geographical range of the market includes transport

The ECJ assumed the following attitude to this argumentation:

”44. The conditions for the application of Article 86 to an undertaking in

1.1.3 The temporal aspect

1.2 Definition of the dominant position for the purposes of article 82 of

”The dominant position referred to in this Article relates to a position of economic

ECJ judgments clearly show that an entrepreneur having the statutory

However, it has to be stressed here that there is no specified market share

1.3 Definition of abuse for the purposes of article 82 of the EC Treaty

Because of this, it is vital to define precisely what should be understood as

Firstly, it has to be decided who is covered by the protection pursuant to

Secondly, it is assumed that, although having a dominant position is not illegal

Finally, commentaries to the Treaty distinguish two types of situation, in

1.3.2 Examples of abuse of a dominant position in the light of the

(b) Refusal to supply as an abuse of a dominant position

Commercial Solvents Corporation (CSC) manufactured raw materials,

The issue described above is an excellent illustration of the problem of the

ECJ stated that the entrepreneur occupying a dominant position which

As a public unit rendering broadcasting services in Ireland, RTE reserved the

(c) Price discrimination as an abuse of a dominant position

The provision referred to also includes price discrimination that occurs if

Price discrimination can take different forms:

- it can be of a geographical nature, when the discriminating entrepreneur

The Tribunal extensively examined price discrimination, among other things,

The Tribunal concluded that the concept of abuse of a dominant position is

Akzo, a company with headquarters in Holland, and ECS, a smaller company

The Tribunal stated that article 82 of the EC Treaty prohibits a dominant

Regardless of the doubts presented above, the judgments of European courts

(e) Discrimination of independent undertakings in relation to affiliated

The approach of European competition authorities to this problem is

The concept of collective dominance was introduced by the Commission in

Although the issue of control of concentration is beyond the subjective scope

The theory of collective dominance is applied ex ante on the basis of

2.1.1 Nestlé/Perrier - the first decision of the Commission concerning

Having examined the consequences of the transaction in question, the

number of sources of mineral water. After the transaction, the degree of

2.1.2 Italian Flat Glass - development of the concept of collective