102 Bellamy Child

KluwerCompetitionLaw
Document information 10. Article 102

Rhodri Thompson ; Christopher Brown ; Nicholas Gibson
Publication 1. Introduction
BELLAMY & CHILD European
Union Law of Competition
(Eighth Edition) (a) Generally
10.001 Article 102. Article 102 TFEU provides:
'Any abuse by one or more undertakings of a dominant position within the
Jurisdiction internal market or in a substantial part of it shall be prohibited as
European Union incompatible with the internal market insofar 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 other
Topics unfair trading conditions;
Antitrust (b) limiting production, markets or technical development to the prejudice
of consumers;
(c) applying dissimilar conditions to equivalent transactions with other
Bibliographic trading parties, thereby placing them at a competitive disadvantage;
reference (d) making the conclusion of contracts subject to acceptance by the other
parties of supplementary obligations which, by their nature or according
Rhodri Thompson,
Christopher Brown, et al., to commercial usage, have no connection with the subject of such
'10. Article 102', in David P 860 contracts.'
Bailey and Laura Elizabeth 10.002 Article 102 and the internal market. Article 102 TFEU has been interpreted and
John (eds), BELLAMY & applied by the EU Courts to achieve the objectives and tasks of the EU, (1) one of which is
CHILD European Union Law to establish an internal market. (2) The internal market includes a system ensuring that
of Competition (Eighth competition is not distorted (3) and Article 102 is one of the competition rules which are
Edition), 8th edition necessary for the functioning of that internal market. (4) The Commission has stated that
(© Oxford University Press; its enforcement activity in relation to exclusionary conduct by dominant undertakings
Oxford University Press seeks to safeguard the competitive process in the internal market. (5)
2018) pp. 859 - 970
10.003 Scope of Article 102. There are conflicting views as to the appropriate legal limits
that should be imposed upon the behaviour of dominant undertakings. (6) The case law
imposes a 'special responsibility' (7) on dominant undertakings not to allow their conduct
to impair genuine undistorted competition on the internal market. The case law also
acknowledges, however, that dominant undertakings are entitled to compete 'on the
merits' in relation to pricing, contractual conditions, output, quality, innovation, cost
reduction, efficiency and so on. In Post Danmark I (8) and Intel v Commission (9) the Grand
Chamber of the Court of Justice held that 'competition on the merits may, by definition,
lead to the departure from the market or the marginalisation of competitors that are less
efficient and so less attractive to consumers from the point of view of, among other
things, price, choice, quality or innovation.' A difficulty in practice is that competition on
the merits and exclusionary conduct of dominant undertakings can often look alike.
Moreover, the same practice may give rise to both harmful and beneficial effects, making
it even more difficult to distinguish between conduct that should be condemned as an
abuse of a dominant position and conduct that should not. Given this, and the
desirability of establishing clear and administrable legal standards, there have been
extensive efforts in recent years to develop more refined criteria to determine whether
conduct is unlawful under Article 102. (10)
10.004 The Commission's Article 102 Enforcement Priorities Guidance. In February 2009
the Commission adopted its Guidance on the Commission's enforcement priorities in
P 861 applying Article 102 to abusive exclusionary conduct by dominant undertakings ('the
Article 102 Enforcement Priorities Guidance'). (11) This is not intended to be a statement
of the law; (12) rather it aims to provide greater clarity and predictability as regards the
framework of analysis that the Commission uses to select cases. (13) It introduced a more
economics-based approach to the Commission's enforcement of Article 102 while
purporting to remain within the constraints of the case law of the EU Courts. (14) It
applies only to exclusionary conduct and to conduct of a single dominant firm. (15) The
Article 102 Enforcement Priorities Guidance sets out the Commission's approach to
assessing market power; (16) a general description of what is termed 'anti-competitive
foreclosure', that is to say, foreclosure leading to consumer harm that is likely to result in
intervention by the Commission, and the factors that are relevant in assessing whether
such foreclosure is likely to occur; (17) a description of price-based exclusionary conduct
including the cost benchmarks that the Commission intends to use; (18) and how the
Commission assesses claims by dominant undertakings that their conduct is objectively
justified. (19) This general discussion of the Commission's enforcement principles is
followed by a section dealing with specific abuses, namely exclusive dealing (including
1
© 2023 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
rebates); tying and bundling; predation; and refusal to supply and margin squeeze. (20)
The EU Courts are, of course, not bound by the Commission's Article 102 Enforcement
Priorities Guidance. (21) That said, in recent cases involving margin squeeze, rebates and
price discrimination, the EU Courts emphasised the need to consider the actual or likely
effects on competitors as efficient as the dominant undertaking as well as efficiencies
P 862 when determining whether a dominant position has been abused. (22) In particular, the
Court of Justice has said that Article 102 does not 'seek to ensure that competitors less
efficient than the undertaking with the dominant position should remain on the market'.
(23)
10.005 Constituent elements of Article 102. Following the wording of the Treaty, the
prohibition contained in Article 102 comprises five constituent elements:
(1) an abuse;
(2) by one or more undertakings;
(3) of a dominant position;
(4) within the internal market or a substantial part thereof;
(5) insofar as it may affect trade between Member States.
In practice, the existence of a dominant position is considered before the question of any
abuse, and these are invariably the main (and often contentious) issues under Article 102:
'dominance' is discussed in Section 2 and abuse is examined in Section 3, below. The
concepts of 'effect on trade between Member States' and 'undertaking' were considered,
respectively, in Chapters 1 and 2, above. Civil remedies before national courts for breach
of Article 102 will be considered in Chapter 16, below.
10.006 Undertakings: imputation of subsidiary's conduct to parent. The question of
whether an infringement of Article 102 by a subsidiary company may be imputed to its
parent is a question of fact. (24) Many of the principal cases under Article 102 have
involved the parent company in addition to the subsidiary, since the policies or conduct
in dispute were plainly attributable to the parent company. Where the parent company
is responsible for the definition and implementation of the undertaking's overall policy,
it can be held liable for the behaviour of its subsidiaries. Thus, the Commission
addressed its infringement decision to the parent company in Continental Can (US
P 864 parent), (25) Commercial Solvents (US parent), (26) Hoffmann-La Roche (Swiss parent),
(27) Hilti (Liechtenstein parent), (28) Tomra (Norwegian parent), (29) Clearstream
(Luxembourg parent) (30) and Google (US parent). (31)
10.007 A substantial part of the internal market. For Article 102 to apply, one or more
undertakings must hold a dominant position 'within the internal market or in a
substantial part of it'. (32) In Suiker Unie v Commission the Court of Justice stated:
'For the purpose of determining whether a specific territory is large enough to
amount to “a substantial part of the [internal] market” within the meaning of
Article [102] of the Treaty the pattern and volume of the production and
consumption of the said product as well as the habits and economic
opportunities of vendors and purchasers must be considered.' (33)
To determine whether the dominant position is held in a 'substantial' part of the internal
market, it is necessary to take into account the geographic area in which the dominant
position is alleged to exist and the product market in that area. Member States will
usually be 'substantial' parts of the internal market. (34) More generally, what is
'substantial' is a question of fact in each case. (35) For example, the Court of Justice has
held that the port of Genoa is a substantial part of the internal market, having regard to
the volume of traffic and its importance. (36)
10.008 The need to demonstrate both dominance and abuse. Article 102 does not
prohibit dominance as such. As the Court of Justice held in Michelin:
'A finding that an undertaking has a dominant position is not in itself a
recrimination but simply means that, irrespective of the reasons for which it
has such a dominant position, the undertaking concerned has a special
responsibility not to allow its conduct to impair genuine undistorted
competition on the [internal] market.' (37)
The corollary of there being no infringement by virtue of being dominant is that there is
no infringement by virtue of committing an abuse: conduct that would be abusive if an
undertaking were to hold a dominant position does not infringe Article 102. (38) The Court
of Justice made this point in Alsatel, ruling that 'contractual practices, even if abusive
ones, on the part of an undertaking … do not fall within the prohibition in Article [102]
where that undertaking does not occupy a dominant position on the relevant market'. (39)
10.009 Link between dominant position and abuse. It is not necessary to demonstrate a
causal link between a dominant position and the abuse of that position. That is to say, it
has been held that behaviour can be abusive even though it does not result from, or is
not made possible by, the market power bestowed by a dominant position. (40) Certain
types of contractual terms may be abusive even if they are included at the request of the
customer. (41) In some cases, however, the effects of abusive conduct may be felt on a
2
different market from the one in which the undertaking is dominant and on which its
conduct takes place. (42) In exceptional cases involving closely related markets, the
abusive conduct may take place and its effects arise on a different market from that on
P 865 which the undertaking holds a dominant position. In TeliaSonera (43) the Court of
Justice was considering a preliminary reference relating to an alleged margin squeeze
abuse (44) by an undertaking dominant on the wholesale market for ADSL input services.
The Swedish Court asked whether it was necessary to establish that the undertaking was
also dominant in the retail market for broadband connection services to end-users
before the abuse could be established. The Court held it was not and that certain
conduct on markets other than the dominated markets and having effects either on the
dominated markets or on the non-dominated markets themselves can be categorised as
abusive. (45) The Court said that such a situation could arise where the conduct of a
vertically integrated dominant undertaking on an upstream market consists in
attempting to drive out at least equally efficient competitors in the downstream market,
in particular by applying margin squeeze to them. Similarly, in AstraZeneca the
Commission considered that behaviour may be abusive if it is implemented in a different
geographic market from that where the undertaking is dominant. (46) In cases involving a
collective dominant position, it is not necessary for all the undertakings holding that
position to engage in the abuse; it is possible for there to be an individual abuse of a
collective dominant position. (47)
(b) Relationship between Article 102 and other competition rules

(i) Article 101
10.010 Generally. In Tetra Pak I the General Court observed that, whilst Articles 101 and
102 are complementary, inasmuch as they pursue the common general objective of
ensuring that competition in the internal market is not distorted, 'they none the less
constitute, in the scheme of the Treaty, two independent legal instruments addressing
different situations.' (48) The focus of Article 102 is upon the control of unilateral
P 866 behaviour of dominant undertakings but it may also apply to an agreement where it
involves a dominant undertaking and the agreement constitutes an abuse. In Ahmed
Saeed? (49) the Court of Justice said that, while Article 101 is normally the relevant
provision where two or more undertakings engage, by concerted action, in price-fixing or
other restrictions of competition on the relevant market, there may be circumstances
where Article 102 is the more relevant provision even in such cases. (50)
10.011 Circumstances where both Articles 101 and 102 may apply. For Article 102 to apply
as well as Article 101, something more than just the making of the agreement is needed: in
Ahmed Saeed, (51) as would often be the case, the relevant additional factor was the
pressure brought to bear by the dominant undertaking on its competitors. In Tetra Pak I
(52) the General Court rejected the argument that for Article 102 to apply as well as Article
101 there must be a supplementary element external to the agreement. Although
recognising that in Ahmed Saeed the Court of Justice had referred to the existence of a
supplementary element, the General Court found that the additional element was: 'the
fact that Tetra Pak's acquisition of the exclusive licence had the practical effect of
precluding all competition in the relevant market'. (53) Separately, an agreement
between parties may be relevant to the application of Article 102 in a quite different way,
as a 'link' between one or more undertakings when determining whether they hold a
collective dominant position. That distinct aspect is discussed in paragraphs 10.051 et
seq, below.
10.012 Article 102 and the application of Article 101(3). In Tetra Pak I (54) the General
Court upheld the decision of the Commission condemning as abusive the acquisition of
an exclusive patent licence by Tetra Pak, which was dominant in the market for
equipment for the aseptic packaging of UHT-treated milk, to which the patented
technology related. The patent licence fell within the terms of the block exemption
Regulation applicable at the time. The General Court found that the application of the
P 867 block exemption did not preclude the application of Article 102. (55) In Compagnie
Maritime Belge v Commission (56) the Court of Justice dismissed the argument that,
because a practice was block exempted, it could not infringe Article 102 unless and until
the block exemption had been withdrawn. The Court stated:
'… the fact that operators subject to effective competition have a practice
which is authorised does not mean that adoption of the same practice by an
undertaking in a dominant position can never constitute an abuse of that
position.' (57)
In Atlantic Container Line v Commission the General Court acknowledged that if the
Commission decided that an agreement involving a dominant undertaking satisfied the
conditions in Article 101(3), then it could not subsequently hold that agreement to be an
abuse of a dominant position, at least in the absence of a change in the facts or the law.
(58) In the same case, however, the General Court considered that a dominant
undertaking may have to rely on a narrower range of arguments to justify its conduct
objectively under Article 102 than would otherwise be available under Article 101(3). (59)
More recently, the Court of Justice has recognised that a dominant undertaking may seek
to demonstrate that the exclusionary effect of its behaviour was counterbalanced,
3
outweighed even, by advantages in terms of efficiency that also benefit consumers—an
approach which is not that dissimilar to the analytical framework under Article 101(3).
(60)
(ii) Article 106
10.013 Public undertakings and undertakings granted special or exclusive rights. A
dominant position may be conferred by statute or administrative action upon a public
body or upon undertakings to which Member States grant special or exclusive rights.
Article 106(1) TFEU imposes a duty on Member States not to adopt or maintain in force
any measure which could deprive the competition rules, including Article 102, of their
effectiveness. Article 106(2) provides that an undertaking entrusted by the State with the
operation of services of general economic interest is still subject to Article 102, so long as
it is not shown that the prohibition is incompatible with the performance of its tasks.
These provisions must be read with Article 14 TFEU, which requires Member States to
ensure that services of general economic interest (for example, a universal postal
service) 'operate on the basis of principles and conditions which enable them to fulfil
their missions'. Although a State may create a dominant position, it cannot do so in such
a way that the undertaking in question inevitably commits abuses. (61) Article 106 is
P 868 discussed in Chapter 11, below.
(iii) The Merger Regulation

10.014 Generally. Article 2(3) of the Merger Regulation (62) provides that a concentration
that would significantly impede effective competition, in the internal market or in a
substantial part of it, in particular as a result of the creation or strengthening of a
dominant position, shall be declared incompatible with the internal market. Recital (26)
of the Merger Regulation states that a significant impediment to effective competition
generally results from the creation or strengthening of a dominant position. (63) That
being so, the substantial body of decisional practice, particularly in the areas of market
definition and assessment of dominance, can be valuable for interpreting and applying
Article 102. There have been many more cases under the Merger Regulation in which the
Commission has been required to conduct at least preliminary market analyses than
under Article 102. There is no direct 'read-across', however, between market definitions
and/or findings of dominance under the Merger Regulation and such findings under
Article 102. (64) Given the prospective analysis required for the purposes of merger
control and the need to analyse the structure of the market and of competition prevailing
at the time the Commission adopts each decision, (65) only limited guidance can be
derived from earlier cases. Separately, in assessing whether the merged entity is likely in
the future to act in an anti-competitive manner, the Commission must consider the fact
that the entity might be deterred from such conduct because it might be unlawful under
Article 102. (66)
(iv) Relationship to other provisions of EU law
10.015 Non-discrimination and the maintenance of the internal market. The Court of
Justice has consistently stated that Article 102 is to be construed as an integral part of EU
law, having regard to the objectives of the Treaties. (67) Of these wider objectives, the
most important are the prohibition of discrimination on grounds of nationality and the
creation of the internal market. Article 18 TFEU prohibits discrimination on grounds of
nationality in wide terms. In the context of Article 102, there have been numerous cases
where a dominant undertaking has been found guilty of discriminating between its
customers or competitors on grounds of nationality. (68) Classifying such conduct as
abusive, even where it has not been demonstrated that the discrimination resulted in
P 869 competitive disadvantage, reflects the central place that the concept of non-
discrimination on grounds of nationality plays within EU law as a whole. (69)
2. Dominant Position
(a) Generally
10.016 Definition of dominance. The Court of Justice has defined a dominant position (70)
under Article 102 as:
'… a position of economic strength enjoyed by an undertaking which enables it
to hinder the maintenance of effective competition on the relevant market by
allowing it to behave to an appreciable extent independently of its
competitors and customers and ultimately of consumers.' (71)
10.017 Analysis of dominance. The EU Courts and the Commission have tried to give the
legal term 'dominant position' an economic meaning; the Court of Justice refers to a
'position of economic strength' (above) and the Commission defines dominance by
reference to the economic concept of 'substantial market power'. (72) Determining
whether an undertaking holds a dominant position normally involves two steps:
(a) market definition: dominance cannot be assessed in a vacuum; it must be assessed
within the relevant product and geographic market(s) (which must constitute a
substantial part of the internal market);
4
(b) market power: assessing the degree of market power (or economic strength)
enjoyed by the undertaking on the relevant market. This stage involves
consideration of various factors, such as market share, barriers to entry, and
competitive constraints.
The first step, the definition of the relevant market, has been addressed in Chapter 4,
above. This Section is concerned with the second step, the assessment of 'substantial
market power', which is the equivalent economic concept for a dominant position.
10.018 Temporal scope of a finding of dominance. A finding of a dominant position by the
Commission (or NCA or national court) does not have binding legal effects in the sense
P 870 that it does not affect the legal position of the undertaking. (73) This is because the
finding will be based on an analysis of the structure of the market and of competition
prevailing at a point in time. The General Court has said that any subsequent decision
applying Article 102 must define the relevant market again and make a fresh analysis of
the conditions of competition. (74) Nevertheless a finding of a dominant position may
have practical effects for the undertaking in question insofar as Article 102 imposes
constraints on its conduct. (75)
10.019 Degrees of market power. Article 102 does not envisage any variation in the
degree of market power or the extent of a dominant position. (76) The prohibition is
unitary in form and, as a matter of law, either an undertaking holds a dominant position
at a given time or it does not. As a matter of fact, however, not all dominant firms are
alike since, for example, they may possess differing degrees of market power. The logical
implication is that, although all undertakings found to be dominant on a relevant market
are subject to the special responsibility imposed by Article 102, the precise scope and
extent of such obligations may depend on the particular circumstances of the market on
which that finding is made, a point made by the Court of Justice in Compagnie Maritime
Belge v Commission. (77) In particular, there is authority for the proposition that there
may be cases of 'super-dominance' (78) where conduct will be subject to stricter
standards in order to protect residual competition on a market where one undertaking
enjoys a degree of market power approaching a position of monopoly. (79) In TeliaSonera
the Court of Justice clarified that the extent of a dominant position can be important
when assessing the extent of the effects of the conduct of the undertaking concerned (as
opposed to the question of whether the abuse exists). (80) The Court of Justice made the
same point in its judgments in Post Danmark II (81) and in Intel v Commission, (82) stating
that the extent of the dominant position was relevant to whether or not the rebates in
question were capable of restricting competition and, in particular, of producing
foreclosure effects. As one might expect, the conduct of an undertaking with a
particularly strong market position is likely to have a strong effect on the market, and
P 871 vice versa.
10.020 Indicators of dominance. The existence of a dominant position may derive from
several factors which, taken separately, are not necessarily determinative. (83) There are
typically three main factors to be considered when assessing the degree of market power
of a single undertaking on a relevant market:
(a) the market position of the undertaking itself and its competitors. The market shares
of the allegedly dominant undertaking and of its competitors provide a common
starting point for the analysis. They provide an indication of the degree of actual
competition on the relevant market. The importance of market shares may vary
from one market to another, although the possession of a very large market share
over time can be, save in exceptional circumstances, evidence of the existence of a
dominant position. (84) In general, however, it is also necessary to look at other
factors that support a finding of dominance, such as the nature of the market and
the competitiveness of the other participants on that market; (85)
(b) barriers to expansion, entry and exit. Barriers to expansion and entry are crucial to
the analysis of dominance as they often affect the extent to which an undertaking
can exercise market power. If barriers to expansion and entry are low, any attempt
to engage in exclusionary conduct and increase prices would be constrained
because it would trigger new entry that would dissipate the hoped-for profits.
Conversely, high barriers to expansion and entry tend to support a finding of market
power;
(c) countervailing power. Evidence of the ability and incentive of one or more
competitors and/or counterparties to constrain the conduct of the allegedly
dominant undertaking is a relevant consideration. The question is whether the
degree of countervailing power from competitors, customers and/or consumers is
sufficient to offset the market power of the allegedly dominant undertaking to mean
that there is no dominant position.
There are often strong correlations between these three factors. For example, a very high
market share held over several years will tend to suggest that there are substantial
barriers to entry and may also indicate that there are few actual or potential competitors
on that market. (86) However, for the purposes of analysis it is appropriate to consider
each factor in turn.
(b) The market position of the undertaking itself and its competitors
5
10.021 Market share as an indicator of dominance. In determining whether an
undertaking holds a dominant position, the starting point is often to identify the market
share of the undertaking in question, since the existence of very large market shares is an
P 872 important factor in establishing dominance. (87) The reason is that:
'An undertaking which has a very large market share and holds it for some time
by means of the volume of production and the scale of the supply which it
stands for — without those having much smaller market shares being able to
meet rapidly the demand from those who would like to break away from the
undertaking which has the largest market share — is by virtue of that share in a
position of strength which makes it an unavoidable trading partner and which
already because of this secures for it, at the very least during relatively long
periods, that freedom of action which is the special feature of a dominant
position.' (88)
10.022 Caution about market shares. In its Article 102 Enforcement Priorities Guidance,
the Commission states that market shares 'provide a useful first indication' of the market
structure and the relative importance of the different undertakings on the market, but
that market shares should be interpreted in the light of the dynamics of the market and
the extent to which products are differentiated. (89) Possession of a very large market
share is seldom, if ever, a proper substitute for a full economic analysis of an
undertaking's market strength for four reasons. (90) First, even if the market share figures
are reliable, they provide little information about the competitive process without an
understanding of the reasons for, and the pressures determining, the output and price
decisions made by the firms in the market. (91) Secondly, even if the relevant market has
been defined correctly, market share figures do not show relative efficiencies and do not
necessarily show that similar market shares can or will be sustained in the future. Thirdly,
market share figures measure actual, not potential, competition, whereas the decisions
that any firm makes may be influenced by potential competitors who have not yet
entered the market but who would do so if a profitable opportunity were to arise.
Fourthly, the market position of buyers may constrain the ability of the allegedly
dominant undertaking to act independently of their wishes. (92) Notwithstanding this
note of caution, in AstraZeneca the General Court stated that 'the Commission could not
disregard the importance that had to be attached to AZ's generally very large market
share throughout the entire relevant period in all the countries concerned'. (93)
10.023 Measurement of market shares. Market shares are generally measured by value
and volume; where the relevant products are heterogeneous with varying levels of prices,
P 873 shares by value may be the more reliable indicator of market strength. (94) The
analysis of market shares involves examination of absolute and relative levels and of
changes, if any, over time. Moreover, the concept of the 'unavoidable trading partner' (95)
invites an examination of the stability, or instability, of trading relations between
suppliers and their customers. In a market in which demand increases slowly and no
substitute products are developed, and in which one firm has far outdistanced its rivals
and maintained a high market share, the dominant firm may well have become an
'unavoidable trading partner', reasonably secure in the knowledge that existing
competitors cannot, and potential competitors would not, seek to mount an attack on
that established position. On the other hand, the opposite may be the case on an
emerging market, where even a very high initial market share may be vulnerable to
challenge from competing suppliers. (96)
10.024 Market share levels. A market share of 100 per cent is a clear and obvious
indication of the existence of a dominant position, at least in the absence of low barriers
to entry and expansion and/or strong countervailing buyer power. (97) A dominant
position is not confined, however, to positions of monopoly and quasi-monopoly; a
dominant position may exist where there is 'lively competition'. (98) Since the early and
leading case of Hoffmann-La Roche v Commission (99) in which the Court of Justice
considered the issue of market shares in respect of a series of different markets, it has
been clear that the significance of market shares is relative to the overall market
structure. For example, the Court found that market shares over a three-year period
ranging between 75 per cent and 87 per cent were 'so large that they are in themselves
P 875 evidence of a dominant position'. (100) Further, a market share of 47 per cent in a
'narrow oligopolistic market', in which the shares of the other producers were 27 per cent,
18 per cent, 7 per cent and 1 per cent, 'proves that [Roche] is entirely free to decide what
attitude to adopt when confronted by competition'. (101) By contrast, in another market,
the Court of Justice found that a market share of 51 per cent in a single year, 1974,
constituted 'insufficient evidence of the existence of a dominant position', (102) taking
account of the fact that Roche's shares had been significantly lower over the previous two
years (in 1972 28.9 per cent by value and only 18.9 per cent by volume). (103) Indications
in subsequent cases in relation to levels of market share include the following:
(i) in ICI, the General Court held that, in the absence of exceptional circumstances, it
followed from an 'historic market share of more than 90% … over the whole period
under consideration' that the company held a dominant position on the relevant
market; (104)
(ii) in Google, the Commission decided that market shares exceeding 90 per cent since
at least 2008 (2011 in the case of the Czech Republic) indicated that Google's search
6
engine held a dominant position in general internet search; (105)
(iii) in Intel, the Commission decided that market shares between 70 and 80 per cent
were a clear indication of dominance; (106)
(iv) in Michelin I, the Court of Justice held that a market share of 57 per cent to 65 per
cent on the market in new replacement tyres for heavy vehicles (compared with the
market shares of Michelin NV's main competitors of between 4 per cent and 8 per
cent) 'constitutes a valid indication of Michelin NV's preponderant strength in
relation to its competitors'; (107)
(v) in AKZO, a stable market share of 50 per cent over at least three years was held to
be evidence of the existence of a dominant position; (108)
(vi) in United Brands, the Court of Justice held that a market share of between 40 per
cent and nearly 45 per cent 'does not permit the conclusion that UBC automatically
controls the market. [The dominance] must be determined having regard to the
strength and number of the competitors'. (109) However, the Court went on to find
that that percentage represented a share several times greater than that of UBC's
competitors, the rest of whom were far behind. This, together with other factors,
afforded 'evidence of UBC's preponderant strength'; (110)
(vii) in Gøttrup-Klim, a case involving the application of Article 101 to a cooperative
purchasing association, the Court of Justice considered market shares of 36 per cent
in fertilizers and 32 per cent in plant protection products 'cannot on their own
constitute conclusive evidence of a dominant position'; (111)
(viii) in Metro, a 5–10 per cent share of a market for highly technical products which
appear to the majority of consumers to be readily interchangeable rules out the
existence of a dominant position. (112)
10.025 Market shares of competitors. In determining whether any particular level of
market share establishes dominance, the relationship between that share and the shares
of competitors in the market is important. The implications of a market share of, say, 40
per cent are likely to be very different in circumstances where there are two competitors
each with 30 per cent as compared with circumstances where no other competitor has
more than 10 per cent. This is a clear example of the overlap between issues relating to
the strength of the undertaking itself and the countervailing power of its competitors,
customers and suppliers, considered below. In AstraZeneca v Commission (113) the
General Court upheld the Commission's finding that the undertaking's share which was
much higher than those of its competitors was a relevant indicator of its market power
being 'out of all comparison' with other market players. In British Airways v Commission
P 876 (114) the General Court upheld the Commission's finding that British Airways (BA) was a
dominant purchaser in the United Kingdom market for the supply of travel agency
services to airlines although its market share was only 39.7 per cent because it still had a
'preponderant' share significantly larger than that of its five nearest rivals combined and
that BA enjoyed other advantages, in particular its slots at Heathrow airport, which were
not available to its competitors.
10.026 Stability of market shares. The persistence of a given market share over time can
be important in determining whether that share implies dominance. (115) No minimum
period has been stipulated over which a high and stable market share is indicative of
dominance, but a period of five years would probably afford sufficient evidence while
any period of less than three years, especially in a dynamic market, might be considered
too short for a high market share to be an indicator of dominance. In France Télécom v
Commission (116) the General Court rejected the contention that market shares were not a
reliable indicator of dominance in an emerging and fast-growing market since the market
did not show signs of marked instability. The fact that market shares may be declining
over time will also be relevant, although, as the General Court has held, 'a decline in
market shares which are still very large [over 90 per cent in the case in question] cannot
in itself constitute proof of the absence of a dominant position'. (117)
10.027 Market shares on bidding markets. Market shares are particularly uncertain
guides to the issue of dominance on markets characterised by the award of a limited
number of high-value contracts. On such 'bidding markets', the fact that a particular
company has had a number of recent 'wins' does not necessarily mean that one of its
competitors will not be successful in the next competition and increase its market share
P 877 considerably at one go. (118) In addition to the temporal aspect of such markets, it will
often be the case that the customers on such markets are substantial undertakings in
their own right with significant buyer power.
10.028 Market shares indicating dominance. In the light of the foregoing, the following
broad comments may be helpful:
i) market shares significantly and consistently above 50 per cent are likely to be
strong indicators of dominance save in exceptional market conditions;
ii) market shares above 40 per cent may be relevant and significant for the purposes
of finding dominance, depending upon: (i) changes in the absolute level over time;
(ii) the level relative to that of the competitors closest to the undertaking alleged to
be dominant; and (iii) the presence of other factors tending to entrench the leading
position or, conversely, to threaten it; (119)
7
iii) market shares varying between 30 per cent and 40 per cent would require evidence
of substantial disparities in market share, significant impediments to entry, and so
on, before dominance could be established. The Commission's experience suggests
that dominance is not likely if the undertaking's market share is below 40 per cent
in the relevant market; (120)
iv) market shares below 30 per cent in a correctly defined market would not be
evidence of a dominant position save in wholly exceptional circumstances.
10.029 Overall size and strength. It may be relevant to compare the overall economic and
commercial strengths of the undertaking alleged to be dominant and those of its
competitors. In Michelin I, the Court of Justice took into account 'the advantages which
P 879 [Michelin and its competitors] may derive from belonging to groups of undertakings
operating throughout Europe or even the world'. (121) In AstraZeneca v Commission the
General Court noted that AstraZeneca's superiority in terms of financial resources was
derived almost exclusively from its pharmaceutical business, on which it also focused
almost all its resources, whereas its competitors had more limited resources which were
not devoted exclusively to their pharmaceutical business. The Court held that the
superiority of the company's R&D efforts was also relevant for assessing its position
relative to its competitors on the market. Although these facts were not sufficient in
themselves to indicate dominance, they constituted a series of relevant indicia which
permitted the inference that AstraZeneca had resources superior to those of its
competitors such as to reinforce its market position in relation to them. (122) In
Hoffmann-La Roche v Commission the Court of Justice disagreed with the Commission that
a relevant factor in support of a finding of dominance in the various markets for vitamins
was that Roche was the world's largest manufacturer of vitamins and pharmaceuticals.
(123) Adding in resources that were not employed in the production or supply of goods
within the relevant market was not, on the facts of that case, material. In some cases it
may be seriously misleading to add together resources used for different purposes and
different markets and seek to infer dominance from the aggregate size of the undertaking
in question. (124) In Hoffmann-La Roche, however, the Court of Justice stated that vertical
integration could be regarded as one of the factors contributing to the existence of a
dominant position. (125)
10.030 Incumbency and 'first mover advantage'. The established position of an
incumbent undertaking on the market can support a finding of dominance. It may be
difficult to compete effectively with an undertaking that was the first to bring a product
to market. This may be the case in particular if buyers show loyalty to the first mover's
product and there is a degree of customer inertia in switching to, or even trying out,
competing products. (126) The existence of such a 'first mover advantage' may have the
effect of increasing the need for advertising and other promotional activities; these are
sunk costs which cannot be recovered on exit from the market and they thus discourage
market entry. (127) Separately, a first mover advantage may arise in markets in which a
company needs to secure a 'critical mass' of customers in order to benefit from network
effects and to achieve as low and efficient costs as the incumbent undertaking. (128)
(c) Barriers to entry and expansion

10.031 Generally. Where the undertaking under consideration has a high market share, it
is important to consider how quickly this share could be eroded by existing competitors
increasing their output or by new competitors entering the market in response to any
attempt to raise price. The expression 'barriers to entry and expansion' is short-hand for
the various difficulties which competing undertakings may face in entering a market.
These difficulties do not have to be absolute but must materially impede an actual
competitor in seeking to compete with the market leader and/or deter any actual or
potential competitor from seeking to enter or expand its competing business to provide
effective competition. Such difficulties may result from technical resources, economies of
scale, intellectual property rights or other attributes of the putatively dominant
undertaking. (129)
10.032 Barriers to entry and definition of the relevant market. Consideration of barriers
to entry may be relevant to various stages of the analysis under Article 102, including at
the stage of defining the relevant market as well as in the assessment of market power. As
discussed in Chapter 4, above, supply-side substitutability—the possibility that
alternative suppliers can switch their production to make products which compete with
those of the putative dominant company—is an essential factor in the definition of the
relevant market. But where such switching is not so straightforward as to justify a wider
relevant product market, the potential for market entry may still exercise a competitive
constraint on the allegedly dominant undertaking. The Commission's Market Definition
Notice suggests that potential competition will generally not be considered in the
context of market definition but rather as part of the analysis of dominance, but adds
that the Commission may also treat barriers to entry as relevant to the geographic
market assessment. (130) Some of the commonly identified barriers are discussed below.
10.033 Economies of scale and fixed costs. A dominant undertaking may benefit from
economies of production where lower or minimised average costs are achieved at higher
levels of production. In Intel (131) the Commission noted not only that lower costs
depended on high factory capacity use but that the levels of production needed to
8
achieve competitive cost levels were high, relative to the overall size of the market:
Intel's competitor, AMD, supplied a significant share of the market from just one
production facility. The fact that the minimum efficient scale of production was high
relative to overall market demand amounted to a barrier to entry. Similarly, in Telefónica
P 880
de España v Commission (132) the General Court upheld the Commission's finding that
Telefónica's dominant position in the regional wholesale market partly derived from
economies of scale and scope of a magnitude that was not available for alternative
operators. (133) In each case it will be important to analyse whether the scale of
production precludes effective entry and/or expansion by competitors. (134) If the
relevant activities can be effectively conducted by competitors operating efficiently but
on a smaller scale, dominance may not be established. Where a high proportion of the
costs of production are fixed costs such as R&D, marketing and plant investment, this is
likely to create a barrier to market entry and the market is likely to be concentrated.
(135)
10.034 Technical barriers. In Tetra Pak II, the General Court found that Tetra Pak had
artificially limited competition to the sale of machines in which it had the greatest
technological lead and where entry barriers were therefore at their highest. (136) In
Hoffmann-La Roche v Commission (137) both the Commission and the Court of Justice held
that Roche's possession of technological advantages was a relevant consideration in the
assessment of dominance. The fact that the patent holder brings patent proceedings
against market entrants such that it can dictate the terms of their market entry is a
relevant indicator of market power even if the proceedings and the ensuing settlements
are not unlawful in themselves. (138) In its decision accepting commitments under Article
9(1) of Regulation 1/2003 in Rambus, the Commission's preliminary assessment noted that
where the industry was locked in to a particular technical standard over which Rambus
held patent rights, any new entrant wishing to manufacture products complying with
those standards would have either to acquire a patent licence from Rambus or litigate its
asserted patent rights. The costs of developing a rival standard were a considerable
barrier to entry since the adoption of a new standard would need to be agreed by the
companies active in the sector and would involve high risk and substantial costs for
customers. (139)
10.035 Ownership of intellectual property or other monopoly rights. The legal 'monopoly'
conferred by national law through patent, trade mark or copyright protection is to be
distinguished from the economic concept of 'dominance' for the purposes of Article 102.
P 881 (140) In Radio Telefis Éireann and Independent Television Publications v Commission ('the
Magill case') the Court of Justice held:
'So far as dominant position is concerned, it is to be remembered at the
outset that mere ownership of an intellectual property right cannot confer
such a position.' (141)
The ownership of an intellectual property right may nevertheless be an important
contributory factor in establishing dominance. (142) Thus in Deutsche Grammophon v
Metro, the Court of Justice suggested that if recording artists were tied to the
manufacturer of sound recording by exclusive contracts, a dominant position might arise,
depending on the popularity of the artists, the duration of the contracts and the ability of
competitors to obtain the services of comparable performers. (143) The issue is whether
the ownership of intellectual property rights is such as to enable the owner to prevent
effective competition being maintained on a relevant market that it may be regarded as
dominant. (144)
10.036 Patents can be a barrier to entry. A patent is a legal title protecting an invention,
which can be a product or a process, by granting its holder the right to prevent third
parties from making, using, selling, importing, distributing or stocking the product
without the patent owner's consent. (145) Ownership of a patent, or a portfolio of patents,
may contribute to the possession of substantial market power. (146) This is not always the
case, however, as the patented product or process may compete with other products
accomplishing the same result from the consumer's point of view (or it may be
technically possible to design around a patent). Patents that are essential to a standard
are those that cover technology to which a standard makes reference and that users of
the standard cannot avoid when manufacturing or using products that comply with the
standard. In Motorola — Enforcement of Standard Essential Patents (147) the
P 882 Commission said that Motorola's mere holding or exercise of its rights under a SEP that
had been declared essential to the GSM / GPRS ('2G') telecommunications standard did
not confer dominance on its own; however, Motorola's market strength had to be assessed
by reference to two factors: first, the indispensability of the SEP for firms wishing to
implement the standard in question; and, secondly, the industry 'lock-in' to that
standard. (148)
10.037 Trade marks can be a barrier to entry. The statutory protection from infringement
of trade marks is generally unlikely to be a serious impediment to competition, although
a strong brand image could contribute to a position of economic strength amounting to
dominance.
10.038 Copyright can be a barrier to entry. The Commission and the Court of Justice have
in several cases (149) found copyright collecting societies to hold a dominant position
9
where the national systems established for the protection of individuals created
organisations of monopolistic power for the exploitation of the copyrights. In Magill, (150)
whereas the General Court had explicitly related the dominant positions of RTE and ITP
to their copyright in programme listings, the Court of Justice approached the matter on
the basis that the television stations (or their agents) were the only source of the basic
information about the timing and other details of their own programmes. This meant that,
'by force of circumstance', they held a de facto monopoly over the information used to
compile listings and were thereby able to prevent effective competition on the market in
weekly television magazines, and were thus dominant. (151)
10.039 Structural barriers: vertical integration. Where the allegedly dominant
undertaking is vertically integrated it may have an advantage over its competitors in the
upstream market because of its ready access to the downstream market. In France
Télécom v Commission the General Court upheld the Commission's assessment that
Wanadoo's strength on the market for high-speed internet access was reinforced by the
logistical advantages which it enjoyed from its link-up to France Télécom's distribution
network. (152) However, the General Court held that the revenue earned by the Wanadoo
P 883 group from its directory publishing business could not confirm dominance since that
related to a different market. In Telekomunikacja Polska (153) the Commission pointed to
TP's vertical and horizontal integration as features strengthening its position on the
market for the wholesale supply of broadband internet services and set out a number of
features which constituted a competitive advantage for TP. In particular, TP's monopoly
over wholesale supply gave it a competitive advantage on the retail market, in that,
unlike its rivals, it had no need to incur transaction costs when purchasing wholesale
inputs; furthermore, it had a strong presence on the retail market in the form of two
recognised brands and a network of sales outlets across Poland which allowed TP to
benefit from economies of scope, given that the outlets also sold fixed and mobile
telephony services.
10.040 Structural barriers: rights over land and ownership of property. In a narrowly
defined market, rights over land may be found to confer dominance by affording the
ability to preclude entry by potential competitors. In cases where the complainant is an
undertaking attempting to provide services from premises or facilities owned by one of
its competitors, it is important to distinguish between the market for access to those
premises or facilities and the market for the services themselves. Thus, in Aéroports de
Paris (154) the Court of Justice upheld the finding that ADP, as manager of the Paris
airports, was the dominant supplier of airport management services to groundhandlers
who needed the licence issued by ADP as well as access to its airport facilities to offer
groundhandling services. (155)
10.041 Strategic barriers: conduct as evidence of dominance. There are occasions on
which behaviour may be considered in assessing the market power of an undertaking.
Although generally the issue of dominance is analysed prior to consideration of abuse,
the Court of Justice has held that the acts alleged to constitute abuses may be taken into
account in determining whether dominance exists. (156) The fact that the firm can engage
in the conduct alleged to be abusive may suggest that it is able to act independently of
P 885 its competitors and customers. (157) In AstraZeneca v Commission the General Court
observed that AstraZeneca was able to obtain higher prices for its pharmaceutical
product because of its 'first mover advantage' on the market for a product that it had
pioneered. The Court noted:
'The fact that AZ was able to maintain a much higher market share than those
of its competitors while charging prices higher than charged for other
[competing products] is a relevant factor showing that AZ's behaviour was not,
to an appreciable extent, subject to competitive constraints from its
competitors, its customers and ultimately consumers.' (158)
Other conduct which has been held to indicate the existence of dominance includes a
policy of granting rebates, (159) a refusal to negotiate any amendments to the onerous
terms of the contracts which the firm offers its customers, (160) the treatment by the firm
of its competitors, (161) the firm's own attitude to its market position (162) and the
charging of supra-competitive prices over a sustained period. (163) However, the fact that
a firm is not charging particularly high prices, or is even making losses, is not
incompatible with dominance. (164)
10.042 Advertising, branding and reputational effects. High levels of advertising tend to
increase the 'sunk cost' of entry, by which is meant the irretrievable costs of entry, and
thus increase the risk that entry will be unprofitable and unsuccessful, or not even
attempted at all. In Intel (165) the Commission compared the sunk costs incurred by Intel
and its competitor in marketing. The Commission noted that Intel funded extensive
advertising campaigns working with both its direct customers (computer manufacturers)
and retailers. The resulting brand equity arising from its investment in product
differentiation made it an unavoidable trading partner for equipment manufacturers.
Equally, an incumbent's reputation for aggressive price cutting in response to market
entry may be characterised as a barrier to entry. (166)
(d) Countervailing power
10
10.043 Relative market power of competing firms. The need to take account of the
relative market power of the firms competing with the allegedly dominant undertaking
has been considered above in respect of market shares. That is however one aspect of the
wider issue of whether there are significant actual or potential competitors who may be
able to provide effective competition to the leading firm and thereby enable it to rebut
any presumption of dominance that might arise based on a simple consideration of
market shares. (167)
10.044 Countervailing buyer power. The potential constraints on an undertaking not only
derive from actual and potential competitors but may also come from its customers and
consumers. 'Countervailing buyer power' refers to the bargaining position of one or more
buyers and their ability to constrain the behaviour of a supplier, for example by making a
credible threat to switch to competing suppliers or to sponsor market entry. Buyer power
is not an absolute concept, however, and it is important to consider the degree of buyer
power and whether it operates as an effective constraint on the ability of the supplier to
exert market power. (168) Assessment of the degree of buyer power is a frequent feature
of analysis in merger cases, as discussed in Chapter 8, above. (169) In Italian Flat Glass
(170) the General Court was critical of the fact that the Commission 'has not even
attempted to gather the information necessary to weigh up the economic power of the
three producers [alleged to be collectively dominant] against that of Fiat, which could
cancel each other out'. (171) The fact that the main purchasers of a product are public
authorities who are bound by EU public procurement rules to put contracts out to tender
also indicates lack of market power, particularly where the evidence shows that there are
several companies bidding for the contracts. (172) In Prokent-Tomra, however, the
P 889 Commission noted that the existence of buyer power requires that there are either
credible alternative suppliers to which the customers could turn or that customers were
able to sponsor new entrants. In that case procurement of the products that Tomra
supplied was not part of its customers' core activities so that they were unlikely to act in
a strategic manner to subsidise and actively build up competing suppliers to which a
large part of their demand could be diverted. There was, therefore, no substantial
countervailing buyer power to challenge Tomra's dominance. (173) Similarly, where the
dominant undertaking's marketing effort means that the buyers' own customers demand
products incorporating its components, even large purchasers have no choice but to buy
the dominant undertaking's product. (174)
10.045 Market power of upstream suppliers. The contractual power of large producers
can clearly constrain the market freedom of their customers and has been recognised by
the Court of Justice as a factor in assessing the effect on competition. Thus, in Gøttrup-
Klim, in the context of private litigation challenging the legality of the statutes of
association of a Danish buyers' agricultural cooperative under Article 101, the Court of
Justice stated:
'In a market where product prices vary according to the volume of orders, the
activities of cooperative purchasing associations may, depending on the size
of their membership, constitute a significant counterweight to the contractual
power of large producers and make way for more effective competition.' (175)
(e) Appraisal of market power in more complex cases

10.046 Related markets: general. Market definition for related or connected markets is
discussed at paragraph 4.063, above. This issue is of considerable importance in the
application of Article 102: an undertaking may possess substantial market power on one
market, but seek to extend that power in a way that distorts the conditions of
competition on a related market. This issue is considered below in relation to abuse; this
Section illustrates some aspects that are relevant to the prior stage of determining
market power. The main product or piece of equipment is typically referred to as the
'primary product' (such as a printer) and the product or service used in conjunction with
the primary product is referred to as the 'secondary product' (such as toner). (176)
10.047 Separate brand-specific after-market. The question of whether spare parts or
ancillary services that are specific to an individual manufacturer's product constitute a
relevant market is discussed in Chapter 4, above. Where such a relevant market exists, an
abuse can be committed by the manufacturer on that narrowly defined market. In
General Motors v Commission (177) the Commission found that General Motors was
charging excessive prices for the issue of certificates of conformity, which were required
under Belgian law by importers of motor cars into Belgium and were available only from
General Motors in respect of General Motors' cars. General Motors argued that issuing
such certificates was an activity merely ancillary to the market in motor cars, in which it
did not hold a dominant position. The Court of Justice rejected that argument, treating
the issue of certificates of conformity for General Motors cars as a distinct market in
which General Motors was dominant by virtue of the legal monopoly delegated to it by
the State. In CEAHR v Commission the General Court held that the Commission had
committed manifest errors of assessment in taking the view that two aftermarkets, for
spare parts and repair/maintenance services, formed part of the primary market for
luxury/prestige watches. (178) In IBM Maintenance Services (179) the Commission's
preliminary assessment was that IBM might hold a dominant position on the market for
the inputs that are required to provide maintenance services for IBM mainframes and
11
that IBM might have imposed unreasonable supply conditions in the maintenance
market.
10.048 Separate market for a raw material. Where a firm is alleged to have abused a
dominant position in refusing to supply a raw material to a long-standing customer who is
also, or is about to become, a competitor on a downstream market, the existence of
effective competition in that downstream market is not relevant to the assessment of
dominance. In such a case, the undertaking may hold a dominant position in the relevant
upstream market for the raw material, although the exclusionary effect on the
downstream market may well be relevant to a finding of abuse. (180)
10.049 Separate market for other essential inputs and facilities. The issue of control over
a related market is not limited to monopoly supply of a raw material but extends to a
wide range of goods and services that are necessary inputs for the purposes of competing
on another market. Examples are industries that function based on 'networks' or common
industry standards, where the controller of the network or the holder of proprietary rights
over the industry standard may in practice be able to control competition on the
principal market. The liberalisation of previously State-owned companies transporting
and supplying energy, water and telecommunications has led to a system of regulation at
the national and EU level of the relevant networks to ensure fair access to the network for
competing suppliers. (181) Similar issues have arisen on computer markets where one
firm has a commanding position in relation to the industry standard. (182) There have
also been a number of cases in the transport sector where the operator of a transport
hub, for example a port or airport, has in practice been able to control the conditions of
competition facing actual or potential competitors on the relevant transport market.
(183) These issues are considered in more detail below, in the context of abuse.
10.050 Competition on the primary market may constrain behaviour on the aftermarket.
The Commission has explained that the assessment of market power on the after-market
is related to the interdependence between the primary and secondary product as well as
on the competitive conditions on the primary market. As to interdependence of separate
markets, the Commission examines whether a sufficient number of customers, when
purchasing the primary product, are able and willing to take account of the life-time cost
of the primary and secondary products. (184) If they are, the Commission examines the
competitive conditions on the primary market to see if customers would adapt their
purchasing behaviour within a reasonable time (by switching to other primary products)
if there were a small lasting increase in price of the secondary product. If a sufficient
number of customers would adapt their purchasing behaviour on the primary market,
then a firm is unlikely to hold a dominant position on the secondary product market. In
those circumstances, the primary and secondary markets form an 'interdependent
system' of markets and effective competition on the primary market will act as a
competitive constraint on behaviour on the secondary market. The Commission has used
this method of analysis to reject complaints about an abuse of dominance on
aftermarkets in several cases, concluding in each case that aftermarket dominance did
not exist. (185)
(f) Collective or joint dominance

10.051 Generally. Article 102 refers to any 'abuse by one or more undertakings of a
dominant position' and thereby envisages that two or more undertakings may jointly hold
a dominant position. Although it is well established that Article 102 is capable of
applying to situations in which several undertakings together hold a dominant position
(186) (without each being dominant individually), (187) there are a number of difficult
issues that can arise in such cases both in respect of dominance and in respect of abuse.
Regarding collective dominance, the words of Article 102 must describe something
different from the prohibition of anti-competitive agreements or concerted practices
under Article 101. The question whether the market position of a number of undertakings
should be assessed collectively is a question to be determined in advance of deciding
whether any collective position on the market is a dominant one. (188) Undertakings in a
vertical relationship may be jointly dominant. (189) It is also clear that, for undertakings
to be treated collectively, they must adopt in some respects common conduct on the
market. (190) The Commission has indicated, however, that that common conduct does
not have to include the conduct alleged to be abusive: an abuse of a collective dominant
position may be committed by some but not all of the undertakings held to be
collectively dominant. (191) In Atlantic Container Line v Commission ('TACA') the General
Court held that the existence of a collective dominant position does not require the
adoption by those undertakings of the same conduct for all aspects of competition on the
relevant market. (192) The manner in which and the degree to which the policy or conduct
of the undertakings concerned must be coordinated or aligned is unclear.
10.052 Adoption of common conduct on the market. Whether any, and if so what, form of
connection between the undertakings concerned is a prerequisite to a finding of joint
dominance has been the subject of several cases in respect of analogous issues under the
Merger Regulation. (193) In the context of Article 102, the Court of Justice has held that
'[i]n order to find that a collective dominant position exists, the undertakings in question
P 890 must be linked in such a way that they adopt the same conduct on the market'. (194)
This definition was developed further in Compagnie Maritime Belge, where the Court of
12
Justice stated (195) that two or more companies may together hold a dominant position
'provided that from an economic point of view they present themselves or act together
on a particular market as a collective entity …'. These formulations leave the nature of
any linkage unspecified, indicating that there is no specific requirement as to the manner
in which the undertakings come to adopt common conduct; the necessary connecting
factors will depend on an economic assessment, reflecting the conditions in the
particular market concerned. (196) The connecting factors which have been found to be
capable of establishing a situation where a group of independent undertakings act as a
collective entity include:
(a) an agreement between the undertakings concerned; (197)
(b) the use of model conditions of supply drawn up by a common trade association;
(198)
(c) the pursuit of a common market strategy or sales policy; (199) and
(d) the fact that the undertakings operate in an oligopolistic market which is conducive
to parallel behaviour.
Each of these connecting factors is discussed in more detail, below.
10.053 Relationship between collective dominance and anti-competitive agreements. It
is not sufficient to 'recycle' the facts constituting an infringement of Article 101 into a
finding that the parties to that agreement jointly hold a dominant position of which the
making of the agreement constitutes an abuse. (200) Weakness in the evidence of
concertation cannot be overcome by resort to Article 102. (201) In principle, however,
both Article 101 and Article 102 may apply in parallel to the same agreement or
concerted practice. (202)
10.054 Agreements establishing a collective entity. In Italian Flat Glass, while finding that
the Commission had failed to establish collective dominance on the facts, the General
Court observed that collective dominance could arise where, for example, two or more
independent undertakings jointly have, through agreements or licences, a technological
lead that enables them to act independently of the market. (203) The question of whether
P 891 two or more separate entities occupy a collectively dominant position is different from
the question whether two or more legally separate entities form a single undertaking so
that their market shares should be aggregated in order to establish whether that single
undertaking is dominant. (204) In Atlantic Container Line v Commission ('TACA') (205) the
General Court confirmed that the links between the parties did not need to be as strong
as the institutional links existing between a parent and its subsidiaries. The Court noted,
however, that significant 'internal' competition between the undertakings concerned may
indicate that they are not in a position to adopt the same course of conduct on the
market such as to give third parties the impression that they are a single entity and thus
justify a finding of collective dominance. (206) In Compagnie Maritime Belge v Commission
(207) the Court of Justice upheld the Commission's finding that that implementation of a
liner conference agreement resulted in the conference members presenting themselves
on the shipping market as a collective entity. The Court pointed out that a collective
dominant position may flow from the nature and terms of an agreement and from the way
in which that agreement is implemented. The existence of an agreement or of other links
in law is not, however, indispensable to a finding of such a position. (208)
10.055 Collective dominance of members of an association of undertakings. Sports clubs
that make up a major professional league may well be in a collectively dominant
position. (209) In Piau (210) the General Court considered whether the members of the
International Football Federation, FIFA, held a collectively dominant position by virtue of
the fact that they agreed to be bound by the FIFA regulations, in that case in particular
the regulations governing the activities of players' agents. The members of FIFA are the
national associations of football clubs. The Court, overturning the Commission's view that
FIFA did not hold a dominant position, held that the regulations adopted by FIFA could,
where implemented, result in the clubs being so linked as to their conduct on the market
that they present themselves on that market as a collective entity vis-à-vis their
competitors, trading partners and consumers. By contrast, in Wouters, although the Dutch
Bar was an association of undertakings for the purpose of Article 101, the heterogeneous
character of its members and the fact that they engaged in a high degree of competition
P 892 with each other meant that they were not sufficiently connected in their conduct on
the market so as to hold a collectively dominant position. (211)
10.056 Market structures that enable undertakings to act together as a collective entity.
A finding of collective dominance may be based on a range of connecting factors and
depends on an economic assessment, in particular of the structure of the market in
question and the way in which undertakings interact on that market. (212) The simpler
and more stable the economic environment, the easier it is for undertakings to reach a
common understanding and to coordinate their behaviour by observing and reacting to
each other's behaviour. As importantly, coordinated behaviour must be sustainable over
time, such that there is an incentive for members not to depart from the common policy.
(213) The fullest consideration to date by the EU Courts of the requirements for collective
dominance have come in the sphere of merger control, in the judgments in Gencor v
Commission, (214) Airtours v Commission (215) and Impala v Commission. (216) These are
discussed in detail in Chapter 8, above. (217) However, the same legal principles should
13
apply in an assessment of dominance under Article 102. Referring to the jurisprudence
under the Merger Regulation the General Court summarised the conditions in Piau v
Commission (218) as follows:
'Three cumulative conditions must be met for a finding of collective
dominance: first, each member of the dominant oligopoly must have the
ability to know how the other members are behaving in order to monitor
whether or not they are adopting the common policy; second, the situation of
tacit coordination must be sustainable over time, that is to say, there must be
an incentive not to depart from the common policy on the market; thirdly, the
foreseeable reaction of current and future competitors, as well as of
consumers, must not jeopardise the results expected from the common
policy.'
A helpful list of characteristics which can make a market conducive to parallel behaviour
P 893 and thus collective dominance is annexed to the EU Directive on a common regulatory
framework for electronic communications. (219) In applying the above conditions,
however, the Court of Justice has emphasised that it is necessary to avoid a mechanical
approach involving the separate verification of each condition taken in isolation, while
taking no account of the overall economic mechanism of a hypothetical coordinated
behaviour. (220)
3. Abuse of a Dominant Position

(a) Introduction
10.057 Generally. The concept of abuse is not defined by Article 102 TFEU, although that
provision provides a non-exhaustive list of examples in Article 102(a)–(d). (221) The Court
of Justice has interpreted Article 102 as applying not only to practices which may cause
damage to consumers directly, but also to those which are detrimental to them through
their impact on competition. (222) In accordance with settled case law, a dominant
undertaking has a special responsibility not to allow its behaviour to impair genuine,
undistorted competition on the internal market. (223) That special responsibility means
that a dominant undertaking is likely to infringe Article 102 when it engages in conduct
that seriously and unjustifiably distorts competition within a properly defined relevant
market, or leads to a weakening or further weakening of competition in such a market.
(224) The Grand Chamber of the Court of Justice has acknowledged that not every
exclusionary effect is necessarily detrimental to competition; indeed 'competition on the
merits' may, by definition, lead to the departure from the market or the marginalisation
of competitors that are less efficient than the dominant undertaking. (225) Article 102
prohibits a dominant undertaking from, among other things, adopting pricing practices
that have an exclusionary effect on competitors considered to be as efficient as it is itself
and strengthening its dominant position by using methods other than those that are part
of competition on the merits. (226)
10.058 Meaning of abuse. In Hoffmann-La Roche v Commission the Court of Justice
defined the concept of abuse as follows:
'The concept of abuse is an objective concept relating to the behaviour of an
undertaking in a dominant position which is such as to influence the structure
of a market where, as a result of the very presence of the undertaking in
question, the degree of competition is weakened and which, through recourse
P 894 to methods different from those which condition normal competition in
products or services on the basis of the transactions of commercial operators,
has the effect of hindering the maintenance of the degree of competition still
existing in the market or the growth of that competition.' (227)
That definition is taken as the starting point for the assessment of allegedly exclusionary
conduct, that is to say, practices of a dominant undertaking that are said to have an
adverse effect on the process of competition. (228) The definition is important because it
emphasises the need to analyse the effect of the conduct in order to establish an abuse.
It is the negative effect upon competition and the structure of the market that is relevant
rather than any potentially more transient behavioural effects.
10.059 Identifying abuse: the 'theory of harm'. The examples set out at Article 102(a)–(d)
specify categories of prohibited conduct, using pejorative wording such as 'unfair' pricing
or trading conditions or output restrictions operating 'to the prejudice of consumers',
discrimination that places trading partners 'at a competitive disadvantage', and the
imposition of supplementary obligations which 'by their nature or according to
commercial usage, have no connection with the subject matter of such contracts'. A
practical difficulty with concepts such as 'unfair' and 'competitive disadvantage' is that
they are unclear in their scope and highly dependent on their application to the facts of
a given case, such that distinguishing between conduct on the part of a dominant firm
which is permissible and conduct which is prohibited as abusive is difficult. Given the
wide powers available to the Commission and the national competition authorities to
investigate and punish breaches of Article 102, the prohibition under Article 102 should
not be so uncertain as to render its application in an individual case difficult to predict.
14
That being so, many competition authorities, commentators and practitioners have
sought to identify a credible 'theory of harm' that explains how the conduct alleged to be
abusive has, or is likely to have, adverse effects on competition. (229) A theory of harm is
an economic narrative that enables a competition authority or a court to apply sound
economic principles to the facts of a case. (230) The public consultation from 2005 to
2008 on how the Commission interpreted and applied Article 102, culminating in its
Article 102 Enforcement Priorities Guidance, reflected that emerging consensus, and
P 895 there are signs that the Court of Justice is adopting a similar approach. (231) While it
did not use the term 'theory of harm', the Grand Chamber of the Court of Justice made
clear in Intel v Commission (232) that the Commission is not entitled to assume that
exclusivity rebates are restrictive of competition in cases where a dominant undertaking
submits, on the basis of supporting evidence, that they are not capable of restricting
competition. Instead, the Commission must verify whether its theory of harm—that the
rebates in question foreclose competitors—is supported by the circumstances of the
case, such as the extent of the undertaking's dominant position on the relevant market
and the share of the market covered by the challenged practice. (233)
10.060 Relevant factors for finding an exclusionary abuse. In the absence of clear-cut
legal rules, the determination of a case under Article 102 will often be a question of fact
and degree, but the following considerations (234) are relevant when assessing whether a
credible theory of harm applies to the conduct of a dominant firm:
(a) the nature of the market on which the alleged abuse takes place, and the extent to
which actual or potential competitors are vulnerable to exclusionary conduct on
that market;
(b) how far competition on the market is already weakened by the degree of market
power of the dominant undertaking;
(c) the extent to which the conduct in issue further weakens competition to the
dominant undertaking on the relevant market or strengthens the position of that
undertaking on a connected market; (235)
(d) the direct and indirect effect of the conduct on end consumers, including, where
appropriate, a counterfactual analysis to illustrate the likely impact of the conduct
at issue; (236)
(e) how far the conduct in issue is normal industry practice or, on the contrary, is
exceptional and plainly restrictive of competition;
(f) how far the conduct reflects a transitory response to a competitive threat as against
a systematic attempt to exclude or to discipline competitors that threatens to
P 896 impose a long-term impediment to effective competition;
(g) whether the conduct of the dominant firm is motivated by an exclusionary intent or
constitutes a legitimate and proportionate response to competing firms;
(h) the extent to which a dominant undertaking can be seen to be 'leveraging' its
market power in order to place competing undertakings at a significant
disadvantage on parts of the market, or related markets, that are in principle
contestable;
(i) the extent to which the dominant undertaking is treating its customers and
competitors less favourably than its own subsidiaries or related companies, and in
particular whether it is incurring or imposing costs that are economically
sustainable for itself or its downstream operation (where appropriate by reference
to costs benchmarks); (237) and
(j) whether the exclusionary effect of the conduct in issue is 'proportionate' to any
legitimate commercial interest or, perhaps, public policy objective which may be
identified as an 'objective justification' for such conduct. (238)
In addition, although this further factor is of questionable relevance from an economic
perspective, the case law indicates that the Court of Justice has taken account of the
connection between the conduct at issue and the general principles of EU law, especially
the elimination of obstacles to the internal market and the absence of discrimination
between nationals of different Member States. (239) The following paragraphs address
certain issues of principle that are common to many cases on abuse. (240)
(b) Some basic concepts

10.061 The 'special responsibility' of dominant firms. The judgment of the Court of Justice
in Hoffmann-La Roche refers to 'methods different from those which condition normal
competition'. However, this does not mean that an abuse must comprise conduct
peculiar to dominant firms or be capable of being indulged in only by virtue of
dominance. (241) It follows from the nature of the obligations imposed by Article 102 that
undertakings in a dominant position may be deprived of the right to adopt a course of
conduct or to take measures which would be unobjectionable if adopted or taken by non-
dominant undertakings. (242) Such firms have a 'special responsibility' on account of the
P 897 prejudice that their activities may cause to competition in general and to the interests
of competitors, suppliers, customers and consumers in particular. (243) The imposition of
a restriction under a contract or the acquisition of a right may amount to an abuse for the
purposes of Article 102 if that contract is concluded or that right is acquired by an
15
undertaking in a dominant position. (244) Equally, whereas a non-dominant firm is
entitled to choose with whom to do business, Article 102 may prohibit a dominant firm
from refusing to deal with third parties that seek access to essential inputs or facilities.
(245)
10.062 Exclusionary strategy or intention to eliminate a competitor. It is not necessary, as
a matter of law, to find anti-competitive intention to find an infringement of Article 102;
abuse is an objective concept. (246) A person alleging an infringement of Article 102 is
not, however, precluded from relying on the existence of anti-competitive intent, as one
of a number of facts, when seeking to show that a dominant position has been abused.
(247) In the case of a dominant undertaking charging prices below average total costs, but
above average variable costs, an abuse exists if an intention to eliminate can be shown.
(248) Conduct that may otherwise be permissible, even on the part of a dominant firm,
may be abusive if its purpose is anti-competitive. As the Court of Justice has said:
'Although it is true … that the fact that an undertaking is in a dominant
position cannot disentitle it from protecting its own commercial interests if
they are attacked, and that such an undertaking must be conceded the right to
take such reasonable steps as it deems appropriate to protect its said
interests, such behaviour cannot be countenanced if its actual purpose is to
strengthen this dominant position and abuse it.' (249) (emphasis added)
Conduct may be abusive even where it has failed to achieve its intended effect. The Court
of Justice has said that, where dominant undertakings engaged in a practice with the aim
of removing a competitor, the fact that this is not ultimately achieved does not alter its
categorisation as an abuse. (250) The General Court has held that the preparation by a
P 898 dominant undertaking of a strategy whose object it is to minimise erosion of its sales
and to enable it to deal with competition is legitimate and is part of the normal
competitive process, provided that the conduct envisaged does not depart from
practices coming within the scope of competition on the merits, which is such as to
benefit consumers. (251) However the existence of an intention to compete on the merits
cannot, by itself, prove the absence of abuse. (252)
10.063 Abuse 'by object': departure from competition on the merits. The EU Courts have
held that conduct that clearly falls outside the scope of 'competition on the merits' can
amount to an abuse. (253) For example, in Intel v Commission (254) the General Court held
the grant of payments by a dominant undertaking to its customers in exchange for the
customer agreeing to delay or cancel the launch of a rival's product ('naked restrictions')
clearly fall outside the scope of competition on the merits; the anti-competitive object of
the practices established their abusive nature to the requisite legal standard. In BEH
Electricity (255) the Commission referred to the General Court's judgment in Intel and
claimed that the General Court had 'expressly recognised that where there is a restriction
of competition by object, the Commission is entitled under Article 102 of the Treaty to
rely on the anti-competitive object of such behaviour and is not required to demonstrate
the capability of such behaviour to restrict competition'. (256) In Lithuanian Railways
(257) the Commission found that company had dismantled 19km of track connecting
Lithuania and Latvia, thereby preventing a major customer from using a competitor's
services. The impugned conduct—the removal of the track—appears to have had no other
purpose than to eliminate competition.
10.064 Abuse 'by effect': role of exclusionary effects. The older case law of the EU Courts
indicates that, notwithstanding the reference to effect in the hallowed definition of
exclusionary abuse in Hoffmann-La Roche, at least some practices of a dominant
undertaking were deemed to be abusive without the need to consider factual or
economic evidence on their effects. (258) It appears, however, that the EU Courts
recognise that a per se approach runs the risk of the prohibition being applied to conduct
to which it should not be applied. (259) That being so, in more recent cases, the EU Courts
have emphasised the role of effects in the application of Article 102. For example, in a
number of cases the Court of Justice has held that Article 102 prohibits a dominant
undertaking from adopting pricing practices that have an exclusionary effect on
P 900 competitors considered to be as efficient as itself. (260) The Court of Justice has also
ruled out, for example, the possibility that a margin squeeze can be unlawful in the
absence of such an effect. (261) Similarly, where a dominant firm substantiates an
argument that exclusivity rebates do not restrict competition, the Commission must
analyse whether they are capable of producing foreclosure effects. (262) It is, however,
important to understand what is meant by an 'effect' for this purpose. Evidence of actual
effects is not necessary, although the absence of actual effects may have evidential
significance for determining whether an effect is reasonably likely. (263) It is not
necessary to prove actual effects because it would undermine the effectiveness of Article
102 if the prohibition did not apply until an effect has materialised. (264) Nor, for the
same reason, is evidence of complete exclusion of competitors from the market
necessary. Put simply, conduct must be shown to be capable of restricting or distorting
competition to amount to an exclusionary abuse of a dominant position within the
meaning of Article 102; (265) the effect must not be 'purely hypothetical'. (266) In
AstraZeneca v Commission (267) the Court of Justice summarised the position as follows:
' … it follows from the Court's case-law that, although the practice of an
16
undertaking in a dominant position cannot be characterised as abusive in the
absence of any anti-competitive effect on the market, such an effect does not
necessarily have to be concrete, and it is sufficient to demonstrate that there
is a potential anti-competitive effect.' (268)
10.065 Direct or indirect effects on consumers. There is no need to prove that a practice
has the effect of harming consumers directly; Article 102 is aimed both at practices that
may harm consumers directly and at those that are detrimental to them through their
impact on the competition structure of the market. (269)
10.066 Effect of pricing practices on as efficient competitors. The case law of the EU
Courts on pricing conduct indicates that it is necessary to assesss whether the pricing
practice of the dominant undertaking is likely to foreclose competitors who are as
efficient as (or more efficient than) the dominant undertaking. (270) This is commonly
referred to as the as efficient competitor (AEC) principle. (271)
10.067 Appreciable effects. There is no need to show that the likely anti-competitive
effect is of a serious or appreciable nature, at least in the case of abuses in a dominated
market. (272) In cases involving related market abuses, it appears to be necessary to show
either an effect on the dominanted market or that the anti-competitive effect on the non-
dominated market is appreciable (at least where the impugned conduct on the
dominated market is pro-competitive). (273) Appreciable effect does not mean
substantial; it means more than de minimis or insignificant.
10.068 No need to derive a commercial advantage from the alleged abuse. In Aéroports
de Paris v Commission (274) the General Court held that the fact that ADP has no interest
in distorting competition on a market on which it is not present, and indeed that it
endeavoured to maintain competition, was irrelevant. The concept of abuse is an
objective concept and therefore implies no intention to cause harm. (275) The absence of
P 902 any commercial gain on the part of the dominant undertaking may nonetheless be
relevant, for example on the issue of objective justification. (276)
10.069 Possibility of objective justification. Although Article 102 contains no equivalent
to Article 101(3), (277) it does not operate on a wholly rigid basis, outlawing specific types
of conduct. In his Opinion in Syfait Advocate General Jacobs described the position as
follows:
'… it is clear that the [EU] case-law provides dominant undertakings with the
possibility of demonstrating an objective justification for their conduct, even if
it is prima facie an abuse, … I would add that the two-stage analysis suggested
by the distinction between an abuse and its objective justification is to my
mind somewhat artificial. Article [102], by contrast with Article [101], does not
contain any explicit provision for the exemption of conduct otherwise falling
within it. Indeed, the very fact that conduct is characterised as an “abuse”
suggests that a negative conclusion has already been reached, by contrast
with the more neutral terminology of “prevention, restriction, or distortion of
competition” under Article [101]. In my view, it is therefore more accurate to
say that certain types of conduct on the part of a dominant undertaking do not
fall within the category of abuse at all.' (278)
In practice the concept of 'objective justification' is often considered as a distinct
element (279) and the absence of any such justification has been identified by the Court
of Justice as a legal requirement in a number of cases. (280) It follows that a dominant
firm can argue that apparently anti-competitive conduct is in fact justified, provided that
the grounds relied on are more than simply the commercial advantage of the undertaking
itself. (281) The General Court has stated that, although the Commission bears the burden
of proving an infringement of Article 102, it is for the dominant undertaking concerned to
raise any plea of objective justification and to support it with arguments and evidence. It
then falls to the Commission to show that the arguments and evidence relied on by the
undertaking cannot prevail and, accordingly, that the justification put forward cannot be
accepted. (282)
10.070 Principle of proportionality. In determining whether a dominant undertaking's
commercial conduct unjustifiably distorts competition, the principle of proportionality
will be important. In striving to improve its market position and pursue its legitimate
interests, the dominant firm may employ only such measures as accord with 'commercial
usage' in the market in question and are necessary to pursue those interests. It must not
act in a way that foreseeably limits competition more than is necessary. (283)
10.071 Efficiency defence. From an economic perspective, one of the principal issues is
whether the conduct of a dominant firm is likely to result in net harm to competition and
consumers, and thus may be abusive, or whether it is likely to result in increased
efficiency to the overall benefit of competition and consumers. From a legal perspective,
in Post Danmark I the Court of Justice held that a dominant undertaking is entitled to
provide an efficiency justification for its pricing practices and that:
'it is for the dominant undertaking to show that the efficiency gains likely to
result from the conduct under consideration counteract any likely negative
effects on competition and consumer welfare in the affected markets, that
17
those gains have been, or are likely to be, brought about as a result of that
conduct, that such conduct is necessary for the achievement of those gains in
efficiency and that it does not eliminate effective competition, by removing
all or most existing sources of actual or potential competition.' (284)
The above conditions closely resemble those contained in Article 101(3) TFEU (285) and
also those applied by the Commission under its Article 102 Enforcement Priorities
Guidance. (286) If the conduct does not satisfy any or all of these requirements, then it is
plausible to identify the harm to consumers and to the competitive structure of the
market that justifies a finding of abuse. (287) These issues are considered in the
discussion of particular abuses, below.
10.072 Exclusionary and exploitative abuses. Conduct of a kind prohibited by Article 102
can be categorised in various ways. A useful classification is by reference to its effects on
others. An 'exclusionary abuse' is conduct which is likely to lead to the anti-competitive
foreclosure effect of eliminating, weakening or marginalising effective competition on the
P 903 relevant market (by forcing out or marginalising existing competitors and/or raising
barriers to entry for potential new competitors). Predatory, below-cost, pricing which is
explicable only by the desire to eliminate a competitor from the market is an example of
an exclusionary abuse. An 'exploitative abuse' is conduct which is unfair or unreasonable
towards those persons who depend on the dominant firm for the supply of goods or
services on the relevant market. Excessive prices, which bear no reasonable relation to
the economic value of the product supplied, are an example of an exploitative abuse. Of
these two categories, the first tends to be the more important in practice and reflects the
increasing focus on the wider economic effect of conduct alleged to be abusive. (288)
Nonetheless, it may be relevant to consider whether any conduct has caused detriment
to final consumers, either in terms of a significant increase in price or a restriction in
output or choice. There is no clear-cut or absolute distinction in practice between these
two categories of abuse, and some abuses, such as refusal to supply and the imposition of
tying clauses, may be both exploitative and exclusionary. In addition, although the
concept of abuse is an objective one, a realistic characterisation of an exclusionary
abuse will be strengthened by an explanation of the motivation of the dominant firm, in
terms of a supra-competitive return resulting from the exclusion of its competitors, so
that, as often as not, there is an explanatory link between an exclusionary and an
exploitative element in an individual case.
10.073 Own market and related market abuses. For the purposes of classification of
different types of abuse, this Chapter draws a distinction between abuses that adversely
affect competition on the market where dominance exists as against those that restrict or
distort competition on a related market, in particular where a dominant firm is able to
harm competition on a downstream market by the leveraging of substantial market
power. A classic 'own market' exclusionary abuse would be predatory pricing or exclusive
dealing that make it difficult or impossible for competitors to establish themselves on
the market on which an undertaking is dominant. 'Related market' exclusionary abuses
include refusal to supply an essential raw material or to grant a licence of an intellectual
property right or to provide access to a network needed for the purposes of competition
on a downstream or related market. Here again, there is a danger in over-rigid
categorisation. For convenience, the classification as between 'own market' and 'related
market' abuses is adopted below, with exclusionary abuses taken before exploitative
abuses in each case. A distinction is also drawn between pricing and non-pricing abuses.
10.074 Abuses considered in this Section. The rest of this Chapter therefore considers the
following forms of abusive behaviour:
(a) own market abuses, divided between:
(i) exclusionary pricing practices, in particular predatory pricing, price
discrimination or targeting and fidelity rebates and similar practices;
(ii) exclusionary non-price practices, including discrimination and long-term
exclusive dealing; and
P 904 (iii) exploitative pricing, in particular excessive pricing;
(b) related market abuses, divided between:
(i) exclusionary pricing practices, including margin squeezing and cross-
subsidisation; and
(ii) exclusionary non-pricing practices, in particular tying and bundling, and
refusal to supply;
(c) other forms of abuse (reflecting the fact that a number of cases do not fall naturally
within the above scheme of classification).
10.075 Case-by-case assessment. Many cases finding an abuse involve conduct of more
than one kind or that can be classified under more than one heading. In addition, the EU
Courts have stated that the categories of abuse are not closed, so that it is impossible to
set out an exhaustive list of conduct that might violate Article 102. (289) There are also
indications that it is inappropriate to 'pigeon-hole' conduct as one type of abuse to the
exclusion of any other. (290) Reference to earlier decisions is only an imperfect guide as
to how the principles summarised in this Section should be applied to the facts of an
18
individual case. In each case it will be important to consider, among other matters: (a)
the theory of harm arising from the conduct in question; (b) the actual and likely effects
of the conduct on competition and on consumers; and (c) the objective justifications and
efficiency gains, if any, associated with the conduct.
(c) Own market abuses

10.076 Exclusionary and exploitative abuses on the dominated market. Where a firm
enjoys a dominant position on a single market, it has a readily comprehensible incentive
to deter entry and expansion by its smaller actual and potential competitors and
thereby to protect its strong market position and its ability to trade profitably on that
market. This Section discusses the extensive case law on these issues, under the
categories of exclusionary pricing, exclusionary non-pricing practices and exploitative
pricing.
10.077 Categories of exclusionary pricing. There are numerous cases under Article 102
concerning the exclusionary pricing practices of dominant undertakings. In broad terms,
they comprise one or more of the following:
(i) predatory pricing: the setting of prices at an unreasonably low level (usually below
a measure of cost) to induce a rival firm to exit the market or deter its entry or
expansion;
(ii) price discrimination or targeting: the selective use of unfairly low (albeit above
'cost') prices to target customers of a competing firm; and
(iii) fidelity rebates and discounts: the granting of financial advantages to customers on
condition that customers buy all or most of their requirements from the dominant
P 905 undertaking to prevent customers from obtaining their supplies from competing
producers.
These practices are closely related as, for example, fidelity rebates may be predatory
and/or discriminatory as well as exclusionary. However, fidelity rebates do not have to
be below-cost or loss-making to be abusive. (291) Even so, there is a trend in cases of
alleged exclusionary pricing abuse to assess prices by reference to the costs of the
dominant undertaking. The judgments of the Court of Justice dealing with margin squeeze,
(292) the Commission's Article 102 Enforcement Priorities Guidance, (293) the judgment of
the Court of Justice requiring the General Court to examine Intel's criticisms of the
Commission's price/cost test, (294) the Commission's assessment of Qualcomm's
price/cost test in relation to its exclusivity payments to Apple, (294a) and the practice of
some NCAs (295) are indicative of this trend. This is consistent with the Commission's
intention that it will normally intervene only where a pricing practice has already
hampered, or is capable of hampering, competition from competitors who are as
efficient as the dominant undertaking. (296)
(i) Predatory pricing
10.078 Predatory pricing. Predatory pricing is the charging of prices by a dominant
undertaking at a level that has no economic purpose other than to eliminate or weaken
its competitors. (297) Predatory pricing normally involves:
(a) a temporary, substantial reduction in price by the dominant firm in response to
anticipated or actual market entry or growth in sales by a smaller competitor;
(b) price levels that are, in themselves, unprofitable or barely profitable for the
dominant firm; and
(c) pricing aimed at eliminating or disciplining a specific competitor.
The likelihood of a strategy of predatory pricing being credible is highly sensitive to a
range of factual issues, notably the relative efficiencies of the dominant firm and its
competitors, the transparency of costs as between competing firms and the reputation of
P 906 the dominant firm to respond aggressively to market entry. It is for this reason that the
Court of Justice has emphasised the need to consider all the circumstances when
determining whether a pricing practice is abusive. (298)
10.079 Price competition on the merits. In certain circumstances the cutting of prices is a
lawful, indeed normal, commercial practice on the part of a dominant firm. Such pricing
may reflect the superior efficiency of a dominant undertaking's operations, resulting in a
reduction of its costs, or it may be a legitimate response to competition to keep the
customers which were originally its own. In practice, it is not always easy to distinguish
predatory pricing from normal price competition. In theory, the distinction between
predatory pricing and competition on the merits is the assumption that a predatory
strategy involves pricing at a level below costs that will be profitable for the predator
and therefore commercially rational if, but only if, it so weakens or deters effective
competition from equally efficient competitors that the dominant firm can subsequently
raise prices or otherwise exploit its market power. The distinguishing feature of predatory
pricing, although easily expressed in general terms, is difficult to translate into legal
tests of general application that are sufficiently certain and accurately identify
circumstances in which price cuts are likely to harm competition in the internal market.
10.080 Measures of cost. In determining whether predatory pricing has occurred, the
19
Commission and the EU Courts compare the suspect prices charged by a dominant
undertaking with its costs. There are various measures of cost. (299) Costs can be fixed or
variable. Fixed costs remain the same irrespective of the activity levels of a firm, whereas
variable costs are those costs that vary with the level of output. Despite the absence of
any perfect touchstone, the case law considers the relation of price to average variable
costs and average total costs as a way of distinguishing between predatory prices that
are abusive from those that are not. The principal measures of cost referred to in the
jurisprudence of the EU Courts and the guidance of the Commission (300) are:
(a) 'average variable costs' ('AVC'): the costs of producing a good or service that vary
with changes in output, (301) averaged over the number of units produced;
(b) 'average avoidable costs' ('AAC'): the average of the costs that could have been
avoided if the dominant firm had not produced a certain amount of output;
(c) 'average total costs' ('ATC'): the combination of variable costs and fixed costs of
production, which remain constant irrespective of changes in output, (302) averaged
over the number of units produced;
(d) 'long run average incremental costs' ('LRAIC'): the change in total cost in the long run
resulting from a specified variation in output (the increment), averaged over the
units of output supplied; the long run for this purpose refers to a period that is long
P 907 enough to be relevant to planning and investment decisions.
When considering which costs are fixed and which are variable, the period over which the
costs are assessed is crucial: the shorter the period considered, the more costs are likely
to be fixed. In the long run, all costs are variable. (303)
10.081 Legal test. The legal test for predation was established by the Court of Justice in its
judgment in AKZO v Commission (304) which has been followed and developed in later
cases. The Court of Justice acknowledged that, to establish predatory pricing, it is
necessary to conduct a comparative analysis of prices and costs and, in some cases, to
determine whether there is a plan for eliminating a competitor. The Court of Justice
established two rules to assess the lawfulness of a pricing policy practised by a dominant
undertaking:
'First, prices below average variable costs must always be considered abusive.
In such a case, there is no conceivable economic purpose other than the
elimination of a competitor, since each item produced and sold entails a loss
for the undertaking. Secondly, prices below average total costs but above
average variable costs are only to be considered abusive if an intention to
eliminate can be shown.' (305)
The economic rationale for the first rule, that a dominant firm must not price below its
average variable costs, is three-fold: first, a profit-maximising dominant firm cannot
maintain such a loss-making price and stay in business; secondly, competitors as
efficient as the dominant firm cannot sustainably match such a price and stay in
business; and, thirdly, competitive markets are often characterised by prices that are
roughly equal to average variable costs. When undertaken by a dominant firm, pricing
below average variable cost will normally constitute 'recourse to methods different from
those which condition normal competition' and thus an abuse. The same rationale does
not hold for the second rule, when prices are above average variable costs but below
average total costs, which is why the Court insisted that such prices be shown to be part
of a plan to eliminate a competitor.
10.082 Refinement of the legal test. In more recent cases, consistently with the more
economic approach to Article 102 described in the introduction, the Court of Justice has
refined the applicable test. In France Télécom v Commission (306) the Court of Justice
held, in respect of the first limb of the 'AKZO rule', that prices below AVC 'must be
considered prima facie abusive' but that such presumption could be rebutted by
demonstrating an 'economic justification' for such pricing. (307) Prices below AVC may be
P 908 set pro-competitively: for example, in launching a new product, it may be necessary to
sell it initially at a loss for that product to gain consumer awareness and acceptance.
(308)
10.083 Assessment of variable costs in predatory pricing. It follows from the judgment of
the Court of Justice in AKZO v Commission that careful consideration must be given to
what proportion of costs should be regarded as being variable, having regard to the
duration of the alleged predation, or such other period as is reasonable from a business
perspective. In defining variable costs in the AKZO decision, the Commission had treated
items such as labour, maintenance, warehousing and dispatching as variable because
most accounting systems classify them as such. On appeal, however, the Court agreed
with AKZO that their labour costs were fixed. The Court held that 'an item of cost is not
fixed or variable by nature. It must be determined, therefore, whether, in the present
case, labour costs did vary according to the quantities produced'. (309) On the facts, the
Court found that there was no direct correlation between the quantities produced by
AKZO and its labour costs, and therefore held that labour costs were fixed, not variable.
(310) Similarly, the timescale over which costs are to be considered will have a bearing
on their classification as fixed or variable. (311)
20
10.084 Other measures of cost. The subsequent practice of the Commission makes it
clear that not all cases under Article 102 have proved amenable to application of rules
based on average variable and average total cost. In its Article 102 Enforcement Priorities
Guidance, the Commission proposes to apply two other measures of cost, AAC and LRAIC,
which are closely related to AVC and ATC. Many cases under Article 102 involve network
industries, such as telecommunications. In those cases, the Commission considers that
the simple application of a test based on AVC would not be appropriate. Because such
industries have large capital costs, some of which are common costs covering a range of
services, a price based only on the costs of each additional unit of output may be
substantially lower than needed to cover the operator's costs of supplying the service.
Instead the Commission suggests that LRAIC should be the basis for judging whether
prices are predatory. (312) Use of LRAIC may involve some allocation of common costs,
which is often difficult. 'Common costs' are those which arise from the provision of a
P 909 group of products, but which are not incremental to the provision of any individual
product. However, to the extent that the operator's common costs involve the costs of
fulfilling a mandatory service obligation, only those costs exclusively related to the
provision of the additional service impugned for predatory pricing should be included: in
other words, the costs which the firm would not incur if that additional service was not
provided. This may include some fixed costs (and therefore will still be a higher measure
than AVC) but may be lower than LRAIC. In finding that Deutsche Post, which held a legal
monopoly in Germany for ordinary letter post, had engaged in predatory pricing of its
mail order parcel service which was open to competition, the Commission took into
account only Deutsche Post's incremental costs of providing that service. (313) In Post
Danmark I the Court of Justice appeared to endorse the approach taken by the Danish
Competition Council to calculating the average incremental costs of distributing
unaddressed mail in Denmark, which included a proportion of common costs to
delivering unaddressed and addressed mail. (314)
10.085 Plan or intention to eliminate a competitor. Where prices charged are below ATC,
but above AVC or AAC, evidence of intention to exclude a competitor is required under
the principles adopted by the Court of Justice in AKZO. (315) The Commission's Article 102
Enforcement Priorities Guidance indicates that direct evidence of such an intention may
take the form of a detailed plan to sacrifice profits in order to exclude a competitor, to
prevent entry or to pre-empt the emergence of a market, or evidence of concrete threats
of predatory action. (316) In AKZO, the Court inferred the necessary intention from the fact
that there was no objective justification for the low prices charged over a long period in
the absence of any competing quotations. (317) In Tetra Pak II, the Commission drew a
similar conclusion on the basis that loss-making prices were charged only where it was
necessary to win prospective customers or win back customers. (318) The General Court, in
agreeing with the Commission, relied in addition on the evidence of board meeting
minutes, the duration, continuity and scale of the losses incurred by Tetra Pak, their
behaviour in buying stock and selling it below cost in the Italian market (where the
alleged predatory behaviour occurred), the lower prices charged in Italy compared with
other Member States and the increasing sales of Tetra Pak on the Italian market, and the
P 910 decline in sales of their competitor, Elopak. (319) In France Télécom v Commission, the
General Court held that statements in management-level communications, in particular
formal presentations and corporate planning documents that referred to Wanadoo's
intention to 'pre-empt' the ADSL market, could properly be relied on as indicating a 'plan
of predation'. Those statements were reinforced by evidence that Wanadoo was aware
that its strategy of non-profitable pricing combined with high sales volumes was not
sustainable for its competitors. (320) Separately, the longer the prices of a dominant
undertaking remain below total costs, the easier it may be for an authority or court to
infer the requisite intent to eliminate competition, in accordance with the AKZO test.
(321) A willingness by a dominant undertaking to accept prices below ATC for a significant
period without any other explanation may indicate an intention to eliminate a rival from
the market. (322) The UK Competition Appeal Tribunal has observed:
'The phrase “intention to eliminate a competitor” is not entirely
straightforward to interpret, since in one sense any competitor, competing in
the market, is striving to eliminate — i.e. to drive out — a less efficient rival
competitor. What is meant in our view is conduct on the part of a dominant
firm which (i) has the reasonably foreseeable result of driving a rival from the
market; (ii) goes beyond a normal competitive response and is
disproportionate to the threat; and (iii) has the object or effect of preserving
or strengthening a dominant position.' (323)
10.086 Potential for recoupment of losses. Any allegation of predation faces the obvious
difficulty that it may well be commercially irrational for a dominant firm to engage in
aggressive price-cutting against competitors in the short term unless it is likely to obtain
a significant commercial benefit (or 'recoupment' of its short-term losses) when viewed
over a longer time period. There is therefore a strong theoretical argument that any case
of predatory abuse should include such an element of 'recoupment' in its overall theory
of harm. However, the Court of Justice has not accepted this argument. (324) In France
Télécom v Commission the Court of Justice affirmed and elucidated earlier case law
concerning the relevance of recoupment of losses: (325)
21
'It does not follow from the case-law of the Court that proof of the possibility
of recoupment of losses suffered by the application, by an undertaking in a
P 911 dominant position, of prices lower than a certain level of costs constitutes a
necessary precondition to establishing that such a pricing policy is abusive. In
particular, the Court has taken the opportunity to dispense with such proof in
circumstances where the eliminatory intent of the undertaking at issue could
be presumed in view of that undertaking's application of prices lower than
average variable costs.'
The Court went on to hold that if the Commission finds that there was a possibility of
recoupment, this may be relevant in ruling out an economic justification for the practice
or in establishing that a plan to eliminate a competitor existed.
10.087 Objective justifications for below-cost pricing. Various objective justifications
have been put forward for below-cost pricing, but they have tended to be viewed
sceptically by the Commission and the EU Courts. (326) In France Télécom v Commission
(327) the Commission emphatically rejected, as a matter of principle, various
justifications put forward by the dominant firm, in particular, that it was legitimate for a
dominant company to price a new product at a level which anticipates economies of
scale which will be achieved once production volumes increase. (328) The search for
economies of scale did not legitimise below-cost pricing since it had the effect of
conferring a more favourable cost structure on the dominant undertaking to the
detriment of its competitors. The Commission also rejected an argument advanced by
Wanadoo that it was not appropriate to allege predation in a market which does not
possess a sufficient degree of maturity: in the context of introducing a new service,
incurring significant losses was inevitable. The Commission held that nothing in Article
102 or the case law on predation provided an exception for emerging markets. (329) It
may, however, be a defence for the dominant firm to demonstrate that it reasonably
expected the activity in question to be profitable even if in practice that was not the
case. (330)
10.088 Alignment of prices with the competition. In France Télécom the Commission
rejected a defence that Wanadoo Interactive, part of the France Télécom group, was
'meeting not beating' prices offered by its non-dominant competitors. (331) The
P 912 Commission stated:
'… from a point of view of principle, it is true that new entrants or undertakings
which are not in a dominant position are entitled to charge promotional
prices for limited periods. … On the other hand, alignment by the dominant
operator on the promotional prices of a non-dominant operator is not
justified. Whilst it is true that the dominant operator is not strictly speaking
prohibited from aligning its prices on those of competitors, this option is not
open to it where it would result in its not recovering the costs of the service in
question.' (332)
On appeal, the General Court focused on the intention behind the alignment stating that
Wanadoo could not rely on 'an absolute right to align its prices on those of its
competitors in order to justify its conduct'. Even if such alignment was not in itself
abusive or inherently objectionable, 'it might become so where it is aimed not only at
protecting its interests but also at strengthening and abusing its dominant position'. (333)
(ii) Price discrimination and selective discounting
10.089 Price discrimination or targeting. In a literal sense, price discrimination involves
charging different customers or different classes of customers different prices for goods
or services whose costs are the same or, conversely, charging a single price to customers
for whom supply costs differ. It is often a difficult question in practice to determine
whether two cases are alike or different in a relevant respect and also whether there is an
objective justification for any difference of treatment. Moreover, price discrimination is a
common phenomenon in the business world and there are many market factors which
may lead to different customers paying different prices for the same product. Similarly,
in some circumstances there can be strong economic justifications for price
discrimination as a way of maximising economic efficiency. (334)
10.090 Selective undercutting of competitor: the rationale for intervention. When a
dominant firm reduces its prices only to those customers approached by a competitor,
the EU Courts have held that this may be an abuse, even where the prices remain above
cost and therefore are not predatory. For example, in Compagnie Maritime Belge v
Commission (335) the use of so-called 'fighting ships' to target competitors was
condemned under Article 102 on the basis that it was evident that the practice was
P 913 introduced with the aim of forcing a new entrant out of the market. Although such
conduct neither violated the AKZO test, nor fell within Article 102(c), Advocate General
Fennelly identified the vice of the conduct as follows:
'… normally, non-discriminatory price cuts by a dominant undertaking which
do not entail below-cost sales should not be regarded as being anti-
competitive. … Different considerations may, however, apply where an
undertaking which enjoys a position of dominance approaching a monopoly,
22
particularly on a market where price cuts can be implemented with relative
autonomy from costs, implements a policy of selective price cutting with the
demonstrable aim of eliminating all competition. In those circumstances, to
accept that all selling above cost was automatically acceptable could enable
the undertaking in question to eliminate all competition by pursuing a
selective pricing policy which in the long run would permit it to increase
prices and deter potential future entrants for fear of receiving the same
targeted treatment.' (336)
In Post Danmark I the Court of Justice considered questions referred by a Danish court
hearing an appeal by Post Danmark from a finding of unlawful price discrimination by the
Danish competition authority. (337) The case concerned the market for distributing
unaddressed mail, a market that was fully liberalised in Denmark. (338) Post Danmark
concluded contracts for the distribution of this mail with three major supermarket
customers of its main competitor in the market, Forbruger-Kontakt. The Danish first
instance court held that no intention to eliminate competition had been proved and that
the prices charged by Post Danmark in the case of two customers covered its ATC and in
the case of one customer, covered ATC but not average incremental costs. (339) The Court
of Justice stated that the fact that a dominant undertaking charges different customers or
different classes of customers different prices for goods or services whose costs are the
same (or conversely charges a single price to customers for whom supply costs differ)
cannot of itself suggest that there exists an exclusionary abuse. It was common ground
P 914 that the prices offered by Post Danmark to the Spar and SuperBest groups were above
average total costs and it 'cannot be considered that such prices have anti-competitive
effects'. (340) Moreover, it was not an exclusionary abuse simply because the price
charged was lower than ATC as estimated by the Danish NCA, since it will, as a general
rule, be possible for a competitor as (or more) efficient as a dominant firm to compete
with those prices without suffering losses that are unsustainable in the long term. (341)
The Court of Justice held that it is necessary to consider (a) whether the pricing policy
produces an actual or likely exclusionary effect on competitors at least as efficient as the
dominant firm; and, if so, (b) whether that policy is 'objectively necessary' or that the
exclusionary effect is counterbalanced or outweighed by advantages in terms of
efficiency that benefit consumers. (342) The Danish Supreme Court subsequently set
aside the Danish NCA's decision as it had not been based on the considerations set out in
the Court of Justice's judgment. (343)
10.091 Article 102(c). Not all price discrimination practised by a dominant firm
constitutes an abuse. Article 102(c) specifically prohibits a dominant firm from 'applying
dissimilar conditions to equivalent transactions with other trading parties, thereby
placing them at a competitive disadvantage'. This wording requires the person alleging
abusive discrimination to demonstrate an effect on competition, in the form of a
'competitive disadvantage', in the related market of the customer. Price discrimination
which lacks any objective justification and places one customer of the dominant firm at a
competitive disadvantage as against that customer's competitors is likely to be an
abuse, particularly if the advantaged customer is vertically integrated with the dominant
supplier. In MEO the Court of Justice held that '[i]t is only if the behaviour of the
undertaking in a dominant position tends, having regard to the whole of the
circumstances of the case, to lead to a distortion of competition between those business
partners that the discrimination between trade partners which are in a competitive
relationship may be regarded as abusive'. (344) There may also be cases where
exclusionary effects arise not at the level of the customers but on the market where the
dominant undertaking is itself active, when selective or targeted price discrimination
effectively excludes a competitor of the dominant firm. The circumstances in which this
amounts to an abuse were considered by the Court of Justice in Post Danmark I discussed
above. (345)
10.092 Identifying equivalent transactions. To determine whether a dominant
undertaking has infringed Article 102(c), it is necessary, first of all, to identify equivalent
P 915 transactions which have been treated differently by the dominant firm. In Scandlines
(346) the complainants sought to compare the prices which the port authority charged for
services provided to passenger ferry operators with the services provided to cargo
vessels. The Commission found that the services provided were not comparable since the
ferry operators used ramps and gangways for embarking and disembarking vehicles and
passengers whereas the cargo vessels used cranes and other equipment for loading and
unloading cargo. The complainants argued that in determining whether transactions were
equivalent, the Commission should examine whether the costs of providing the two
different services were the same since only differences which affected the costs incurred
by the dominant undertaking were relevant. The Commission rejected this approach.
According to its analysis, differences in prices could be justified although the costs
incurred in the provision of the respective transactions were equivalent. (347) In
Clearstream v Commission (348) the General Court held that the Commission had been
correct to find that the content of the primary clearing and settlement services for cross-
border transactions provided by Clearstream to the central securities depositories and
the international central securities depositories was equivalent.
10.093 Competitive disadvantage. Where a dominant firm charges its customers different
prices for the same product, this may place the customers paying the higher prices at a
23
real competitive disadvantage. In MEO the Court of Justice held that the fact that a
trading partner is charged more than its competitors for an equivalent service does not,
in itself, mean that competition is, or is capable of being, distorted. Rather, it is
necessary to examine all the relevant circumstances to determine whether the price
discrimination produces, or is capable of producing, a competitive disadvantage. (348a)
In the absence of any objective justification, such a practice may be an abuse within the
meaning of Article 102(c) where:
i) the customers are direct competitors in the downstream market; or
ii) possibly, where the practice has an indirect effect as between the two categories of
customer. (349)
In Aéroports de Paris, the operator of the Paris airports charged different prices for a
licence to provide groundhandling services to aircraft, as between those who provided
such services to third parties and those airlines that provided the services themselves
(self-handling). The General Court upheld the Commission's finding of infringement of
P 916 Article 102(c). (350) In some cases, the dominant supplier is itself a competitor of its
customer in a downstream market, and the resulting disadvantage to that customer
therefore arises in competing with the dominant firm itself. (351)
10.094 Competitive disadvantage in practice. Although the requirement that the
discrimination should cause 'competitive disadvantage' follows from the wording of
Article 102 and is justified as a matter of economic principle, the case law has sometimes
interpreted the requirement rather broadly in two respects. First, the Court of Justice has
stated that the condition is satisfied if the discriminatory pricing 'tends' to distort
competition; in other words, there is no requirement to prove an 'actual quantifiable
deterioration' in the competitive position of customers taken individually. (352)
Secondly, in some cases involving differential tariffs that are not justified by cost, the EU
Courts and the Commission have given 'competitive disadvantage' an expansive reading,
in particular where the discrimination effectively favours the domestic market or internal
operators. On occasion it has appeared that, even where customers charged higher and
lower rates are not competing directly as regards their use of the goods or services
supplied to them by the dominant firm, it is sufficient if they operate in the same market
more broadly defined. In Corsica Ferries, the Court of Justice, on a reference from the
Italian court, considered the different tariffs charged by the port of Genoa for piloting
services: if a vessel held a cabotage licence for the Italian coast (a licence restricted to
Italian flag vessels), it received piloting at substantially lower rates. (353) The Court
clearly regarded this as an abuse, but the statement to that effect in the judgment makes
no reference to the condition in Article 102(c) of a resulting competitive disadvantage.
(354) Similarly, there have been a series of decisions finding that Article 102 is infringed
by differential bases of charging landing fees at airports. (355) Further, the Commission
P 917 has also found that Article 102(c) is infringed when the customer discriminated against
suffers a commercial handicap in competing in any market, on the basis that price
discrimination may sometimes be an exploitative abuse. (356) In MEO, an Article 267
reference concerning the application of Article 102(c) to alleged discrimination by a
Portuguese collecting society, the Court of Justice held that it is necessary to examine all
the relevant circumstances to determine whether price discrimination produces, or is
capable of producing, a competitive disadvantage. In that regard, the Court held that it is
open to a competition authority or national court to assess the extent of the
undertaking's dominant position, its negotiating power in respect of prices, the
conditions and arrangements for charging those prices, their duration and their amount,
and the existence of any strategy aiming to exclude from the downstream market one of
its trade partners that is at least as efficient as its competitors. (357) The preliminary
ruling in MEO means that the existence of a competitive disadvantage cannot be ignored
or assumed; rather, discrimination may be regarded as an abuse only if it tends to lead
to a distortion of competition between a dominant firm's trading partners.
10.095 Different prices to different groups of buyer. Notwithstanding the above case law,
appellate courts in the Member States have recognised that a dominant firm is not
required to reach the same pricing arrangement with all its customers, but can negotiate
arrangements that take account of its customers' different commercial situations. The
issue has arisen before the German Federal Supreme Court and the English Court of
Appeal, both cases coincidentally concerning disputes over the charges levied in
connection with the televised broadcasting of horse racing to betting shops. In Horserace
transmission ('Galopprennübertragung'), (358) the horse racing clubs which held the
exclusive right to commercialise the televising of German horse racing charged a licence
fee for transmission to bookmakers who took their own bets that was substantially higher
than the fee charged to betting shops which offered only totalisator bets. Although the
Court found that the transactions were equivalent, it held that the discriminatory pricing
was not abusive since the companies being charged the lower fees were new market
entrants whom the defendants wished to support: the defendants were legitimately
seeking to promote the totalisator business which was ultimately of benefit for them. In
Attheraces v British Horseracing Board, (359) the defendant ('BHB') arranged the supply of
the precise details of the horses and riders in each race ('pre-race data') for use in
conjunction with the broadcast of British races and charged different rates for different
categories of customer. The Court of Appeal held that such price discrimination was not
P 918
an abuse, observing that the 'mere fact that BHB has negotiated different deals with
24
P 918
two customers, each in the absence of the other, cannot by itself render the difference
objectionable'. (360)
10.096 Price discrimination on grounds of nationality. Price discrimination based on the
national location of the buyer is likely to infringe Article 102. In United Brands v
Commission (361) it was argued that its pricing merely reflected current retail prices in
the relevant Member States, prices which themselves reflected different and often
rapidly changing patterns of demand in the different countries. The Court of Justice held
that UBC was not entitled to discriminate. A rigid partitioning of national markets was
created at price levels which were artificially different, placing certain
distributors/ripeners at a competitive disadvantage, thereby distorting competition in
the internal market. It follows that price discrimination designed to maintain national
boundaries is likely to be an abuse of a dominant position. (362)
10.097 Discrimination that harms consumers. Where the discriminatory conduct of a
dominant company results in one class of ultimate consumer being disadvantaged when
compared with another, that conduct may constitute an abuse. That is the case for non-
price discrimination, (363) and a similar outcome was reached by the Commission in
Deutsche Post — Interception of cross-border mail. In that case, both non-price and price
discrimination were at issue in the treatment by the German postal monopoly of cross-
border mail from the United Kingdom. (364) Deutsche Post ('DP') collected and
distributed all mail coming from the UK but where it suspected that the mail had
originated from an entity in Germany and was being posted back to Germany via the UK
to take advantage of lower UK postal tariffs, DP intercepted the mail and imposed a
surcharge corresponding to DP's own domestic tariff. The Commission found that although
the UK senders of the mail were not in a direct contractual relationship with DP, they
were directly affected by DP's actions and so fell within the class of 'trading parties'
P 919 referred to in Article 102(c). DP's actions placed some of those UK senders at a
competitive disadvantage vis-à-vis others whose mail was not intercepted and
surcharged. Further, the German companies using the remail service were adversely
affected even though they might not qualify as trading parties with DP. (365)
10.098 Objective justification. A dominant firm may demonstrate either that its prima
facie discriminatory conduct is objectively necessary or that the anti-competitive effect
produced by such conduct may be counterbalanced by advantages in terms of efficiency
that also benefit consumers. (366) Discrimination is more likely to be permissible when
based on differences in the costs of production or delivery, including savings resulting
from economies of scale. It is not clear how far a dominant undertaking is entitled to offer
differential prices on wider strategic grounds, for example in response to an offer to the
same customer made by a competitor. In United Brands the Court of Justice stated:
'Even if the possibility of a counter-attack is acceptable that attack must still
be proportionate to the threat, taking into account the economic strength of
the undertakings confronting each other.' (367)
In Compagnie Maritime Belge v Commission (368) and in Irish Sugar, (369) a 'meeting
competition' argument was rejected in circumstances where the price reduction was
made by a 'super-dominant' company to exclude competitors altogether. However, the
EU Courts stressed the peculiar features of those cases, involving the elimination of
competition and (in Irish Sugar) the harm to the single market, and they do not lay down
a general rule. (370)
(iii) Fidelity rebates and similar practices
10.099 Fidelity rebates, discounts and similar practices. Rebates and other financial
inducements (371) are standard commercial practices. A supplier may offer rebates
because, for example, it wishes to incentivise a distributor to promote its products or
because there are cost savings as purchases increase from that supplier. In certain
circumstances, however, rebates may be unlawful if offered by a dominant firm. (372)
Where a dominant firm offers a rebate in return for securing all or an increased
proportion of the business of customers, with the effect that the market is sufficiently
P 922 foreclosed, the rebate may constitute an abuse of a dominant position. This principle
was first established in Suiker Unie v Commission (373) where the Court of Justice held that
Article 102 was infringed when a dominant undertaking operated a system of pricing
which was 'loyalty rebate' designed, through the grant of a financial advantage, to
prevent customers obtaining their supplies from competing producers. The principle has
been affirmed and applied many times, (374) but was subject to an important
'clarification' by the Court of Justice in Intel.
10.100 Analytical framework: exclusionary effect and objective justification. In the
absence of discrimination, the lawfulness of fidelity rebates and similar practices offered
by a dominant undertaking is typically assessed in two stages. The first is to consider
whether the rebate is capable of restricting competition (an 'exclusionary effect' in the
parlance of the case law) in light of all the circumstances of a case. As explained further
below, various factors may be relevant to the first stage, including the extent of the
undertaking's dominant position, the market coverage of the rebate, as well as the
criteria for granting the rebates in question. (375) There is, however, no requirement to
show that rebates result in pricing below cost, (376) although the Commission may take
25
this matter into account when deciding whether to intervene and in support of its
analysis under Article 102. (377) If the rebate gives rise to an exclusionary effect, the
second stage is to determine whether there is an objective economic justification for the
rebate in question. (378) The Court of Justice has said that it is necessary to ask whether
the exclusionary effect arising from the rebate may be counterbalanced, or outweighed,
by advantages in terms of efficiency which also benefit the consumer. It is irrelevant that
the obligation is willingly accepted or even requested by the customer since the abuse
consists of the further weakening of the structure of competition in a market where the
firm is already dominant. (379)
10.101 Analytical framework: the role of the as efficient competitor test. The 'as efficient
competitor' test ('the AEC test') examines whether the pricing practices of a dominant
undertaking could drive a competitor as (or more) efficient as a dominant undertaking
from the market. The AEC test is based on a comparison of the prices charged by a
dominant undertaking and certain costs incurred by that undertaking as well as its
strategy. The AEC test has been applied to selective prices or predatory prices and
margin squeeze. (380) In Tomra (381) the Court of Justice held that the invoicing of
'negative prices', in other words prices below cost prices, to customers is not a
prerequisite of a finding that a retroactive rebate is abusive. In Post Danmark II, (382)
another case involving a retroactive rebate, the Court of Justice held that the AEC test can
be used—but does not have to be used—to find that a rebate scheme is abusive. The AEC
test is therefore one analytical tool amongst others for the purposes of assessing whether
a rebate scheme is an abuse. (383) When considering the capability of a fidelity rebate to
restrict competition, the Court of Justice referred in Intel to the effect on competitors as
efficient as the dominant undertaking and the AEC test. The AEC test clearly played an
important role in the Commission's decision in Intel to show that Intel's fidelity rebates
were capable of restricting competition, (384) but there may be cases where it is
inappropriate or impossible to apply the AEC test: for example, where the structure of
the market makes the emergence of an as-efficient competitor practically impossible.
(385) In those circumstances, the presence of a less efficient competitor might contribute
to intensifying the competitive pressure on the dominant undertaking. (386) In Qualcomm
the Commission considered a price/cost test submitted by Qualcomm, but concluded
that the results of the test failed to support Qualcomm's claim that its exclusivity
payments to Apple were not capable of having anti-competitive effects. (386a)
10.102 Quantity rebates. Quantity rebates are linked to the volume of purchases made
from an undertaking occupying a dominant position are generally considered not to have
the foreclosure effect prohibited by Article 102. (387) If increasing the quantity supplied
results in lower costs for the dominant undertaking, it is entitled to pass on that
reduction to the customer in the form of a more favourable tariff. Quantity rebates are
therefore deemed to reflect gains in efficiency and economies of scale made by the
undertaking in a dominant position. (388)
10.103 Fidelity rebates. A fidelity rebate (also referred to as a 'loyalty rebate', 'market
share based rebate' or 'exclusivity rebate') is a discount that is granted on condition that
a purchaser agrees to show fidelity or loyalty to the dominant undertaking by purchasing
exclusively (or almost exclusively) from that undertaking. In Hoffmann-La Roche v
Commission (389) the Court of Justice stated that an abuse is committed if, without the
purchasers being tied by a formal obligation, the dominant supplier adopts, either under
the terms of agreements concluded with the purchasers or unilaterally, a system of
fidelity rebates. (390) In Intel (391) the Commission imposed a fine of €1.06 billion on that
company both for granting exclusivity rebates and making payments to customers so that
they would delay, cancel or restrict the marketing of a competitor's products. On appeal
the General Court upheld the Commission's decision. (392) On further appeal, however,
the Grand Chamber of the Court of Justice set aside the General Court's judgment. (393)
The Court of Justice referred to paragraph 89 of its judgment in Hoffmann-La Roche and
clarified that in a case where the dominant undertaking submits, during the
administrative procedure, on the basis of supporting evidence, that its conduct was not
capable of restricting competition, the Commission is required to analyse, first, the
extent of the undertaking's dominant position on the relevant market (394) and, secondly,
the share of the market covered by the challenged practice, (395) as well as the
conditions and arrangements for granting the rebates in question, their duration and
their amount; it is also required to assess the possible existence of a strategy aiming to
exclude competitors that are at least as efficient as the dominant undertaking from the
market. (396) This means that, in a case involving a fidelity rebate, there is an evidential
burden on the dominant undertaking to show that its rebates were not capable of
restricting competition. If the dominant undertaking submits evidence to that effect,
then the Commission bears the legal and evidential burden of proof to demonstrate that
the rebates are capable of foreclosing competitors that are at least as efficient as the
dominant undertaking. (397) In Qualcomm the Commission found that Qualcomm's
P 923 exclusivity payments were capable of foreclosing competitors from competing in the
worldwide market for 4G chipsets and were therefore abusive. (397a) The Commission had
regard to the extent of Qualcomm's dominant position, the size of the payments it made
to Apple on condition that Apple would exclusively use Qualcomm chipsets and the
importance of Apple as a customer.
10.104 Turnover-related discounts. In Michelin I, (398) Michelin NV offered its dealers an
26
annual variable discount determined according to the dealer's turnover in Michelin
heavy vehicle, van and car tyres in the previous year. The dealer received its discount, or
the full rate thereof, only if it achieved an annual sales target fixed by Michelin NV.
Neither the discount system as a whole nor the scale of discounts was published by
Michelin NV. The Court of Justice upheld the Commission's decision that the system was
abusive. (399) The Court emphasised the length of the period by reference to which the
discount was calculated, the pressure on dealers to stay with Michelin NV throughout the
period to achieve the sales target, the fact that the discount applied to the total
purchases, the difficulty faced by competitors in matching the Michelin discounts and the
lack of transparency of the system. (400) The 'loyalty mechanism' was therefore
embedded in the combination of an individualised sales purchase target and the
retroactive grant of a rebate 'rolled back' over the previous year. (401) The Court
concluded that the rebate scheme was: (402)
'calculated to prevent the dealers from being able to select freely at any time
in the light of the market situation the most favourable offers made by the
various competitors and to change supplier without suffering any appreciable
economic disadvantage. It thus limits the dealers' choice of supplier and
makes access to the market more difficult for competitors. Neither the wish to
sell more nor the wish to spread production more evenly can justify such a
restriction of the customer's freedom of choice and independence.'
10.105 Turnover-related bonuses. The Court of Justice applied its judgment in Michelin I in
British Airways v Commission, (403) confirming the General Court's judgment (404) that
BA's bonus schemes had restrained the freedom of those agents to deal with other
airlines, and had thereby produced an exclusionary effect. It did so for three reasons. The
EU Courts noted, first of all, that an exclusionary effect may arise from goal-related
bonuses, that is to say those the granting of which is linked to the attainment of an
individual sales objectives defined for each travel agent. (405) Secondly, the EU Courts
held that the fact that BA's bonuses were rolled back over overall turnover during the
P 925 previous year largely took precedence in absolute terms; the retroactive bonuses were
preferred over even more generous offers by BA's competitors. (406) Thirdly, the Courts
held that the pressure exerted on the travel agents by BA was exacerbated by the fact
that BA held a very much larger market share than its competitors. The Article 102
Enforcement Priorities Guidance sets out the factors which the Commission will consider
when assessing the possible anti-competitive foreclosure effects of a conditional rebate
scheme. (407)
10.106 Individualised, retroactive quantity rebates. In Prokent/Tomra (408) the
Commission condemned as abusive exclusivity agreements, individual quantity
commitments and individual retroactive quantity rebate schemes in the supply of
reverse vending machines used to collect beverage containers. The Court of Justice
upheld the General Court's judgment confirming the Commission's decision. (409) The
Court of Justice considered whether it was necessary, in order to show that the retroactive
rebates were capable of significantly foreclosing the market, to calculate the minimum
viability threshold necessary to operate on the relevant market and assess whether the
non-contestable portion of the market (that is to say, the part of demand tied up by the
dominant firm's practices) was sufficiently large to be capable of having an exclusionary
effect vis-à-vis competitors. The Court held that this was not necessary. The Commission
had shown that the proportion of the market covered by Tomra's arrangements was
substantial, covering two-fifths of total demand in the five affected Member States. Such
a practice could not be justified by showing that the contestable part of the market was
still sufficient to accommodate a limited number of competitors:
'[f]irst, the customers on the foreclosed part of the market should have the
opportunity to benefit from whatever degree of competition is possible on the
market and competitors should be able to compete on the merits for the
entire market and not just for a part of it. Second, it is not the role of the
dominant undertaking to dictate how many viable competitors will be allowed
to compete for the remaining contestable portion of demand'. (410)
The Court of Justice returned to the issue in Portugal v Commission, where one ground for
the Commission's finding of abuse was the system of discounts on landing fees based on
the number of landings. (411) The Court noted that the fact that larger purchasers or users
receive a higher average reduction than smaller purchasers or users is inherent in a
system of quantity discounts and does not in itself make the system discriminatory.
However, the Court held that having a high threshold in the system which can be met by
only a few particularly large customers, or the absence of a linear progression in the
increase in quantity discounts, may constitute evidence of discriminatory treatment,
amounting to abuse unless it is objectively justified. (412)
10.107 Standardised, stepped discount schemes. In Michelin II there were a wide variety
of complex pricing schemes in respect of the supply of replacement tyres for heavy
vehicles in France. The various pricing schemes being operated by Michelin included a
'progress bonus' which involved target rebates (that is, quantity rebates based on
standardised, non-discriminatory volume targets), aimed at rewarding increases of
purchases year-on-year. When a dealer went up a step he received the extra rebate not
27
just for the additional purchases but for all purchases made in the reference period; it
was this element which resulted in the bonus having a similar effect to a more
conventional loyalty rebate. The General Court (413) confirmed the Commission's decision
that a quantity rebate system in which there is a significant variation in the discount
rates between the lower and higher steps, which has a reference period of one year, and
in which the discount is fixed on the basis of total turnover achieved during the reference
period, is a loyalty-inducing discount system, (414) and is abusive unless based on a
countervailing advantage which may be economically justified. (415) The General Court
emphasised that it is not necessary to establish any actual effect of foreclosure by the
discount scheme, it is enough to show that it 'tends to restrict competition or, in other
words, that the conduct is capable of having that effect'. (416)
10.108 Discreationary discounts. The 'service bonus' scheme in Michelin II gave Michelin
significant discretion as to whether a dealer would receive a discount. (417) The General
Court agreed with the Commission that such a discount system could be unfair and thus
abusive because it had loyalty-inducing effects, created serious uncertainty for
customers and allowed Michelin to behave in a discriminatory manner. (418)
10.109 Multi-product rebates. In Hoffmann-La Roche v Commission the fact that in certain
cases the rebates were based on purchases of various vitamins was one element
condemned in the Commission's decision, (419) which was upheld by the Court of Justice.
(420) Such 'across-the-board', multi-product or bundled rebates can make it harder for a
competitor that has a narrower product range than the dominant company to compete.
(421) The Commission's Article 102 Enforcement Priorities Guidance says that a multi-
product rebate may be anti-competitive on the tied or the tying market if it is so large
that equally efficient competitors offering only some of the components cannot compete
against the discounted bundle. (422) If the incremental price that customers pay for
P 926 each of the dominant undertaking's products in the bundle remains above its LRAIC of
including that product in the bundle, the Commission will normally not intervene since
an equally efficient competitor with only one product should be able to compete
profitably against the bundle. (423) The Commission may take action, however, if the
incremental price is below the LRAIC because that would imply that an equally efficient
competitor may be prevented from expanding or entering the market. If, however, the
available evidence shows that competitors sell, or are capable of selling, identical
bundles to the dominant firm, the relevant question is not whether the incremental
revenue covers the incremental costs for each product in the bundle, but rather whether
the price of the bundle as a whole is predatory (applying the price/cost tests described
in paragraph 10.081 above). (424)
10.110 Objective justification. As noted in paragraph 10.100 above, the second stage of
analysis of fidelity rebates and similar practices under Article 102 is to consider whether
they have an objective economic justification. In British Airways v Commission (425) the
Court of Justice held:
'Assessment of the economic justification for a system of discounts or bonuses
established by an undertaking in a dominant position is to be made on the
basis of the whole of the circumstances of the case. It has to be determined
whether the exclusionary effect arising from such a system, which is
disadvantageous for competition, may be counterbalanced, or outweighed, by
advantages in terms of efficiency which also benefit the consumer. If the
exclusionary effect of that system bears no relation to advantages for the
market and consumers, or if it goes beyond what is necessary in order to attain
those advantages, that system must be regarded as an abuse.'
In Intel v Commission (426) the Court of Justice held that this balancing of the favourable
and unfavourable effects of a rebate scheme can be carried out only after an analysis of
the intrinsic capacity of that practice to foreclose competitors which are at least as
efficient as the dominant undertaking. The economics literature suggests possible
efficiency justifications for granting rebates or bonuses, such as the recovery of customer-
specific investments or dealing with a free-rider problem, although these arguments have
not yet been considered by the EU Courts. (427) The case law suggests that rebates or
bonuses may be justified as constituting consideration for efficiency gains or cost savings
resulting from purchases made by an individual customer. (428) Following the
condemnation of the rebate arrangements in BPB Industries and British Gypsum, (429) the
Commission indicated that it considered British Gypsum's revised rebate schemes were
permissible: they were essentially volume related, subject to a qualifying level of
P 927 purchases and without a loyalty element. (430) The Commission's Article 102
Enforcement Priorities Guidance indicates that transaction-related cost advantages and
relationship-specific investments may justify rebate schemes. (431)
10.111 Fidelity rebates in national courts. There have been a number of cases where
national courts have considered the legality of rebate schemes under Article 102.
Retroactive rebates schemes operated by the postal service and other former utility
monopolies have been condemned in Denmark and Romania. (432) In SAS the Swedish
Market Court upheld a decision of the Swedish NCA that SAS had abused its dominant
position on the market for domestic scheduled air transportation passenger services by
applying its frequent flyer programme, which was held to constitute a loyalty system. The
28
Market Court held, however, that SAS should only be prohibited from applying this system
in relation to traffic between destinations where SAS faced competition from new
entrants or existing scheduled air passenger transport services. (433) Other instances
where exclusivity arrangements or rebate schemes have been condemned include those
relating to Roquefort cheese, (434) gas meters, (435) TV advertising, (436) instant coffee
(437) and electrical sockets. (438)
(iv) Exclusive dealing and long-term contracts
10.112 Exclusive dealing. The most economically significant form of 'own market'
exclusionary abuse, other than the pricing practices considered above, is exclusive
dealing by a dominant firm which has the effect of foreclosing entry or expansion by
competitors. Entry by a dominant undertaking (439) into contracts under which the
P 928 customer undertakes to acquire all or a substantial proportion of its requirements
from the dominant firm is likely to be an abuse according to the same principles
discussed earlier in relation to loyalty rebates. (440) Such contracts may be abusive even
where they are readily accepted by the undertaking's customers (441) since they can
make the other parties dependent on the dominant undertaking, reducing competition
from its existing competitors and/or deterring new entrants. (442) An exclusivity
requirement for a short period is less likely to constitute an abuse, but may still fall
within Article 102 either because in particular circumstances that may be sufficient to
produce an exclusionary effect, (443) or when the agreement is regularly renewed and
thus has an equivalent effect to a longer-term exclusive commitment. (444)
10.113 Long-term agreements. An abuse can be committed where a dominant
undertaking enters into a long-term agreement which limits the customer's choice of
supplier and makes access to the market more difficult for competitors. This is even more
likely to be the case where the agreement is an exclusive or near-exclusive one. The
P 929 Commission has found that a long-term exclusive licensing agreement between two
undertakings in a dominant position on neighbouring markets is likely to be caught by
Article 102 (as well as Article 101). (445) Where a dominant undertaking entered into a
five-year agreement to buy a considerable proportion of the output of one of its few
competitors, the Commission's investigation resulted in the giving of commitments to
bring the agreement to an end. (446)
10.114 De facto exclusive dealing: discretion to allow purchases from others. Article 102
may apply to contractual provisions that confer discretion on a dominant firm to permit
a customer to purchase from a competitor. A so-called 'English clause' is an example of
such a provision whereby the customer who receives an offer at a lower price must give
the dominant firm an option to match that offer, and only if the supplier declines to do so
can the purchaser take supplies from the alternative source. (447) This is therefore a
qualified form of exclusive dealing which has been found to violate Article 102
nonetheless. (448) In Hoffmann-La Roche v Commission the Court of Justice found that a
clause whereby Roche's customers were obliged to inform it of more favourable offers
made by competitors also placed at Roche's disposal commercially valuable information
about market conditions and the actions of its competitors; and that such a clause meant
that it was for Roche itself to decide (by adjusting its prices or not) whether it would
permit its customers to buy from competitors. (449) In Compagnie Maritime Belge (450)
the Court of Justice upheld the finding of the Commission that it was abusive for a
shipping conference, Cewal, under the terms of an agreement with Ogefrem, the Zaire
(now Democratic Republic of Congo) maritime trade authority, to exercise its veto on the
use of rival carriers. (451) In E-book MFNs and related matters (Amazon) (452) the
Commission provisionally concluded that price and business model parity provisions
P 930 were capable of reducing Amazon's competitors' ability and incentive to develop and
differentiate their e-book offerings, thereby restricting competition in the distribution of
e-books in the EEA.
10.115 De facto exclusive dealing: cabinet exclusivity. Even where a customer is in
principle free to stock competing products, an abuse may still occur if the practical
effect of the terms of supply of a dominant firm is equivalent to exclusive dealing. In Van
den Bergh Foods v Commission (453) the applicant, which held over 75 per cent of the
market for impulse ice cream in Ireland, had an extensive network of supply agreements
with retailers whereby freezer cabinets were provided and maintained free-of-charge
subject to a prohibition on the retailers using the cabinets to store products made by a
third party. The retailers were not restricted from selling competing brands on their
premises provided they did not do so from the applicant's freezer. The General Court
upheld the Commission's decision that these contracts amounted to an abuse. Retailers
of impulse ice cream were generally unlikely to install a second freezer cabinet on their
premises so that the practice had the effect of rendering those outlets 'de facto exclusive
sellers' of the dominant undertaking's ice cream. The Court accepted that such
agreements may be normal commercial practice in the ice cream market and
advantageous for retailers, (454) but held that for an undertaking in a dominant position
to give such inducements to customers constituted an abuse. (455)
10.116 Product swaps. Product-swapping by a dominant supplier, whereby retailers are
induced to replace the products of a new entrant with those of the dominant firm's
products, has been held to be an abuse of a dominant position. (456)
29
(v) Excessive pricing
10.117 Unfairly high prices. It is economically rational for a dominant firm to charge a
price which maximises its profits and is higher than the price it would have been able to
charge in a competitive market. (457) Such a price, however, may result in the imposition
P 931 of unfairly high prices on customers or consumers. Article 102(a) identifies, as an
example of abuse, 'directly or indirectly imposing unfair purchase or selling prices …'.
Unfair pricing may be either unfairly low pricing, designed to eliminate a competitor, as
discussed above, (458) or unfairly high pricing designed to achieve for the dominant
undertaking larger profits than it would earn in a more competitive environment. (459) As
with other forms of abuse, the boundary between the legitimate rewards of monopoly
power as the fruits of successful investment, innovation or efficiency, and illegitimate use
of such power, is hard to identify with any precision. (460) Although excessive pricing is
clearly established as a form of abuse by a number of cases, including for example
General Motors , United Brands , British Leyland, (461) and Bodson, (462) decisions by the
Commission, national competition authorities and national courts demonstrate the
challenges involved in establishing unlawful excessive prices. (463) There are also cases
where excessive pricing is considered in conjunction with other pricing abuses such as a
margin squeeze or price discrimination. While cases involving this category of abuse are
relatively rare, the Commission and national competition authorities have been
prepared to pursue them. (464)
10.118 Need to assess the relationship between the price and the economic value of the
product. In General Motors v Commission (465) the Court of Justice held that an abuse
might lie in the imposition of a price that 'is excessive in relation to the economic value
of the service provided, and which has the effect of curbing parallel imports by
neutralising the possibly more favourable level of prices applying in other sales areas' in
P 932 the EU. (466) On the facts of the case, the Court of Justice held that GM had given an
adequate explanation of the prices that it had charged for inspecting imported motor
vehicles to comply with standards imposed by Belgian legislation. The inspections
constituted an occasional activity for GM (they were normally carried out by State testing
stations) and were of 'minute importance' compared with the inspections which GM
normally carried out on the vehicles that it put on the market. Further, GM rapidly
reduced the charge for the inspection of imported vehicles to a level that was more in
line with the real cost of the operation and refunded the excess to the parties concerned.
In these circumstances, the Court held that GM's pricing could not be regarded as an
abuse. In Chiquita (United Brands) (467) the Commission applied the test in General Motors
and decided that United Brands' prices in certain Member States were 'excessive in
relation to the economic value of the product supplied'. The Commission relied primarily
on the widely differing prices charged as between one Member State and another.
Starting from the assumption that prices charged to customers in Ireland were high
enough to yield a profit, and noting that prices to customers in other Member States were
sometimes more than 100 per cent higher, the Commission concluded that profits were
excessive. On appeal, the Court of Justice held (468) that the Commission's findings were
defective, in that there was considerable doubt whether the price in Ireland had yielded
a profit. The Court did confirm however that 'charging a price which is excessive because
it has no reasonable relation to the economic value of the product supplied' is an abuse.
The Court indicated that an objective means of determining such excess would be a
comparison of selling prices with costs of production but the Commission had made no
attempt to examine United Brands' costs, which the Court ruled should have been
possible. The Court of Justice held that it is advisable to ascertain:
'whether, in imposing that price, the undertaking has made use of the
opportunities arising out of its dominant position in such a way as to reap
trading benefits which it would not have reaped if there had been what is
referred to as normal and sufficiently effective competition.' (469)
10.119 The United Brand questions. In United Brands the Court of Justice held that, when
determining whether a price is abusively high, the questions to be determined are
'whether the difference between costs actually incurred and the price actually charged is
excessive, and, if the answer to this question is in the affirmative, whether a price has
been imposed which is either unfair in itself or when compared to competing products'.
(470) The Court acknowledged, however, that 'other ways may be devised — and economic
theorists have not failed to think of several — of selecting rules for determining whether
the price of a product is unfair.' (471)
10.120 There is no single method for determining whether a price is excessive. In
Autorties?bu un komunic?šan?s konsult?ciju a?ent?ra / Latvijas Autoru apvien?ba v
Konkurences padome ('AKKA/LAA') the Court of Justice confirmed that there are other ways
of determining whether a price may be excessive, (472) referring to the method based on
a comparison of prices applied in the Member State concerned with those applied in
P 934 other Member States. (473) The case law and decisional practice to date has tended to
focus on the questions posed in paragraph 252 of the judgment in United Brands. (474)
10.121 United Brands question 1: is the price excessive? The first limb of the United
Brands test is whether there is a difference between the costs actually incurred and the
price actually charged which is excessive. (475) Costs refers to the costs directly incurred
30
in supplying the good or service and an appropriate apportionment of the indirect costs
that are reasonably attributable to the good or service. (476) There is no single
methodology for measuring costs. (477) The fact that the price charged provides a high
margin over cost is not conclusive of abuse. (478) For example, for pharmaceutical drugs,
it is generally recognised that the revenue earned from the drugs which are brought to
market has to cover the manufacturer's research and development costs which embrace
also other drugs that never reach production. (479) Moreover, the English Court of Appeal
has said that the law on excessive pricing is about the distortion of competition and
safeguarding the interests of consumers and not about controlling excessive profits. (480)
Whereas costs plus a reasonable profit margin ('cost+') may represent a baseline below
which a price could not be considered excessive, a price above that figure is not
necessarily abusive. (481) Furthermore, calculation of what is a 'reasonable profit' can
itself be a difficult and contentious exercise. (482)
10.122 Economic value of the product. The judgments in General Motors and United Brands
both referred to the economic value of the product, (483) without explaining what is
meant by the term. The economic value of a product is not necessarily the same as what
it costs to produce. (484) The economic value of a product may reflect its revenue-
earning potential to the person who acquires it; for example the economic value of
media rights for access to film and broadcast sporting events is not (or not only) the cost
to the supplier of making the media rights available; rather it is the revenue-earning
asset or opportunity for broadcasters on televising those sports events. (485) Having said
this, the economic value does not mean simply what the consumer is prepared to pay. As
the Court of Appeal observed in Attheraces 'the economic value of a product in market
terms is what it will fetch. This cannot, however, be what Article [102 envisages], because
the premise is that the seller has a dominant position enabling it to distort the market in
which it operates. (486) Another, non-cost related factor that may affect the economic
value of a product is if it gives rise to a 'positive externality', that is to say, the product
has beneficial effects that go beyond the trading parties and affect the welfare of third
parties, such that producers may seek to 'internalise' external benefits when setting
prices. In Port of Helsingborg (487) the Commission decided that the 'economic value' of a
port service should be assessed by taking into account both the perspective of the buyer
(the demand-side) and the perspective of the provider (the supply-side):
'The demand-side is relevant mainly because customers are notably willing to
pay more for something specific attached to the product/service that they
consider valuable. This specific feature does not necessarily imply higher
production costs for the provider. However it is valuable for the customer and
also for the provider, and thereby increases the economic value of the
product/service.'
Thus, the assessment of the reasonable relation between a price and the economic value
of the product must consider the relevance and relative weight of non-cost related
factors. (488) Economic value was also considered by the Commission in the context of
the remedy it imposed in Microsoft (489) to achieve interoperability between its
dominant PC client operating system and work group server operating systems. The
Commission decided that in order to be reasonable, the charges for access to Microsoft's
interoperability information must allow competitors to compete viably with Microsoft
and represent fair compensation for the value of the technology transferred, excluding
P 935 the value that derived from Microsoft's market power. (490) Relevant factors included
how much of the technology was Microsoft's own innovation rather than its adaptation of
publicly available information and what charges were made by suppliers of comparable
protocol technology. The Commission's analysis was upheld by the General Court which
emphasised that allowing Microsoft to charge a fee reflecting the value of 'the mere
ability to interoperate' with Microsoft's operating system would 'in effect allow it to
transform the benefits of the abuse into remuneration for the grant of licences'. (491)
10.123 United Brands question 2(a): is the price unfair in itself? The second United Brands
question is, in fact, two alternative questions: (a) a price is either unfair in itself or (b) a
price is unfair when compared to competing products. It is sufficient to answer either
question affirmatively. (492) When determining whether an excessive price is 'unfair in
itself', it seems to be necessary to take into account the competitive conditions and any
related abusive conduct that may enable the dominant undertaking concerned to charge
supra-competitive prices. (493) There is no precise arithmetic relation between price and
the economic value of a product or service for it to be judged fair or unfair. Determining
how far above the economic value a price must be before it can be said to bear no
reasonable relation to the economic value (and thus be unfair in itself) is a matter of
judgement, having regard to the circumstances of the individual case. (494) In Phenytoin
sodium capsules (495) the UK Competition and Markets Authority ('the CMA') concluded
that the prices charged respectively by Pfizer and Flynn Pharma for the supply of an anti-
epilpepsy drug were unfair in themselves. The CMA justified this conclusion by reference
to (among other factors) the existence of a substantial disparity between the prices and
the economic value of the drug; the fact that the competitive conditions on the relevant
market did not function in a manner that would secure a reasonable relationship
between price and economic value and that the prices in question had an adverse effect
on the final customer.
31
10.124 United Brands question 2(b): is the price unfair when compared to competing
products? In some cases, as envisaged by the judgment in United Brands, a comparison
may provide a useful benchmark for determining unfairness. If a price exceeds a
benchmark price, it is 'for the undertaking in question to justify the difference by
reference to objective dissimilarities' between the products or services compared. (496)
In British Leyland v Commission there was a straightforward comparator since the case
concerned the fee charged for the issue of certificates of conformity for left-hand drive
vehicles which was considerably higher than the fee charged by the same company for
the issue of such certificates for right-hand drive vehicles. (497) In Bodson, which
P 936 concerned the price charged for funerals, the Court of Justice indicated that the price
charged by those with an exclusive concession to operate funerals in a particular area
could be compared to the prices charged in other areas that were open to competition.
(498) In some cases, however, an appropriate comparator may not be available; (499) or if
the selected comparator's price requires adjustment to account for different
circumstances, that can make a reliable comparison difficult or impossible. (500) In the
UK case of Napp Pharmaceutical? (501) the methods used to determine whether a price
was unfairly high included comparisons of (i) Napp's prices with Napp's costs; (ii) Napp's
prices with the costs of its next most profitable competitor; (iii) Napp's prices with those
of its competitors; and (iv) Napp's prices with prices charged by Napp in other markets.
Those methods were held to be among the approaches that may reasonably be used to
establish unfairly high prices. (502)
10.125 Price is appreciably higher than prices in other Member States. When a dominant
undertaking imposes scales of fees for its services which are appreciably higher than
those charged in other Member States, and where a comparison of the fee levels has
been made on a consistent basis, that difference must be regarded as indicative of an
P 937 abuse of a dominant position. (503) This comparative method for determining an
abusive price has been applied to a number of cases involving copyright management
organisations charging royalties for the licensing of copyright musical works. In Kanal 5
(504) the Court of Justice held royalties calculated based on the revenue of the television
broadcasting societies, were, in principle, reasonable in relation to the economic value
of the service provided by STIM. (505) The Court held that this method of setting the price
was not abusive unless another method was available which enabled the use of the works
and the audience to be identified more precisely, without a disproportionate increase in
the costs incurred in the management of contracts and the supervision of the use of the
copyright works. Similarly, when a sporting body or association sells the broadcasting
rights to its events, what is supplied is essentially a licence to enter the stadium and film,
the cost of which to the supplier is negligible. (506) In OSA (507) the Court of Justice held
that if a collecting society charges fees that are appreciably higher than those charged by
collecting societies in other Member States, without the difference being objectively
justified by the different conditions in those other Member States, those fees may
infringe Article 102. In AKKA/LAA (508) the Court of Justice held that it is permissible to
compare the rates charged by a copyright management organisation in one Member
State (Latvia) with those applicable in neighbouring Member States (Estonia and
Lithuania) as well as with those applicable in other Member States adjusted in
accordance with the PPP index, provided that the benchmarks in question are selected in
accordance with 'objective, appropriate and verifiable criteria' and that the comparisons
are made on a consistent basis. (509) It is also permissible to compare the rates charged
in one or several specific user segments if there are indications that the excessive nature
of the fees affects those segments. (510) The Court held that there is no minimum
threshold above which a rate must be regarded as 'appreciably higher', given that the
circumstances specific to each case are decisive; however, the difference between the
rates compared will be 'appreciable' if it is significant and persistent. (511) Such a
difference is indicative of abuse of a dominant position and it is for the copyright
P 938 management organisation holding a dominant position to show that its prices are fair
by reference to objective factors that have an impact on management expenses or the
remuneration of rights holders. (512)
10.126 Justificiation of significant and persistent price differentials. A dominant
undertaking is entitled to seek to justify any difference by relying on objective
dissimilarities between the situation of the Member State concerned and that of the
other Member States included in the comparison. (513) In the case of copyright
management organisations, such a justification could be the existence of a national law
on fair remuneration that is different from such laws in the other Member States, and may
also take account of the relationship between the level of the fee and the amount paid to
the rightholders. (514) In Tournier (515) the Court of Justice recognised that the proportion
of fees taken up by collection, administration and distribution expenses (as opposed to
payments to copyright holders) could be due to the lack of competition on the market
and would therefore not be a valid justification of any price difference. In AKKA/LAA (516)
the collection, administration and distribution expenses did not account for more than
20 per cent of the total amount collected which did not appear prima facie to the Court of
Justice to be unreasonable in comparison with the sums paid to the copyright holders
and, subsequently, as evidence of inefficient management. The Court also noted that the
higher level of those expenses in Latvia than in neighbouring countries, Estonia and
Lithuania, might be explained by objective factors affecting costs, such as specific
regulation that places a heavier burden on the administration or other features specific
32
to the market concerned. (517)
(d) Related market abuses

(i) Generally
10.127 'Leveraging' or extension of market power. Many cases under Article 102 involve
some form of 'leveraging' of market power by an undertaking from the dominated market
(often based on some form of monopoly right or superior product or service) to a related
market that is more readily contestable. Such cases often, but not always, involve
exclusionary abuses on 'related markets'. (518) Thus, a common theme in most if not all
'related market' abuses (such as margin squeezing, (519) tying and bundling, (520) and
refusal to deal (521) ) is the use of market power on one market, or segment of that
market, to prevent or distort competition on a related market or market segment,
normally to the advantage of the dominant undertaking or a related company. Although
predatory pricing, exclusive dealing, fidelity rebates and selective discounting schemes
P 939 are naturally seen as 'own market' abuses, they too can sometimes be understood as
'leveraging' cases. (522) Some economists have questioned the basis for objecting to
leveraging as a monopolist can earn its monopoly profit only once; if a monopolist tries
to raise prices for related products, the effect is said to be the same as setting a
monopoly price for the monopolised product. (523) Issues of objective justification and
the principle of proportionality are frequently important in cases of leveraging of market
power, the question being whether the dominant firm has a legitimate basis for its
conduct in the related market and, if so, whether such conduct goes beyond what is
necessary to attain that legitimate objective. (524)
10.128 Margin squeezing, price discrimination and cross-subsidies. A vertically
integrated undertaking which is dominant on an upstream market may be able to
exclude or inhibit those competing against its own downstream operations. It may do this
by setting input prices for competitors at a level which leaves them insufficient margin to
compete effectively in the downstream market, having regard to the retail prices that the
dominant firm is charging on that downstream market. Exclusionary conduct may also
occur where the upstream arm of the dominant firm offers more favourable terms to its
related downstream arm than those it offers to independent customers. In addition, the
dominant firm may on occasion be prepared to forego part of its upstream profitability
in order to subsidise operations on related markets where it faces greater competition.
These issues are addressed in the following paragraphs.
(ii) Margin squeeze
10.129 Margin squeezing is an independent abuse. Investigations of alleged 'price
squeezing' or 'margin squeezing' (525) have become of increasing significance and
concern in the context of pricing for access to networks. In such cases the crucial issue is
the price at which the network owner can be required to provide access and thereby to
facilitate competition on the downstream market. The Court of Justice has endorsed the
existence of margin squeezing as a distinct abuse in Deutsche Telekom v Commission (526)
and in TeliaSonera. (527) In TeliaSonera the Court of Justice was asked to rule on the
P 940 interpretation of Article 102 as regards the conduct of a former monopoly fixed telephone
network operator, TeliaSonera, in relation to the wholesale prices it charged other
operators for a particular input product for ADSL (asymmetric digital subscriber line)
connections and the retail price for ADSL services it offered to consumers. TeliaSonera
was not under any regulatory obligation to provide the wholesale ADSL product to other
operators. The Court of Justice held that there would be an abusive margin squeeze: (528)
'… if, inter alia, the spread between the wholesale prices for ADSL input
services and the retail prices for broadband connection services to end users
were either negative or insufficient to cover the specific costs of the ADSL
input services which TeliaSonera has to incur in order to supply its own retail
services to end users, so that that spread does not allow a competitor which is
as efficient as that undertaking to compete for the supply of those services to
end users.
In such circumstances, although the competitors may be as efficient as the
dominant undertaking, they may be able to operate on the retail market only
at a loss or at artificially reduced levels of profitability.'
The Court held that the abuse was 'the very existence of the margin squeeze' and not the
precise spread so that it was not necessary to establish either that TeliaSonera's
wholesale price was excessive or that its retail prices were predatory. (529) The Court also
rejected the argument that a margin squeeze can be an abuse only if it can be shown to
be an abusive refusal to supply. (530) The relevant question is whether the dominant
undertaking would have been sufficiently efficient to offer its retail services to end-users
otherwise than at a loss if it had been obliged to pay its own wholesale prices for the
intermediary services. If it would have been unable to offer its retail services otherwise
than at a loss, that would mean that competitors who might be excluded by the
application of the pricing practice in question could not be considered to be less
efficient than the dominant undertaking and, consequently, that the risk of their
33
exclusion was due to distorted competition. (531) Such competition would not be on the
merits.
10.130 Margin squeeze: the applicable costs test. As with other pricing abuses, difficult
questions of fact may arise in determining the appropriate margin that is required to
sustain competition on the downstream market without requiring the dominant upstream
P 941 supplier to facilitate inefficient competition to its downstream business. (532) There
was initially some uncertainty as to whether the test should relate to the profitability of
the dominant firm's own downstream operation, a so-called 'equally efficient operator'
test, or whether the objective nature of Article 102 could be reflected in a 'reasonably
efficient operator' test. (533) However, this debate has been resolved by the judgments of
the Court of Justice in Deutsche Telekom (534) and TeliaSonera. (535) The analysis should
generally focus on a comparison between the costs and prices of the dominant
undertaking and on its strategy. The costs and prices of competitors will normally be
relevant only in exceptional circumstances. (536) As regards how to assess whether the
dominant undertaking's downstream arm would operate profitably on the basis of the
upstream charges levied by its upstream arm, two profitability methods were used by the
Commission in Wanadoo España v Telefónica; the so-called period-by-period method
(which assessed Telefónica's profitability every year), and the discounted cash flows
method (which allowed below-cost pricing in the initial phase of an expanding market
but required Telefónica to be profitable over the period 2001–2006) proposed by
Telefónica itself. Both methods led to the same conclusion. (537) On appeal the General
Court rejected Telefónica's contention that the Commission should have completed its
'equally efficient competitor' analysis with a study of the margins of the main alternative
operators on the Spanish market; the application of Article 102 is determined in principle
based on its own situation, and therefore on the basis of its own charges and costs. (538)
10.131 Margin squeeze can be an abuse only if it leads to anti-competitive effects.
Another question which has arisen in respect of this conduct, as with other pricing abuses,
is whether the existence of an inadequate margin is sufficient in itself to found a case of
P 942 abusive margin squeeze. The Court of Justice has now given a decisive answer to that
question consistent with other recent case law. In TeliaSonera, following its approach in
Deutsche Telekom, the Court indicated that a finding of anti-competitive effect was a
necessary condition for a finding of margin squeeze. However, it appears that the
required standard is not actual anti-competitive effects but only a finding of potential
exclusionary effect: (539)
'Where a dominant undertaking actually implements a pricing practice
resulting in a margin squeeze on its equally efficient competitors, with the
purpose of driving them from the relevant market, the fact that the desired
result, namely the exclusion of those competitors, is not ultimately achieved
does not alter its categorisation as abuse within the meaning of Article 102
TFEU …
However, in the absence of any effect on the competitive situation of
competitors, a pricing practice such as that at issue in the main proceedings
cannot be classified as an exclusionary practice where the penetration of
those competitors in the market concerned is not made any more difficult by
that practice … .' (540)
10.132 Circumstances in which margin squeeze is likely to lead to anti-competitive
effects. In TeliaSonera the Court of Justice indicated that, although it is not necessary to
show that the product being supplied by the dominant firm is an indispensable input
from the customer's point of view, if the wholesale product is shown to be indispensable
for the sale of a retail product, then 'at least potentially anti-competitive effect of a
margin squeeze is probable'. (541) A sufficient anti-competitive effect was also 'probable'
where the margin in question was 'negative', that is to say the wholesale price was higher
than the retail price (sometimes referred to as a 'margin crush' rather than a mere margin
'squeeze'). (542) Conversely, if the margin remains positive, it must be demonstrated that
the price level is likely to have the consequence that it would be at least more difficult
for competitors to trade on the relevant market. (543) The degree of dominance held by
an undertaking is, as a general rule, significant in relation to the extent of the effects of
the conduct of the undertaking concerned. (544)
10.133 Margin squeeze: irrelevant considerations. In TeliaSonera the Court of Justice held
that the following factors are, as a general rule, irrelevant to an assessment whether a
pricing practice is abusive: (a) the absence of any regulatory obligation on the dominant
firm to supply the input product; (545) (b) the fact that the dominant firm is not also
dominant in the downstream retail market; (546) (c) whether the customers are new or
existing customers of the dominant firm; (547) (d) the fact that there is no evidence of the
ability of the dominant firm to recoup any losses caused by the margin squeeze; (548)
P 943 and (e) the extent to which the market concerned is a mature market or one that
involves new technology requiring high levels of investment. (549)
10.134 Margin squeeze: objective justification. The formulations of the margin squeeze
test do not generally refer in terms to the absence of objective justification, but it is
inherent in the scheme of Article 102, that a margin squeeze will not be abusive if there is
an objective justification for the conduct in question. A dominant undertaking is therefore
34
entitled to put forward an objective justification for imposing a zero or negative margin
on downstream competitors or otherwise show that a margin squeeze produced
efficiency gains. For example, an objective justification might be that a new entrant
(whose margins had been squeezed) was not engaging in a genuine economic activity in
the downstream market. (550) In Telefónica, however, the Commission rejected the
contention that its pricing conduct was objectively justified and had produced efficiency
gains. (551)
10.135 National cases on margin squeezing. There have been a number of decisions in
Member States concerning margin squeezes imposed by former monopoly telecoms
network operators who offer wholesale services to their downstream competitors. (552) As
regards other sectors, there have been important UK cases in relation to margin
squeezing under the UK competition provisions equivalent to Article 102. In Genzyme,
(553) which concerned the supply of homecare services to patients being treated with the
P 944 drug Cerezyme, Genzyme offered to supply the National Health Service ('the NHS') with
the drug and associated services provided by its own in-house provider, Genzyme
Homecare, at the same price as it offered its competitor, Healthcare at Home, for the
drug alone. Consequently, Healthcare at Home could not earn any margin on the supply
of homecare services to the NHS unless it charged a higher price than was available to
the NHS from Genzyme. The Tribunal found that Genzyme's pricing policy constituted a
margin squeeze, the effect of which was to force Healthcare at Home to sustain a loss in
the provision of homecare services. (554) In Albion Water, (555) a small market entrant in
the retail supply of industrial water challenged the pricing practices of D?r Cymru, the
monopoly supplier in Wales on the upstream market for treatment and distribution and
the incumbent supplier on the downstream retail market, on the basis that its charges for
partial treatment and distribution of water sourced from a third party, United Utilities,
imposed a margin squeeze. The English Court of Appeal, upholding the decision of the UK
Competition Appeal Tribunal ('CAT'), held that it is not a condition of a margin squeeze
abuse that the squeezed customer engages in a 'transformative activity' with the
wholesale input or that the dominant firm avoids any costs by virtue of supplying the
input to a retail competitor rather than the end product to customers. (556)
10.136 Margin squeezing: remedies. If a competition authority or court finds that a
dominant undertaking has failed to maintain a sufficient margin between its upstream
and downstream prices such that competition may be restricted or distorted in the
downstream market, the question of the appropriate remedy arises. Two UK cases,
Genzyme and Albion Water, are instructive on this issue. (557) In both cases the CAT was
confronted with the difficulty of how to fashion an effective remedy in such cases, and
there is a difference in the approach adopted in the two cases. At the interim stage, both
Genzyme and D?r Cymru were required to supply their respective products at a fixed
discount off their retail price in order to provide a conservative margin pending the
outcome of the appeal. (558) However, in Genzyme, after delivery of its judgment on
abuse, the CAT obtained a further report from the OFT on the level of margin required to
remedy the abuse as found, (559) describing its task as having to determine what ex-
manufacturer price for Cerezyme would enable a reasonably efficient (560) homecare
services provider to supply its services to patients and in so doing earn a competitive
return. By contrast, following the finding of margin squeeze in Albion Water, discussed
P 945 above, the CAT held that it was not appropriate in the circumstances of that case to set
a minimum retail margin so that the final relief granted was limited to a declaration that
the abuse had taken place and an order that D?r Cymru bring the infringement to an end
and refrain from any conduct having the same or equivalent effect. (561)
10.137 Cross-subsidisation as a distinct form of abuse? As a matter of principle, a
dominant firm should be entitled to the benefit of its economic strength and efficiency
even if that has adverse effects on its competitors, subject to the restrictions described
at the start of this Section. One issue that remains unresolved is the extent to which an
undertaking that enjoys market power and profitability on one market should be entitled
to cross-subsidise its operations on other more competitive markets, or indeed whether
such conduct could constitute an abuse separate from the other pricing abuses already
considered. Thus far, the Commission has dealt with the issue of cross-subsidies largely in
the context of the postal services sector. (562) The Commission has defined cross-
subsidisation as occurring:
'… where the earnings from a given service do not suffice to cover the
incremental costs of providing that service and where there is another service
or bundle of services the earnings from which exceed the stand-alone costs.
The service for which revenue exceeds stand-alone cost is the source of the
cross subsidy and the service in which revenue does not cover the incremental
costs is its destination.' (563)
The Commission has cast doubt on whether the principles established in these decisions
are of general application, outside the situation where a company operates both in an
area protected by statutory monopoly and in an area open to competition. (564) In the
two Port of Helsingborg decisions, (565) among the complaints about the charges imposed
P 947 by the Port on ferry operators was an allegation that the profits derived from the ferry
operations were used to cover the losses generated by the Port's other operations. The
Commission held that this could not be regarded as being an abuse in itself. Outside the
35
context of State-supported monopoly rights as exist in the postal sector, the extension of
a dominant position to another market would normally constitute an infringement only
when it weakens or reduces the degree of competition in the subsidised market. (566)
There was no evidence that the use of profits derived from the ferry operations to cover
the losses generated by the other operations would weaken or reduce competition in the
neighbouring market for the provision of port facilities and services to cargo vessels
where the Port of Helsingborg was in competition with other ports. (567)
(iii) Exclusionary non-price practices on related markets
10.138 Introduction: tying, bundling and refusal to supply. A dominant undertaking may
seek to 'leverage' or extend its market power from the dominated market into a related
market by engaging in:
(a) tying and bundling, whereby a dominant undertaking coerces customers for the
'tying product' to acquire another 'tied product', thereby leveraging its power on
the 'tying' market on which it is dominant to distort the conditions of competition
on the 'tied' market and/or reinforce its position on the tying product market;
(b) a refusal to supply a product or service or to provide access to infrastructure in
respect of which it is dominant and thereby eliminates effective competition on a
downstream market, normally a market on which it also has an interest but where
its market position is considerably weaker or less well protected from actual or
potential competition. In the absence of such a leveraging effect, refusal to supply
customers would in general simply lead to a counter productive reduction in the
dominant firm's business. (568)
There is an analytical overlap between these two types of conduct, in that one could
readily describe tying or bundling as a form of 'constructive' refusal to supply, the
dominant firm making supply of the product in respect of which it enjoys market power
conditional on the supply of another product that the customer may not want or need, or
that it could acquire more efficiently or cheaply from another supplier. (569)
(iv) Tying and bundling
10.139 Generally. The illustrative list of abuses contained in Article 102 includes, in sub-
paragraph (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.'
Such an abuse involves what is often referred to as 'tying' or 'bundling'. (570) A typical
example of tying is where the dominant firm is prepared to supply the product in respect
of which it holds a dominant position ('the tying product') only if the customer also agrees
to buy another product ('the tied product'). The dominant firm may not be dominant in
the supply of the tied product, the mischief often being the attempt to extend its market
strength into the market for the tied product, to the detriment not only of its customer
but also of its competitors in the supply of the tied product. (571)
10.140 'Pure', 'technical' and 'mixed' bundling. There are no universally accepted
definitions of tying and bundling. The two terms themselves are often used without
distinction, although in the strict sense tying may be thought of as arising when an
undertaking sells the tied product separately but will not sell the tying product
separately, whereas (pure) bundling arises when an undertaking will not sell either
product separately but only the two together as a package. Moreover, in either case
similar results can be achieved indirectly by forms of pricing that provide an incentive to
acquire the tied or bundled product, and the economic effects of the different
arrangements do not necessarily relate to their formal nature. In General Electric v
Commission, (572) a case involving a mainly non-horizontal merger that was prohibited
under the Merger Regulation, the General Court identified three kinds of bundling when
considering whether the merged entity might engage in conduct that would create or
strengthen a dominant position:
(a) pure bundling (where sales are tied by means of a purely commercial obligation to
purchase two or more products together);
(b) technical bundling (where sales are tied by means of the technical integration of
the products); and
(c) mixed bundling (where a number of products are sold as a package on more
favourable terms than if the products are purchased separately). (573)
Mixed bundling may represent an efficiency gain, and thus not constitute an abuse at all,
or it may be a form of exclusionary pricing designed to squeeze competitors in the other
products out of the market. (574) Such pricing is equivalent to a bundled rebate, where a
P 948 firm gives a rebate on the price for the product in respect of which it is dominant
dependent upon the purchase also of one or more other products in which it faces
competition. (575)
10.141 Necessary conditions for a finding of abusive tying. In Microsoft (576) the General
Court upheld the Commission's decision to rely on four factors to find that Microsoft had
36
abused its dominant position by bundling the Windows PC client operating system with
Windows Media Player: first, the tying and tied products must be two separate products;
secondly, the undertaking concerned must be dominant in the market for the tying
product; thirdly, the undertaking concerned does not give customers a choice to obtain
the tying product without the tied product; and fourthly, the tying practice forecloses
competition.
10.142 There must be separate tying and tied products. Tying and bundling arise where
what is on offer comprises two distinct products rather than a combination of different
components in a single product; for example, the supply of shoelaces in shoes or buttons
on clothing will not be regarded as a tie-in or bundle. The issue of whether where there is
a sufficient connection between the two products for it to be appropriate for them to be
considered parts of a composite product, or whether abusive bundling had taken place
was a major issue in Microsoft. (577) In that case the General Court considered whether a
client PC operating system and a streaming media player were two distinct products. The
Court held that the distinctiveness of a product was to be assessed by reference to
consumer demand and the relevant demand was for the tied product; it was not
necessary to show that there was a demand for the tying product without the tied
product. (578) The General Court held that the existence of independent companies which
specialised in the production and sale of streaming media players was strong evidence
P 949 that there was a separate market for that product. Although customers could download
competing media players through the internet often without charge, the Court held that
the pre-installation of Windows Media Player in the Windows client operating system
operated as a disincentive for PC manufacturers to include competing media players.
(579) In its Article 102 Enforcement Priorities Guidance the Commission says that two
products are distinct if, in the absence of tying or bundling, a substantial number of
customers would purchase the tying product without also buying the tied product from
the same supplier. (580) The General Court has emphasised that the existence of
undertakings specialised in the manufacture of the tied product without the tying
product is a 'strong indication' of separate markets for the tied and tying products. (581)
10.143 Consumables tied with machinery. In two important cases, the Commission and
the EU Courts have considered a form of tying whereby the manufacturer of a machine or
machine parts ties the purchaser into also buying the associated consumables. In Hilti,
the undertaking was dominant in the supply of power actuated nail guns and of the
'consumables' used in those guns, namely the cartridge strips and nails. There were a
number of nail producers who were able to produce nails which were compatible with the
Hilti machines but who were not able or willing to produce the cartridge strips. Hilti took
steps to tie the supply of nails into the supply of cartridge strips to ensure that customers
who purchased cartridge strips from Hilti also bought from Hilti the corresponding
number of nails for use with those cartridges. (582) The General Court upheld the
Commission's finding that this conduct was abusive. (583) Similarly, in Tetra Pak II the
Commission, upheld by the General Court and the Court of Justice, condemned clauses
whereby Tetra Pak had tied the sale of carton packaging materials to the sale of its filling
machines by requiring the purchasers of the machines to agree to purchase from Tetra
Pak all their supplies of cartons. (584) The Court of Justice stated that even where tied
sales of two products are in accordance with commercial usage or there is a natural link
P 950 between those products, such sales may still constitute an abuse within the meaning of
Article 102 unless they are objectively justified. (585) It is not necessary for tying or
bundling to fall within Article 102(d) in order for it to constitute an abuse, a point also
made by the General Court in Microsoft v Commission. (586)
10.144 Tying of other ancillary services. A tying obligation imposed in respect of services
which are ancillary to the supply of the principal product may infringe Article 102. In
Tetra Pak II (587) the General Court held that clauses requiring the customer to obtain its
maintenance and repair services (including supplies of any spare parts) for the machines
from Tetra Pak were abusive. The clauses were not limited to the guarantee period but
applied for the whole life of the machine and were not therefore justified by the
contractual responsibility which the guarantee placed on Tetra Pak. In Napier
Brown/British Sugar (588) the Commission held that it was abusive to pursue a policy of
delivered rather than ex-factory pricing, such that the cost of transport to the customer's
site was included in the price; British Sugar thereby reserved for itself the separate but
ancillary activity of delivering the sugar which could otherwise be undertaken by an
independent haulage contractor. (589)
10.145 Pre-installation of applications on mobile operating systems. In Google: Android
(590) the Commission is investigating whether Google may have abused its dominant
position in general internet search by tying or bundling certain Google apps and services
distributed on mobile devices using the Android operating system. In April 2016, the
Commission sent a statement of objections to Google, alleging that it had abusively
required smartphone and tablet manufacturers to pre-install Google's search engine and
internet browser as a condition to license certain Google proprietary apps. In addition,
the Commission suspects that Google may have given financial incentives to
manufacturers and mobile network operators on condition that they exclusively pre-
install Google's search engine on their devices. In the Commission's preliminary view,
such conduct harms consumers because they are not given as wide a choice as possible
and because it stifles innovation.
37
10.146 Coercion. Article 102(d) refers in particular to the anti-competitive vice of making
contracts subject to acceptance of supplementary obligations. A hallmark of tying is that
P 951 consumers are prevented from using competitors' tied products instead of, or in
addition to, the dominant firm's tied product. In Microsoft (591) the General Court agreed
with the Commission that coercion exists when a dominant undertaking deprives its
customers of the realistic choice of buying the tying product without the tied product.
The Court further held that neither Article 102(d) nor the case law on bundling requires
that consumers must be forced to use the tied product or prevented from using the same
product supplied by a competitor of the dominant undertaking in order for such conduct
to be capable of being abusive. (592) In Streetmap v Google, however, the English High
Court was not convinced that the prominent display of a thumbnail map from only Google
Maps on Google's search engine results pages was a case of bundling or tying in the
traditional sense. The judge held that users who saw the thumbnail map had no
obligation to click on it or to use Google Maps (593) and, moreover, they could click on
hyperlinks to other maps displayed lower down the search results. (594)
10.147 Tying or bundling must be capable of having an anti-competitive effect. Tying or
bundling will only constitute an abuse if it may have an anti-competitive effect in the
tying and/or tied markets. (595) The cases of Hilti and Tetra Pak II appear to have
inferred, or perhaps assumed, that the tying practice in question would foreclose
competition; the Commission has said that in 'classical tying cases both it and the [EU]
Courts considered the foreclosure effect for competing vendors to be demonstrated by
the bundling of a separate product with the dominant product.' (596) In Microsoft,
however, the Commission recognised that there were good reasons not to assume without
further analysis that tying Windows Media Player was liable to foreclose competition.
That being so, it found that there was a 'reasonable likelihood' that tying Windows and
Windows Media Player would lead to a foreseeable lessening of competition on the
market for streaming media players. (597) The General Court upheld the Commission's
decision. (598) In Rio Tinto Alcan the Commission's preliminary assessment was that Rio
Tinto Alcan's tying policy was likely to lead to anti-competitive foreclosure given Rio
Tinto Alcan's dominant position in the tying market for more than two decades, the high
barriers to enter the tied market, the importance of 'tied' customers, and that the tying
policy meant Rio Tinto Alcan's only competitor was unlikely to survive. (599)
10.148 Objective justification of tying practices. As with other areas of abuse, it is
possible to objectively justify an otherwise abusive tying practice. Such claims will be
scrutinised carefully. (600) In Hilti, the dominant firm argued that its wish to prevent the
P 952 use of competing nails in its guns was motivated by considerations of safety and
reliability. The General Court rejected these arguments, holding that safety was a matter
for the appropriate public authorities, whom Hilti had taken no steps to alert, and
afforded no justification for a dominant firm to eliminate products which it thought
dangerous. (601) In Rio Tinto Alcan (602) the Commission cited Hilti and Tetra Pak II and
observed that Rio Tinto Alcan's production-related, operational and reputational
efficiency claims ignored 'the fundamental point that any efficiency enhancing tying must
be driven by customer preferences for joint consumption'. Even if were assumed that
Alcan's contractual tying the licensing of its aluminium smeltering technology to the
purchase of pot tending assemblies, the fact that customers wanted to have a choice
indicated, in the Commission's view, that the tying brings no overall benefit to
consumers. The Commission ultimately accepted legally-binding commitments to
remove the contractual tying in question.
(v) Refusal to supply
10.149 Generally. In a market economy, undertakings are generally free to choose for
themselves the parties with whom they wish to deal. (603) A dominant undertaking may,
however, be prohibited, in the absence of objective justification, to refuse to supply to
existing customers and to grant access to 'essential facilities' on a non-discriminatory
basis to new customers, at least in circumstances where a refusal would eliminate
effective competition on the downstream market. In determining the circumstances in
which a refusal to supply may constitute an abuse, as against a legitimate commercial
choice, it is necessary to balance conflicting considerations (604) when justifying
interference with a dominant undertaking's freedom to contract. (605) Accordingly, as
Advocate General Jacobs observed in Syfait, the obligations under Article 102 on a
P 953 dominant undertaking to supply are in various respects circumscribed, and are in
particular limited by the possibility of objective justification for the refusal in question.
(606)
10.150 Structure of this Section. The following discussion of refusal to supply as an abuse
considers first, the cessation of supply to an existing customer; and secondly, the refusal
to grant access to essential facilities. (607) The refusal to license intellectual property
rights is considered in Chapter 9, above. (608) An offer to supply only on unacceptable
terms can be characterised as a constructive refusal to supply. (609) As in other areas, the
types of refusals to deal are not closed and are heavily dependent on the factual context;
for example, a refusal to supply a competitor or the imposition of unattractive terms are
much more likely to raise concerns where the dominant undertaking treats its own
subsidiary or related company more favourably than its competitors, whether or not the
product at issue is strictly speaking an 'essential facility'. (610)
38
10.151 Constructive refusal to supply. It is not necessary for a dominant undertaking to
refuse to supply a customer or competitor outright; it is sufficient for the dominant firm
to propose unreasonable terms of supply or unduly delay negotiations for supply
(commonly referred to as a constructive refusal to supply). (611) In Telekomunikacja
Polska (612) the Commission held that TP had been abusing its dominant position in the
Polish broadband access market by refusing to supply wholesale products because, in
particular, it had proposed unreasonable conditions governing access to the wholesale
broadband products and delayed negotiations for access to its network. In Clearstream v
P 954 Commission (613) the General Court upheld the Commission's decision that Clearstream
had abused its dominant position by refusing to supply primary clearing and settlement
services in respect of registered shares. Clearstream had unjustifiably delayed granting
Euroclear Bank access to its systems and this delay had been likely to put EB at a
competitive disadvantage.
10.152 Discontinuing the supply of goods to an existing customer. The jurisprudence of
the EU Courts has tended to distinguish between the cessation of supplies to an existing
customer and the refusal to supply a new customer. (614) In Commercial Solvents, after its
own subsidiary entered the downstream production market, Commercial Solvents
decided it would no longer supply a raw material to Zoja, its competitor on the
downstream market. The Commission's finding of abuse was upheld by the Court of
Justice. The Court stated that:
'… an undertaking being in a dominant position as regards the production of
raw material and therefore able to control the supply to manufacturers of
derivatives, cannot just because it decides to start manufacturing these
derivatives (in competition with its former customers) act in such a way as to
eliminate their competition which in the case in question, would amount to
eliminating one of the principal manufacturers of ethambutol in the [internal]
market'. (615)
In United Brands v Commission (616) the Court held that a dominant undertaking cannot
discontinue supplies to a long-standing customer if the orders placed by that customer
are in no way out of the ordinary. In Télémarketing (617) the Court of Justice expressed the
same principle as laid down in Commercial Solvents somewhat differently in the context
of a refusal to supply a service rather than goods. The Court held that it would be an
abuse for a television station, if it held a dominant position 'on the market in a service
which was indispensable for the activities of another undertaking on another market',
(618) to refuse, without objective justification, to supply its services to any telemarketing
undertaking other than a member of its own group. (619) The Court's reference in
P 955 Télémarketing to the dominant undertaking 'reserv[ing] to itself' gives rise to the
question whether it is a necessary condition for the refusal to supply to constitute an
abuse. (620)
10.153 Effect of the refusal to supply on the downstream market. In Commercial Solvents
v Commission (621) the Court of Justice held that the refusal to supply could be an abuse
to the extent that it was likely to eliminate all competition from the undertaking
requesting the raw material. In IMS Health (622) the Court appeared to go further and
held that, among the sufficient conditions for an abusive conduct, was that 'it is such as
to exclude any competition on a secondary market'. In Microsoft, (623) however, the
General Court held that an abuse could arise where 'the refusal is of such a kind as to
exclude any effective competition on that neighbouring market', without it being
necessary to demonstrate that all competition had been eliminated.
10.154 Objective justification for refusing to supply an existing customer. The General
Court has made clear that it is for the dominant undertaking to put forward any ground of
objective justification relied on, supported by evidence, which the party alleging abuse
then has to rebut. (624) The commercial rationale for a refusal to deal is not capable of
being objectively justified if, in reality, it is no more than the dominant supplier seeking
to reduce or eliminate effective competition to itself. On the contrary, such motivation of
the dominant undertaking tends to support the finding of abuse. For example, in
Télémarketing (625) the dominant undertaking was in effect replacing one exclusive
provider of telemarketing with another but the Court of Justice did not regard that as
providing any justification for its conduct, given the linkage between the dominant
undertaking and the new exclusive provider. (626) If a dominant undertaking refuses to
P 956 supply in response to a competitive challenge, its response must be fair and
proportional to the threat: it cannot normally, for example, withdraw all supplies
immediately from a long-standing customer only because that customer has become
associated with a competitor. (627) On the other hand, a dominant firm may be justified
in refusing to supply further goods to a customer from whom payment is overdue, (628)
and the Court of Justice in United Brands and Sot Lélos kai Sia v GlaxoSmithKline indicates
that the dominant supplier will not be required to meet orders from a customer that
does not abide by 'regular commercial practice' or whose orders are 'out of the ordinary'.
(629) In Irish Distillers (630) the Commission rejected a complaint that Cooleys/Beam had
refused to supply Irish whisky to Protégé International as the complainant had failed to
comply with the terms of its previous supply agreement with Cooleys/Beam.
10.155 Refusal to supply new customers. Where there is no existing contractual
39
relationship, there is a tension between general principles of freedom of contract and the
need to protect effective competition to dominant firms. In such cases, the Court of
Justice has been relatively cautious in imposing obligations on dominant firms to trade
with competitors who are not already customers who have become dependent on supply
by the dominant firm. (631) One important element in the analysis of such cases is
whether the desired input is 'indispensable' for competition on a downstream market, an
idea often expressed in terms of whether the input is an 'essential facility'. Even where a
facility is indispensable or essential to carrying on business because there is no actual or
potential substitute, there may still be a difficult conflict to resolve between the right of
the owner of that facility and the benefits of effective competition on the downstream
market. The owner wants to obtain a suitable return on its investment (as, for example,
will often be argued to be the case for the holder of a monopoly property right such as an
intellectual property right or a major piece of transport infrastructure) whereas the
P 957 would-be customer may want to, for example, provide competing transport services using
that infrastructure. (632) Cases concerning the refusal by a dominant undertaking to
grant a licence of its intellectual property rights have been considered in Chapter 9,
above. (633)
10.156 Essential facilities. The meaning of essential facility (634) or indispensability is a
fact-specific issue that depends upon the presence of 'technical, legal or even economic
obstacles' preventing the would-be user of the 'facilities' from competing on the relevant
market. (635) In its earlier decisions, the Commission defined an essential facility as 'a
facility or infrastructure, without access to which competitors cannot provide services to
their customers'. (636) Such impediments may arise, for example, through the exercise of
intellectual property rights, through an exclusive licence to operate a facility,
exceptional investment costs or through some natural advantage which cannot be
replicated, such as the location of a port. (637) As Advocate General Jacobs explained in
Bronner:
'An essential facility can be a product such as a raw material or a service,
including provision of access to a place such as a harbour or airport or to a
distribution system such as a telecommunications network. In many cases the
relationship is vertical in the sense that the dominant undertaking reserves
the product or service to, or discriminates in favour of, its own downstream
operation at the expense of competitors on the downstream market. It may
however be horizontal in the sense of tying sales of related but distinct
products or services.' (638)
The degrees of control over the 'essential' facility or input, and of necessity for
competitors in obtaining access to the facility or input, are both highly material in
determining whether a refusal to allow access is unlawful. It follows that these obligations
are most stringent in respect of a monopoly controller of a 'network' that forms the basis
for competition on a clearly identifiable and significant downstream market, as is the
case in many privatised utilities. (639)
10.157 Access to essential facilities. Prior to the judgment of the Court of Justice in
Bronner, the doctrine of access to essential facilities had been developed by the
P 959 Commission in a series of cases concerning access to transport infrastructure (640) and
was formulated in the following terms:
'An undertaking which occupies a dominant position in the provision of an
essential facility and itself uses that facility …, and which refuses other
companies access to that facility without objective justification or grants
access to competitors only on terms less favourable than those which it gives
its own services, infringes Article [102] if the other conditions of that Article are
met.' (641)
Bronner (642) contains a valuable analysis of the law by Advocate General Jacobs and a
comment by the Court of Justice on the scope of the 'essential facilities' doctrine. (643)
The case concerned whether it was an abuse for a dominant newspaper publisher to
refuse a competitor access to its home delivery service which was the only nationwide
service available. The Court, having considered its earlier judgment in Magill, (644) held
that:
'even if that case-law on the exercise of an intellectual property right were
applicable to the exercise of any property right whatever, it would still be
necessary, for the Magill judgment to be effectively relied upon in order to
plead the existence of an abuse within the meaning of Article [102] of the
Treaty in a situation such as that which forms the subject matter of the first
question, not only that the refusal of the service comprised in home delivery
be likely to eliminate all competition in the daily newspaper market on the
part of the person requesting the service and that such refusal be incapable of
being objectively justified, but also that the service in itself be indispensable
to carrying on that person's business, inasmuch as there is no actual or
potential substitute in existence for that home-delivery scheme.' (645)
Thus, although it was clear that refusal of access to its delivery service conferred a
40
competitive advantage on the incumbent publisher on the newspaper market, this was
not considered by the Court of Justice to be sufficient justification for a finding of abuse.
The essence of the abuse was analysed to be the refusal, without objective justification,
of access to goods or services for which there is no alternative and without which the
would-be customer would be unable to compete at all on the downstream market. (646)
10.158 The criterion of 'necessity' in the context of refusal to supply. Although the Court
of Justice imposed a strict 'necessity' test in Bronner, the application of such a test
remains an issue of fact for an individual case. In Tiercé Ladbroke, (647) decided shortly
before Bronner, the applicant (Ladbroke) operated betting shops in Belgium taking bets
on horse races run abroad. The French racecourse societies refused its request for supply
of televised broadcasts of French horse racing. The General Court upheld the
Commission's rejection of a complaint, holding that since the French societies had not
granted any such broadcasting licences for Belgium, there was no question of
discrimination; and further that the fact that such broadcasts would assist Ladbroke's
Belgian operation did not suffice to make their supply essential. In Bronner itself, (648)
based on the facts found by the referring Austrian court, the Court of Justice concluded
that the newspaper publisher was not acting abusively by withholding access to its home
delivery service since that service was not indispensable for the would-be customer's
business. (649) When examining whether a refusal to supply deserves its priority
attention, the Commission will consider whether competitors could effectively duplicate
the input produced by the dominant undertaking in the foreseeable future. In the
Commission's view, an input is likely to be impossible to duplicate (a) when it involves a
natural monopoly due to scale or scope economies; (b) where there are strong network
effects; or (c) when it concerns so-called 'single source' information. (650)
10.159 Likely effect of a refusal to supply on consumer welfare. The Commission has said
that it will examine whether, for consumers, the likely negative consequences of the
refusal to supply outweigh over time the negative consequences of imposing an
obligation on the dominant firm to supply. If they do, the Commission will normally
pursue the case and, presumably, vice versa. (651)
10.160 Dominant undertaking's presence in the downstream market. In its decisional
practice prior to the Court's judgment in Bronner, the Commission had on occasion
asserted a broader doctrine, whereby denial of access to an essential facility would
P 960 constitute an abuse even if the operator of the facility, either directly or through an
associated undertaking, was not itself making use of the facility and so competing with
the third party seeking access. (652) It has been doubted whether that such an extended
proposition is correct in the light of the judgment in Bronner, (653) and in its more recent
decisions on access to essential infrastructure, the Commission has expressed the
principle in narrower terms, referring to the dominant undertaking itself using the
facilities to which it denies access by its competitors. (654) However, it is difficult to
exclude such a possibility entirely, given that the 'essential facilities' doctrine may be
understood as a significant concept within the broader framework of refusal to supply,
which should be considered within its legal, factual and economic context to determine
whether it constitutes an infringement of Article 102. For example, if the dominant
undertaking is not itself operating in the downstream market but its refusal to supply
prevents the emergence of a new product downstream, that may still constitute an abuse,
at least in the context of licensing of intellectual property rights. (655) Moreover, the
proposition that a refusal to supply may be abusive even if the dominant undertaking is
not present on the downstream market has been endorsed by the English High Court.
(656)
10.161 Objective justification for refusal to supply a new customer. As with the
application of Article 102 more generally, (657) a dominant firm is entitled to defend a
P 961 refusal to supply a new customer on the basis that it had an objective justification.
(658) As in other areas, questions of objective justification will tend to be fact sensitive,
requiring the competition authority or court to balance the purported justification
against the harm to consumers and the competitive process resulting from the fact that
competitors do not have access to the relevant essential input. (659) In Irish Distillers
(660) the Commission considered that Irish Distillers and The Old Bushmills Distillery had
an objective justification not to supply a new customer because they did not have
capacities to supply it (or, in the case of Old Bushmills Distillery, any third party) with
whiskey. In the Commission's view, the fact that the two companies cannot or do not wish
to supply whiskey to the complainant is consistent with market expansion and the
legitimate commercial interest in increasing their own sales.
10.162 Refusal to satisfy demand generated by parallel trade. A dominant firm may be
prepared to satisfy some, but not all, of the demand from particular customers, thereby
restricting the customers' ability to export the product but not impeding their ability to
supply their domestic market. This was the position in Sot Lélos kai Sia v GlaxoSmithKline
(661) where the Court of Justice gave a preliminary ruling on questions referred by the
Athens Court of Appeal regarding the legality of GlaxoSmithKline's policy of refusing to
supply pharmaceutical products at sufficient volumes to enable the customer to export
those products as well as meeting domestic demand. The Court of Justice held that it was
an abuse for a dominant undertaking to limit supply so as to prevent parallel trading.
However, the Court noted that the disparities of regulation in the different Member
41
States created opportunities for parallel importers and was concerned that the
competition rules should not be interpreted in such a way as to leave the dominant firm
no choice but to refrain from marketing its products in low price Member States at all.
The Court concluded that it would be a reasonable and proportionate measure in
relation to the threat that parallel exports represent to its legitimate commercial
interests (662) for a dominant undertaking to refuse to supply a wholesaler with orders
which are 'out of the ordinary' ('présentent un caractère anormal'). (663) Thus, although a
P 962 dominant pharmaceutical company cannot cease to honour the ordinary orders of an
existing customer solely because that customer is exporting some of those quantities,
it could refuse to supply 'significant quantities of products that are essentially destined
for parallel export'. (664) It was for the national court to decide whether the orders at
issue were ordinary or not. (665)
(e) Other forms of abuse

10.163 Generally. As in relation to Article 101(1), the Court of Justice has stressed that the
specific examples of abusive conduct set out in Article 102 are merely illustrative of its
scope and do not limit its application. (666) It follows that the conduct of an undertaking
that enjoys a dominant position within a relevant market and satisfies the other
jurisdictional requirements of Article 102 is subject to the 'special responsibility'
imposed on such undertakings and may therefore be open to challenge as abusive. This
concluding Section identifies a number of practices that have been identified in the case
law, either by reference to the examples set out in Article 102 itself or on broader
grounds. (667)
10.164 Unfair trading conditions. Article 102(a) identifies the imposition of 'unfair trading
conditions' as a form of abuse. There are many ways in which a dominant firm may abuse
its position by imposing anti-competitive conditions on customers, some of which may
also infringe Article 101(1). Such conditions may be so unreasonable as to amount to a
refusal to supply. (668) They may also include attempts to restrict exports, (669)
restrictions relating to the resale of goods, (670) restrictions on the freedom to innovate,
P 963 (671) and restrictions on the provision of guarantees. (672) The terms of a licence of
intellectual property rights can also infringe Article 102. (673)
10.165 Unfair trading conditions in industrial supply agreements. In Tetra Pak II, the
Commission and the General Court condemned a wide variety of clauses which they found
were intended to bind the customer to the group to the maximum extent possible and
eliminate competition. (674) Those clauses included: (675)
(a) restrictions preventing the customer from adding accessories to or modifying the
machine without Tetra Pak's consent; (676)
(b) an obligation to advise Tetra Pak of any technical improvements or modifications
made to the machines or cartons and to grant Tetra Pak ownership of the
intellectual property rights to such improvements or modifications;
(c) a requirement that Tetra Pak's consent be obtained for the resale or transfer of use
of the equipment and a right on the part of Tetra Pak to repurchase the equipment;
(677)
(d) a stipulation that honouring of the guarantee was subject to compliance with all the
terms of the contract, not limited to those terms which affected the operation of the
equipment; and
(e) the duration of lease agreements. (678)
10.166 Unfair trading conditions imposed by a collective agreement or as standard
industry practice. In TACA (679) the members of the Transatlantic Conference Agreement
were held to occupy a collectively dominant position and to have abused that position in
various ways. As regards the terms of the contracts which were set by the members, the
P 964 Commission held that the following were abusive:
(a) the outright prohibition between 1994 and 1995 on members entering into
individual service contracts with shippers, (680) thereby forcing shippers to enter
into service contracts with the conference members taken together;
(b) once that prohibition had been lifted, the application in any individual service
contract of certain terms and conditions collectively agreed by the conference;
(c) the application in the conference service contract of certain terms and conditions.
The collectively agreed terms in the individual or conference service contracts which the
Commission condemned were the prohibition of contingency clauses, (681) the minimum
duration for the contract, the ban on multiple contracts and the level of the penalties
imposed on shippers who breached the service contract. The General Court upheld the
Commission's findings of abuse in relation to these clauses. (682) The Court rejected the
argument that the clauses were justified by commercial usage because they were
standard practice in the industry, since the undertakings' special responsibility as a
collectively dominant unit prevented them from adopting practices which were adopted
by their non-dominant competitors. (683)
10.167 Price, business model and promotion parity provisions. In E-book MFNs and
related matters (Amazon) (684) the Commission was concerned that Amazon may have
42
abused a dominant position on the markets for the retail distribution of English and
German language e-books to consumers by imposing parity conditions in its e-books
agreements with publishers. The Commission's preliminary assessment was that price
parity provisions (also known as 'most-favoured-nation' clauses) required publishers to
offer Amazon similar (or better) terms and conditions as those offered to its competitors
and/or to inform Amazon about more favourable or alternative terms given to Amazon's
competitors. The parity clauses allowed Amazon to ensure that the retail prices of e-
books offered on Amazon.com did not exceed the lowest retail prices of the same e-
books sold by competing e-book retailers. The Commission provisionally concluded that
Amazon's terms of distribution constituted an abuse because they were capable of
reducing Amazon's competitors' ability and incentive to develop and differentiate their
e-book offerings. (685) The Commission reached the same provisional conclusion in
P 965 relation to parity provisions that covered the ability of e-book retailers to differentiate
themselves from Amazon, for example by using an alternative business model (686) or
a novel promotion. The Commission accepted commitments from Amazon under Article 9
of Regulation 1/2003 not to enforce clauses requiring publishers to offer Amazon similar
non-price and price terms and conditions as those offered to Amazon's competitors or
clauses requiring publishers to inform Amazon about such terms and conditions.
10.168 Contractual restrictions on the display of competing advertisements. In Google
Search (AdSense) (687) the Commission has sent a statement of objections to Google,
alleging that it has imposed restrictions on the ability of certain websites, such as online
retailers and newspapers, to display online search advertisements from Google's
competitors. Google places search ads on third party websites through its 'AdSense for
Search' platform. The Commission has provisionally concluded that Google is dominant in
the market for search advertising intermediation in the EEA and that it abused its
dominant position by requiring third parties not to source search ads from Google's
competitors and, from 2009 onwards, to take a minimum number of search ads from
Google and reserve the most prominent space on their search results pages to Google
search ads. In addition, it is alleged that competing search ads cannot be placed above
or next to Google search ads. (688) The Commission's theory of harm appears to be that
these contractual restraints enabled Google to protect its dominant position in online
search advertising, and artificially reduced the opportunities for existing and potential
competitors, including other search providers and online advertising platforms, to enter,
invest and grow in online search advertising. (689)
10.169 Limiting production, markets or technical development. As a category of abuse,
Article 102(b) specifically identifies 'limiting production, markets or technical
development to the prejudice of consumers'. Conduct falling within that category could
include limitation by a dominant undertaking of its own output (for example, with a view
to raising prices by ensuring that demand exceeds supply); or action on the part of a
dominant undertaking that limits the ability of third parties to increase production or
P 966 enter new markets or develop new techniques. (690) For example, in Suiker Unie (691)
the Court of Justice found that the sugar companies had infringed Article 102(b) by
compelling dealers to channel their exports to specific destinations and to impose
restrictions on their own customers, thereby restricting the outlets of dealers and
indirectly of their purchasers. In Magill? (692) the Court of Justice held that the dominant
broadcasters' respective refusals to provide programme scheduling information to third
parties prevented the appearance of a new product, namely a comprehensive weekly
television guide, and thus constituted an abuse under Article 102(b). (693)
10.170 Abusive alteration of the structure of the market. In Continental Can v Commission
(694) the Court of Justice held that the acquisition of a competitor by a dominant firm
may constitute an abuse through its impact on the competitive market structure. In
Atlantic Container Line ('TACA') (695) the General Court held that where a liner conference
adopts measures in order to restrict the ability of potential competitors to enter the
market as independent carriers, this could be an abusive alteration of the competitive
structure of the market. However, the Court found that the Commission had not
established the factual basis for this allegation, namely that the conference members
had induced market entrants to join the liner conference rather than operate on the
route as independent carriers. (696)
10.171 Inefficiency as an abuse. Inefficiency, idleness, mismanagement or wilful neglect
on the part of a dominant undertaking may be an abuse, contrary to Article 102(b). Thus in
P 967 Port of Genoa, (697) where an undertaking in Italy had been granted the exclusive right
to organise dock work at Genoa's port, the Court of Justice held that the undertaking's
conduct was abusive in that it refused to use modern technology, resulting in an increase
in costs and prolonged delays in performance. (698) Similarly, in Höfner and Elser (699)
the Court of Justice was considering the conduct of an employment services agency which
was granted under German law the exclusive right to provide employment agency
services to the Federal Labour Office. The agency failed to ensure that it was able
adequately to meet the demand for its services and the Court of Justice held that this was
an abuse within the meaning of Article 102(b). (700) In a somewhat different application
of Article 102(b), in London European/Sabena indirect pressure imposed by a dominant
undertaking on a competitor to encourage the latter to be less price competitive or to
abandon its plan to provide a competing service was construed by the Commission as an
abuse. (701)
43
10.172 Preferential treatment of a dominant firm's own products. The preferential
promotion or 'favouring' by a dominant undertaking, by means of its power on the market
where it is dominant, of its separate product on a distinct market where it is not
dominant, may be an abuse, in particular if it has the effect of strengthening its position
on the related market and is not objectively justified. (702) In Google (703) the
Commission imposed a fine of €2.42 billion on Google for abusing its dominant position in
general internet search by 'giving an illegal advantage' to another Google product, Google
Shopping, its comparison shopping service. The illegal advantage consisted of giving
prominent placement only to Google Shopping and demoting competing comparison
shopping service providers. This meant that Google Shopping was much more visible to
users in the search results of Google's search engine, whilst rival comparison shopping
services were much less visible. As a result of this preferential treatment, Google
Shopping was able to make significant gains in traffic and revenue, at the expense of its
rivals and to the detriment of consumers. (704) Google has argued that the Commission's
analysis is flawed factually, legally and/or evidentially, and in particular has argued that
the Commission has failed to take into account the choice and competition from well-
P 968 established merchant platforms, such as Amazon and eBay.
10.173 Abusive use of litigation. In certain circumstances, the instigation of legal
proceedings may be capable of being characterised as an abuse of a dominant position.
The balance between the undoubted right of a dominant undertaking to take legal steps
to protect its legitimate interests (705) and the need to impose some limit on such a right
to avoid anti-competitive and exclusionary effects raises difficult issues of
proportionality and objective justification. These are similar to the issues considered in
Chapter 9 in relation to the enforcement of intellectual property rights and refusal to
license such rights to competitors. In ITT Promedia, the General Court set out, without
dissent, the view of the Commission described in the following terms:
'The Commission considers that “in principle the bringing of an action, which is
the expression of a fundamental right of access to a judge, cannot be
characterised as an abuse” unless “an undertaking in a dominant position
brings an action (i) which cannot reasonably be considered as an attempt to
establish its rights and can therefore only serve to harass the opposite party,
and (ii) which is conceived in the framework of a plan whose goal is to
eliminate competition”.' (706)
In AstraZeneca (707) the question arose as to whether the defence by a patent holder of
an action brought for a declaration of invalidity of the patent could ever constitute an
abuse. The Commission noted that the conduct of a defence cannot be equated, as a
matter of course, with the initiation of legal proceedings. On the facts of that case,
however, the Commission concluded that the costs and delays associated with legal
P 969 proceedings were not the result of AZ's defence, but of its misleading representations
leading to the granting of extra protection under EU patent law, so the question was left
open. In Huawei v ZTE (708) the Court of Justice considered whether it was contrary to
Article 102 for a dominant undertaking to bring proceedings before a Member State court
to enforce a standard essential patent ('SEP'), in circumstances where the patent has
acquired SEP status as a result of the proprietor having irrevocably undertaken to the
standard-setting body that it will license on fair, reasonable and non-discriminatory
('FRAND') terms. The Court held that the SEP owner does not abuse its dominant position
by bringing such proceedings, as long as prior to bringing that action, the SEP owner has,
first, alerted the alleged infringer of the infringement complained about by designating
that patent and specifying the way in which it has been infringed, and, secondly, after the
alleged infringer has expressed its willingness to conclude a licensing agreement on
FRAND terms, presented to that infringer a specific, written offer for a licence on such
terms, specifying, in particular, the royalty and the way in which it is to be calculated,
and where the alleged infringer continues to use the patent, the alleged infringer has not
diligently responded. (709)
10.174 Discrimination on grounds of nationality and restrictions on parallel trade.
Discrimination consists of not treating like cases alike (or treating unlike cases in the
same way). A particularly significant aspect of discrimination under the Treaty is
discrimination on grounds of nationality: (710) a dominant firm that discriminates
between customers or suppliers or persons seeking services on the ground of nationality
will be acting abusively, subject only to a stringent test of objective justification. (711)
Many of the findings of abusive discriminatory practices under Article 102(c) have
involved protectionist fee schemes by State or State-related entities in the field of
transport, (712) which were condemned under Article 106 in conjunction with Article 102.
Likewise, any restrictive contractual terms imposed by a dominant undertaking, whose
likely or intended effect is to partition the internal market by restricting exports or
P 969 parallel trade will almost inevitably constitute serious breaches of Article 102, (713)
subject again to the possibility of establishing an objective justification. (714)
10.175 Abuse by sporting bodies. Given the economic importance of sport in relation to a
variety of sectors, and in particular television broadcasting, application of the
competition rules to sporting bodies is an issue that has arisen in a variety of contexts.
Although generally arising in the context of Article 101, (715) such questions potentially
involve the application of Article 102, in particular where a sporting body enjoys effective
44
control over rights to participate in a major sport or to broadcast coverage of such a
sport. (716) A staff working document accompanying the Commission's White Paper on
Sport provides an overview of the case law and guidance on the application of both
Articles 101 and 102. (717) The Commission notes that sports associations usually have
practical monopolies in a given sport and may thus normally be considered dominant in
the market of the organisation of sport events under Article 102. Even where a sporting
association is not active on a given market, it may be considered to hold a dominant
position if it operates on that market through its members (such as sport clubs/teams).
Sport clubs/teams (and athletes) may also hold a collectively dominant position to the
extent that they present themselves as a collective entity as a result of the
implementation of rules adopted by a national or international sports association. The
Annex then discusses case law relating to sporting rules, (718) sports media rights and
ticketing arrangements. (719)
References
1) See, eg Case 6/72 Europemballage and Continental Can v Commission [1973] ECR 215,
EU:C:1973:22, para 23; Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461,
EU:C:1979:36, para 38.
2) Art 3(3) TEU.
3) Protocol 27 to the TFEU and TEU, on which see para 1.007, above.
4) See Case C-52/09 TeliaSonera [2011] ECR I-527, EU:C:2011:83, paras 20–22.
5) Article 102 Enforcement Priorities Guidance, OJ 2009 C45/7, para 6.
6) See, eg Ortiz Blanco, Market Power in EU Antitrust Law (2011); O'Donoghue and
Padilla, The Law and Economics of Article 102 TFEU (2nd edn, 2013); Whish and
Bailey, Competition Law (9th edn, 2018), Chaps 1, 5, 17 and 18; Faull and Nikpay
(eds), The EU Law of Competition (3rd edn, 2014), Chap 4. For economic background,
see Niels, Jenkins and Kavanagh, Economics for Competition Lawyers (2nd edn,
2016); Bishop and Walker, The Economics of EC Competition Law: Concepts,
Application and Measurement (3rd edn, 2010); Motta, Competition Policy Theory and
Practice (2004).
7) Case 322/81 Michelin v Commission [1983] ECR 3461, EU:C:1983:313, para 57; Case C-
413/14 P Intel v Commission EU:C:2017:632, para 135.
8) Case C-209/10 Post Danmark v Konkurrencerådet EU:C:2012:172 ('Post Danmark I'),
para 22.
9) Case C-413/14P Intel v Commission EU:C:2017:632, para 134.
10) See, eg Report of the Economics Advisory Group on Competition Policy ('EAGCP'),
An economic approach to Article 82 (July 2005) and DG Comp, 'Discussion Paper on
the Application of Article [102] of the Treaty to Exclusionary Abuses' (December
2005). See also Ehlermann and Marquis (eds), European Competition Law Annual
2007: A Reformed Approach to Article 82 EC (2008); Rousseva, Rethinking
Exclusionary Abuses in EU Competition Law (2010); Akman, The Concept of Abuse in
EU Competition Law (2012); O'Donoghue and Padilla, The Law and Economics of
Article 102 TFEU (2nd edn, 2013).
11) Article 102 Enforcement Priorities Guidance, OJ 2009 C45/7. See also Peeperkorn
and Viertiö, 'Implementing an effects-based approach to Article 82' (2009) 1
Competition Policy Newsletter 17.
12) Article 102 Enforcement Priorities Guidance, above, para 3.
13) Article 102 Enforcement Priorities Guidance (n 11, above) para 2.
14) See, eg Commission MEMO/08/761 (3 December 2008).
15) Article 102 Enforcement Priorities Guidance (n 11, above) para 4. It does not apply
to cases of collective dominance.
16) Article 102 Enforcement Priorities Guidance (n 11, above) paras 9–18.
20) The Commission has referred to the Article 102 Enforcement Priorities Guidance in
subsequent decns: see, eg COMP/39525 Telekomunikacja Polska, decn of 22 June
2011, para 87; COMP/37990 Intel, decn of 13 May 2009, para 916. To date, Advocates
General at the CJ have rejected reliance on the Guidance in respect of decisions
decided before it was issued and have also noted that it is subject to the
developing case law of the CJ and GC: AG Kokott in Case C-109/10P Solvay v
Commission [2011] ECR I-10329, EU:C:2011:256, paras 20–21 (the CJ annulled the decn
on procedural grounds: [2011] ECR I-10329, EU:C:2011:686) and AG Mazák in Case C-
549/10P Tomra v Commission EU:C:2012:55, paras 36–37. Note that in Case C-549/10P
Tomra EU:C:2012:55, para 81, the CJ held that the Guidance has no relevance to the
legal assessment of a decision which was adopted prior to its publication.
45
21) See Case C-23/14 Post Danmark v Konkurrencerådet EU:C:2015:651 ('Post Danmark
II'), para 52. See also the Opinion of AG Mazák in Case C-52/09 TeliaSonera [2011]
ECR I-527, EU:C:2010:483, paras 18–19 and fn 21. In fn 21, the AG stated that the
Article 102 Enforcement Priorities Guidance 'may form a useful point of reference'
even though it clearly does not bind the EU Courts, citing Case C-310/99 Italy v
Commission [2002] ECR I-2289, EU:C:2002:143, para 52. In Case T-286/09 Intel v
Commission EU:T:2014:547, the GC held that the Guidance sets priorities for the
Commission's future enforcement activities; it does not apply to proceedings that
had already been initiated before it was published, even if it was published prior
to the adoption of the Commission's decision in those proceedings. The relevance
of the Guidance was not considered on further appeal to the CJ: n 9, above. As to
the application of the 'as efficient competitor' test in the assessment of rebates,
see para 10.101, below. As to the status of the Guidance from the perspective of
domestic courts, see Purple Parking v Heathrow Airport [2011] EWHC 987 (Ch), para
95.
22) See Case C-280/08P Deutsche Telekom v Commission [2010] ECR I-9555,
EU:C:2010:603, paras 250–254, upholding Case T-271/03 Deutsche Telekom v
Commission [2008] ECR II-477, EU:T:2008:101, para 235; and TeliaSonera (n 4, above)
paras 61–77; Intel v Commission (n 9, above) paras 136, 139–140; Case 525/16 MEO
EU:C:2018:270, para 31. See also the Opinion of AG Kokott Case C-109/10P Solvay v
Commission [2011] ECR I-10329, EU:C:2011:256, para 77: 'The decisive question is
whether rebates can produce an exclusionary effect' (emphasis in original); AG
Mazák in Case C-549/10P Tomra v Commission EU:C:2012:55, para 44: 'Reference to
negative (anti-competitive) effects should clearly not be mechanical. The (likely)
existence of such exclusionary effects in a particular case should not be merely
presumed, it should be assessed and demonstrated'; see also the Opinion of AG
Wahl in Case C-413/14P Intel v Commission EU:C:2016:788, paras 112–121 and 164–
165.
23) See Post Danmark I (n 8, above) para 21; Intel (n 9, above) para 133.
24) See also paras 14.087 et seq, below. In Case 26/75 General Motors Continental v
Commission [1975] ECR 1367, EU:C:1975:150, the Commission proceeded against the
Belgian subsidiary, since the decision to engage in the abusive conduct was plainly
taken locally, affecting only applicants for the relevant Belgian certificate; see also
Case 322/81 Michelin v Commission (n 7, above). In Case T-65/89 BPB Industries and
British Gypsum v Commission [1993] ECR II-389, EU:T:1993:31 (appeal dismissed, Case
C-310/93P [1995] ECR I-865, EU:C:1995:101), the Commission imposed a fine on a
wholly-owned subsidiary company, British Gypsum, in respect of its activities on
the British market but imposed a fine on the parent, BPB, in respect of British
Gypsum's activities on the Northern Irish market where British Gypsum sold
products supplied by the Irish subsidiary of BPB. The GC held that although the
Commission could have fined BPB for all British Gypsum's activities, it was quite
proper for the Commission instead to attribute only some of the abuses to the
parent.
25) See Europemballage and Continental Can (n 1, above).
26) Cases 6&7/73 Commercial Solvents v Commission [1974] ECR 223, EU:C:1974:18.
27) Hoffmann-La Roche v Commission (n 1, above).
28) Case T-30/89 Hilti v Commission [1991] ECR II-1439, EU:T:1991:70 (on appeal from
Hilti, OJ 1988 L65/19).
29) COMP/38113 Prokent-Tomra, decn of 29 March 2006.
30) COMP/38096 Clearstream, decn of 2 June 2004, upheld on appeal on this point in
Case T-301/04 Clearstream v Commission [2009] ECR II-3155, EU:T:2009:317, paras
198–204.
31) Case AT.39740 Google Search (Shopping), decn of 27 June 2017, on appeal, Case T-
612/17 Google and Alphabet v Commission, not yet decided.
32) For the distinct but related issue of geographical market definition, see Chap 4,
above.
33) Cases 40/73, etc, Suiker Unie v Commission [1975] ECR 1663, EU:C:1975:174, para 371.
In Suiker Unie, the CJ held that the Belgium—Luxembourg sugar market was a
substantial part of the common market in sugar: Belgian production was between 8
per cent and 9.5 per cent of total EU production and Belgian consumption was
about 5 per cent of EU consumption (paras 370–375). In Case 77/77 BP v Commission
[1978] ECR II-1513, 1537, EU:C:1978:107, AG Warner stated that there was a danger in
focusing attention exclusively on percentages; in his view the fact that Luxembourg
had a population equal to only 0.23 per cent of the EU would not preclude it being
'a substantial part'. The CJ also held in Suiker Unie that the 'southern part of
Germany' (primarily comprising for this purpose Bavaria, Baden-Wurttemberg and
part of Land Hessen) was a substantial part of the internal market (paras 445–448).
46
34) Case 26/75 General Motors Continental v Commission [1975] ECR 1367, EU:C:1975:150;
Case 7/82 GVL v Commission [1983] ECR 483, EU:C:1983:52; British
Telecommunications, OJ 1982 L360/36; Liptons Cash Registers/Hugin, OJ 1978 L22/23;
Case 322/81 Michelin (n 7, above); Case C-260/89 Eliiniki Radiofonia Tileorasi v
Kouvelas [1991] ECR I-2925, EU:C:1991:254; Case T-69/89 Radio Telefis Éireann v
Commission [1991] ECR II-481, EU:T:1991:39; Case T-70/89 British Broadcasting Corpn
and BBC Enterprises v Commission [1991] ECR II-535, EU:T:1991:40; Case T-76/89
Independent Television Publications v Commission [1991] ECR II-575, EU:T:1991:41.
35) In Case 127/73 BRT v SABAM [1974] ECR 313, 324, EU:C:1974:11, AG Mayras stated that
'What is essential is the quantitative assessment of the common market in relation
to the whole of the market, that is to say its relative economic importance. For this
purpose one must consider above all the density of the population, the level of its
resources and the extent of its purchasing power'.
36) Case C-179/90 Merci convenzionale porto di Genova [1991] ECR I-5889, EU:C:1991:464,
para 15; see also Case C-18/93 Corsica Ferries [1994] ECR I-1783, EU:C:1994:195; Case
C-163/96 Raso [1998] ECR I-533, EU:C:1998:54, para 26; Port of Rødby, OJ 1994 L55/52,
B&I Line/Sealink [1992] 5 CMLR 255 (interim measures: Holyhead harbour a
substantial part). For air transport, see Case 66/86 Ahmed Saeed [1989] ECR 803,
EU:C:1989:140 (a route taken by scheduled flights may constitute a substantial part
of the common market); British Midland v Aer Lingus, OJ 1992 L96/34, para 17 (the
London-Dublin route significant in both the UK and Ireland and therefore a
substantial part of the common market); Brussels Airport, OJ 1995 L216/8 (the
eleventh busiest airport in the EU a substantial part of the common market); Alpha
Flight Services/Aéroports de Paris, OJ 1998 L230/10, upheld on appeal by the GC in
Case T-128/98 Aéroports de Paris v Commission [2000] ECR II-3929, EU:T:2000:290,
and by the CJ in Case C-82/01P Aéroports de Paris [2002] ECR I-9297, EU:C:2002:617;
FAG — Flughafen Frankfurt/Main, OJ 1998 L72/30.
37) Case 322/81 Michelin v Commission [1983] ECR 3461, EU:C:1983:313, para 57. See also
Case C-250/92 Gøttrup-Klim v Dansk Landbrugs [1994] ECR I-5641, EU:C:1994:413,
para 49. The same is true of allegations of collective dominance: see Case T-17/93
Matra Hachette v Commission [1994] ECR II-595, EU:T:1994:89, paras 123–124.
However, see the early ruling in respect of 'strengthening' of a dominant position in
Continental Can v Commission (n 1, above) para 27.
38) The question whether Art 102 could apply if an undertaking is not dominant at the
time it enters into a contract but becomes dominant during the term of the
contract was considered, but not decided, by the UK CAT in Independent Media
Support v OFCOM [2008] CAT 13, paras 75–86.
39) Case 247/86 Alsatel v Novasam [1988] ECR 5987, EU:C:1988:469, para 23. See, in the
UK domestic context, the decision of Rimer J in Chester City Council v Arriva plc
[2007] EWHC 1373 (Ch), para 196: 'In view of my conclusion that Arriva is not
dominant in the relevant market, no question of abuse arises'.
40) Continental Can (n 1, above) para 27 ('strengthening of the position of an
undertaking may be an abuse … regardless of the means and procedure by which it
is achieved'); Hoffmann-La Roche (n 1, above) para 91; Case T-321/05 AstraZeneca
[2010] ECR II-2805, EU:T:2010:266, para 267 (appeal dismissed, Case C-457/10P
EU:C:2012:770).
41) eg fidelity rebates; see paras 10.099 et seq, below. See also, in respect of
exclusivity arrangements, Van den Bergh Foods, OJ 1998 L246/1, para 160 (appeals
dismissed, Case T-65/98 Van den Bergh Foods [2003] ECR II-4653, EU:T:2003:281, and
Case C-552/03P Unilever Bestfoods [2006] ECR I-9091, EU:C:2006:607).
42) See, eg the cases involving refusal to supply discussed in paras 10.149 et seq,
below and also AENA, OJ 2000 L208/36 (the effect of an abuse in the market for
take-off and landing services may be felt in the neighbouring market for passenger
and freight transport on short- and medium-haul flights). In Arriva The Shires v
London Luton Airport Operations [2014] EWHC 64 (Ch) Rose J held (relying on Case T-
128/98 Aéroports de Paris v Commission [2000] ECR II-3929, EU:T:2000:290) that, in a
related market abuse case, there was no need to demonstrate either that the
dominant undertaking was present on the related (downstream) market or even
that it stood to gain some commercial benefit from the effects of its conduct;
however, the complete absence of any commercial gain on the part of the
dominant undertaking may well be highly relevant, eg on the issue of objective
justification: para 99.
43) Case C-52/09 TeliaSonera , [2011] ECR I-527, EU:C:2011:83. The CJ cited Case C-
333/94P Tetra Pak v Commission (Tetra Pak II) [1996] ECR I-5951, EU:C:1996:436,
paras 24 et seq, a case involving predatory pricing and tying. For case comment
see Wurmnest, (2012) 49 CML Rev 721. See also the English High Court in Claritas v
The Post Office [2001] UKCLR 2 (no special circumstances in terms of the Tetra Pak
jurisprudence for finding that conduct on the dominated market (mail deliveries)
adversely affected a different market (consumer preference data)). Note the
observations in the Alleged abuse of a dominant position by Flybe, UK OFT no
grounds for action decn of 5 November 2010, para 6.15.
44) For margin squeeze see paras 10.129 et seq, below.
47
45) TeliaSonera (n 43, above) paras 86–88. Note that in Case T-65/89 BPB Industries and
British Gypsum (n 24, above) paras 92–96, the GC upheld a finding that the practice
of giving priority supplies of plaster (a product in which BPB was not dominant)
could constitute an abuse of its dominant position in plasterboard. For an
example of the limits of this exceptional doctrine, see the ruling of the Paris Court
of Appeal in Laboratoire GlaxoSmithKline (France) v Competition Council, judgment
of 14 March 2007, BOCCRF No. 7 of 15 September 2008; appeal dismissed by the
Cour de Cassation, Case No. E08-14.503, judgment No. 259 of 17 March 2009; cf AG
Van Gerven in Cases C-48&66/90 Netherlands and PTT v Commission [1992] ECR I-
565, EU:C:1991:390, Opinion, para 45 (since the Commission had not shown that the
post office was dominant in the market for messenger services, it could not be
accused of unfair pricing in that market).
46) COMP/37507 AstraZeneca, decn of 15 June 2005, para 775: 'There is no legal
requirement that the abusive behaviour is implemented in the relevant
geographic market where dominance exists. Indeed, what is relevant is that the
behaviour, even if implemented in another relevant geographic market, has the
purpose of excluding competitors in a relevant market where the undertaking is
dominant' (appeals dismissed on other grounds, Case T-321/05 and Case C-457/10P
(n 40, above)).
47) Case T-228/97 Irish Sugar v Commission [1999] ECR II-2969, EU:T:1999:246, paras 63–
66; appeal dismissed, Case C-497/99P Irish Sugar v Commission [2001] ECR I-5333,
EU:C:2001:393. See also COMP/39388&39389 E.ON German electricity markets,
commitment decn of 26 November 2008, para 27.
48) Case T-51/89 Tetra Pak v Commission [1990] ECR II-309, EU:T:1990:41, para 22; on
appeal from Tetra Pak I (BTG Licence), OJ 1988 L272/27. The GC cited Continental Can
(n 1, above) para 25, where the CJ stated that Arts 101 and 102 'seek to achieve the
same aim on different levels viz. the maintenance of effective competition within
the [Internal] Market'.
49) Case 66/86 Ahmed Saeed [1989] ECR 803, EU:C:1989:140. See also Hoffmann-La
Roche (n 1, above). In WEX v FEBIAC (2004/MR/8), judgment of 10 November 2005,
[2006] ECC 343, the Brussels Court of Appeal held that a rule of FEBIAC, the union of
Belgian importers of motor vehicles, restricting members from taking part in a
rival trade exhibition infringed Art 102 as an abuse of its dominant position, even
though the effect on the Belgian market of services for organising exhibitions of
utility vehicles was too weak to violate Art 101. The Court held that when the extent
of competition on a market is very weak, any act by the dominant business having
the effect of restricting that market, even slightly, is prohibited.
50) The CJ referred to a situation in which an agreement 'simply constitutes the formal
measure setting the seal on an economic reality characterised by the fact that an
undertaking in a dominant position has succeeded in having the tariffs in question
applied by other undertakings' as being one where both Arts 101 and 102 may
apply: Ahmed Saeed, above, paras 36–37; in Case T-65/98 Van den Bergh Foods (n
41, above), the GC confirmed that both Arts 101 and 102 may apply to the same
contractual arrangements in appropriate circumstances.
51) Ahmed Saeed (n 49, above).
52) Case T-51/89 Tetra Pak v Commission (n 48, above) para 24.
53) See, eg Case AT.39612 Perindopril (Servier), decn of 9 July 2014, on appeal, Case T-
691/14, not yet decided.
54) Case T-51/89 Tetra Pak v Commission (n 48, above) paras 28–29. See also Case C-
310/93P BPB Industries and British Gypsum [1995] ECR I-865, EU:C:1994:408, per AG
Léger at paras 63–69. His conclusions on this point were adopted by the CJ. See
also the UK CAT in GlaxoSmithKline v CMA [2018] CAT 4, paras 427–432.
55) The GC drew a distinction between the individual application of Art 101(3) and the
application of a block exemption because the latter did not involve any positive
assessment by the Commission under Art 101(3). This distinction is less likely to be
relevant now that the Commission does not grant individual exemption under Reg
1/2003.
56) Cases C-395&396/96P Compagnie Maritime Belge Transports v Commission [2000]
ECR I-1365, EU:C:2000:132. See also Cases T-191/98, etc, Atlantic Container Line v
Commission ('TACA') [2003] ECR II-3275, EU:T:2003:245, where the GC rejected
arguments that certain contractual provisions set by the liner conference were
justified in order to support the stability of the rate agreement which benefited
from the block exemption in former Reg 4056/86 (paras 1117 et seq).
57) Compagnie Maritime Belge (n 56, above) para 131.
58) TACA (n 56, above) para 1456, citing paras 40 and 45 of the Opinion of Judge
Kirschner acting as the AG in Tetra Pak I (n 48, above). Note that in para 30 of the
Article 102 Enforcement Priorities Guidance (n 11, above) the Commission uses
criteria similar to those in Art 101(3) to structure its analysis of efficiencies when
selecting cases under Art 102.
59) TACA (n 56, above) paras 1114–1116: see further para 10.069, below.
60) Case C-95/04P British Airways v Commission [2007] ECR I-2331, EU:C:2007:166, para
86; TeliaSonera (n 43, above) para 76; Post Danmark I (n 8, above) para 43; Intel (n 9,
above) para 140.
61) Case C-41/90 Höfner and Elser [1991] ECR I-1979, EU:C:1991:161, para 27.
48
62) The Merger Regulation, Reg 139/2004, OJ 2004 L24/1. Note that dominance used to
be the test under Art 2 of the original Merger Reg 4064/89, OJ 1989 L395/1, as
amended by Reg 1310/97, OJ 1997 L180/1.
63) Recital (25) to the Merger Reg, above, explains that the notion of significant
impediment to effective competition in Arts 2(2) and (3) extends only to the anti-
competitive effects of a concentration resulting from the non-coordinated
behaviour of undertakings which would not have a dominant position on the
market concerned.
64) Market definition is discussed in Chap 4, above and the Merger Reg is discussed in
Chap 8, above.
65) Cases T-125&127/97 Coca-Cola v Commission [2000] ECR II-1733, EU:T:2000:84, paras
81–83 (market definition in the context of a decn under the Merger Reg).
66) Cases C-12/03P, etc, Tetra Laval v Commission [2005] ECR I-987, EU:C:2005:87, paras
74–75; cf the judgment of the UK CAT in Intercontinental Exchange v CMA [2017] CAT
6, para 285.
67) See Continental Can (n 1, above); Case 27/76 United Brands v Commission [1978] ECR
207, EU:C:1978:22; Hoffmann-La Roche (n 1, above); Michelin I (n 37, above); Case
30/87 Bodson v Pompes Funèbres des regions libérées [1988] ECR 2479, EU:C:1988:225.
68) See para 10.096, below for price discrimination on nationality grounds.
69) See, eg Arts 18, 45, 49 and 56–57 TFEU. For a general discussion of non-
discrimination in EU law, see Craig and de Búrca, EU Law: Text, Cases and Materials
(6th edn, 2015); Tridimas, The General Principles of EU Law (2nd edn, 2007).
70) The task of identifying monopoly power or 'dominance' has exercised economists
and lawyers around the world and is the subject of continuing debate: see, eg
O'Donoghue and Padilla (n 6, above) Chap 3; Bishop and Walker (n 6, above) Chap
3.
71) Michelin v Commission (n 37, above) para 30; Case 311/84 CBEM v CLT and IPB
('Télémarketing') [1985] ECR 3261, EU:C:1985:394, para 16. See also United Brands (n
67, above) para 65; Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461,
EU:C:1979:36, para 38. Depending on the context, the 'customers' may be
competitor-customers, distributors, processors, commercial users or end
consumers. The fact that in relation to some customers an undertaking may be
subject to effective competition from other undertakings does not rule out the
possibility that the same undertaking may be held to be dominant in relation to
other customers at different stages of supply.
73) Coca-Cola v Commission (n 65, above) paras 81–83 (re the definition of a relevant
product market in a decision under the Merger Reg). This was followed by the
Brussels Court of Appeal in Beroepsinstituut van Vastgoedmakelaars Case
2002/MR/2, judgment of 7 June 2004.
74) Coca-Cola v Commission (n 65, above) para 82; for an eg of the temporal dimension
of changing market conditions and an undertaking becoming dominant over time,
see the judgment of the UK CAT in Socrates v Law Society of England and Wales
[2017] CAT 10, paras 99–137.
75) For the special responsibility, see para 10.061, below.
76) Case C-549/10P Tomra Systems v Commission, EU:C:2012:221, para 39 and the case
law cited.
77) Cases C-396/96P, etc, Compagnie Maritime Belge (n 56, above) para 114; see also
Cases C-396/96P, etc, EU:C:1998:518, para 132 of the Opinion of AG Fennelly in that
case (suggesting a more stringent liability standard applies to undertakings which
enjoy a position of dominance approaching a monopoly). The concept of 'super-
dominance' was applied as regards exclusionary pricing strategies by the UK CAT
in Napp Pharmaceutical Holdings v Director General of Fair Trading [2002] CAT 1,
para 219; and, similarly, by the Swedish Market Court in Case A3/98 Posten Sverige v
Swedish Competition Authority, judgment of 11 November 1998. See also the Article
102 Enforcement Priorities Guidance (n 11, above) para 20 and Tetra Pak II (n 43,
above) where the exceptional circumstances relied on to establish abuse in a
related market appear to be an application of this approach.
78) For criticism of the concept of 'super-dominance', see O'Donoghue and Padilla (n 6,
above) pp 206–208.
79) See, eg 1998 Football World Cup, OJ 2000 L5/55, para 86; NDC Health/IMS Health:
Interim Measures, OJ 2002 L59/18, para 58; Deutsche Post AG — Interception of cross-
border mail, OJ 2001 L331/40, paras 103 and 124.
80) TeliaSonera (n 43, above) paras 80–81; see also Case C-459/10P Tomra (n 76, above)
para 39.
81) Case C-23/14 Post Danmark v Konkurrencerådet EU:C:2015:651 ('Post Danmark II'),
paras 30, and 39–42.
82) Intel (n 9, above) para 139; see also Case C-525/16 MEO (n 22, above) para 31 in
relation to price discrimination under Art 102(c).
83) United Brands (n 67, above) paras 65–66.
84) Hoffmann-La Roche (n 71, above) para 41; Case C-62/86 AKZO v Commission [1991]
ECR I-3359, EU:C:1991:286, para 61, where the CJ established that a market share of
50 per cent creates a rebuttable presumption of dominance.
49
85) For an example of extensive consideration of other factors, see, eg Case T-321/05
AstraZeneca v Commission [2010] ECR II-2805, EU:T:2010:266 in which the GC upheld
the Commission's reliance on the following relevant indicators of market power:
not only sustained high market share (in both absolute and relative terms) (paras
242–254); but also the relatively high price charged by the dominant company
(paras 255–269); the existence and use of intellectual property rights (paras 270–
275); first-mover status and incumbency (paras 276–283); and superior financial
resources (paras 284–286). The GC judgment was upheld on appeal by the CJ in
Case C-457/10P EU:C:2012:770.
87) Hoffmann-La Roche (n 71, above) para 39.
88) Hoffmann-La Roche (n 71, above) para 41; and AAMS (n 97, below) para 51.
90) COMP/37990 Intel, decn of 13 May 2009: large market shares (70 or 80 per cent
throughout a six-year observation period) were in themselves a clear indication of
the existence of a dominant position but this insight was subject to further
verification in any given case by reference to contextual factors such as barriers to
entry and expansion and buyer power: para 852. Intel did not appeal against the
finding that it held a dominant position. cf M.4513 Arjowiggins/M-Real Zanders'
Reflect paper mill (4 June 2008), para 363: 'Theoretically, a market where four
competitors that are not capacity-constrained supply a more or less homogenous
product can generate competitive outcomes, even if one firm has a 50% initial
market share'.
91) See, eg M.4533 SCA/ P&G (European tissue business) (5 September 2008), where the
merged entity would have an 80–90 per cent share in the supply of branded
kitchen paper but would not have market power because of the strong competition
from own-label product at the retail level: 'high market shares did not reflect their
real market power vis-à-vis retailers and, ultimately, end-consumers': para 126.
92) eg M.1882 Pirelli/BICC, OJ 2003 L70/35 and the discussion in para 10.044, below.
93) Case T-321/05 AstraZeneca v Commission (n 85, above) para 245, upheld on further
appeal Case C-457/10P EU:C:2012:770 (see in particular para 177). For cases of firms
with high market shares see, eg Cases 40/73, etc, Suiker Unie v Commission [1975]
ECR 1663, EU:C:1975:174, paras 452–457 (supplier with massive share of commodity
product); Hoffmann-La Roche (n 71, above) paras 56 and 60; Tetra Pak II, OJ 1992
L72/1, para 100 of the Commission's decn; Cases T-24/93, etc, Compagnie Maritime
Belge Transports v Commission [1996] ECR II-1201, EU:T:1996:139, para 76.
94) See, eg Warner-Lambert/Gillette, OJ 1993 L116/21, para 22. In COMP/38113
Prokent/Tomra, decn of 29 March 2006, the Commission measured market share by
reference to numbers of units sold in the relevant markets in individual years. This
approach, it said, underestimated the market shares to Tomra's benefit: para 59. It
also considered shares of the installed base of the recycling machines (appeals on
other grounds dismissed, Case T-155/06 Tomra Systems [2010] ECR II-4361,
EU:T:2010:370, and Case C-549/10P EU:C:2012:221). In COMP/39525 Telekomunikacja
Polska, decn of 22 June 2011, market share was measured in terms of retail
telecommunications lines as well as by revenues: para 668 (appeal dismissed on
other grounds, Case T-486/11 Orange Polska v Commission EU:T:2015:1002, on
further appeal, Case C-123/16P, not yet decided; AG Wathelet advised the CJ to set
aside the GC's judgment because it had failed to examine the applicant's
criticisms of the Commission's assessment of the effect of the infringement for the
purpose of calculating the amount of the fine: EU:C:2018:87, paras 66–108); and in
Case T-340/03 France Télécom v Commission [2007] ECR II-107, EU:T:2007:22 share of
subscriber lines was considered by the GC: para 109.
95) As referred to by the CJ in Hoffmann-La Roche (n 71, above) para 41.
96) See to this effect National Grid v Gas and Electricity Markets Authority [2009] CAT 14,
para 51, where the UK CAT pointed out that 'in the years after a statutory monopoly
has been lifted, one should approach market share figures with caution. Even
vigorous and unconstrained market entry is unlikely to result in an instantaneous
and substantial reduction of the incumbent's share from 100 per cent'. Therefore,
despite market shares of between 89 and 98 per cent during the period under
investigation, the Tribunal was prepared, exceptionally, to treat such shares as not
raising any particular presumption as to the existence of dominance.
97) See, eg General Motors (n 34, above); Case 226/84 British Leyland v Commission
[1986] ECR 3263, EU:C:1986:421; Höfner and Elser (n 61, above) para 28; Merci
convenzionale porto di Genova (n 36, above) para 14; Case C-320/91 Corbeau [1993]
ECR I-2533, EU:C:1993:198; Case T-229/94 Deutsche Bahn v Commission [1997] ECR II-
1689, EU:T:1997:155, para 57 (appeal on other grounds dismissed, Case C-436/97P
[1999] ECR I-2387, EU:C:1999:205); Brussels Airport, OJ 1995 L216/8; Case T-139/98
Amministrazione Autonoma dei Monopoli di Stato v Commission ('AAMS') [2001] ECR
II-3413, EU:T:2001:272; Case T-66/01 ICI v Commission [2010] ECR II-2631,
EU:T:2010:255, paras 254–283. For the position of, eg patent holders, see para
10.036, below.
98) Hoffmann-La Roche (n 71, above); Case T-210/01 General Electric v Commission
[2005] ECR II-5575, EU:T:2005:456, para 117.
99) Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461, EU:C:1979:36.
50
100) Hoffmann-La Roche, above, para 56; similarly, market shares ranging between 84
per cent and 90 per cent over a similar period were 'so large that they prove the
existence of a dominant position': para 60. Likewise, market shares ranging
between 63 per cent and 66 per cent over a three-year period were held to be
'evidence of the existence of a dominant position' and 'the gap between Roche's
shares (64.8 per cent) and those of its next largest competitors (14.8 per cent and
6.3 per cent) was such as to confirm the conclusion which the Commission reached':
para 63. For a further example of a case in which an historic market share of more
than 90 per cent was held, in the absence of exceptional circumstances, to
constitute a dominant position, see Case T-66/01 ICI v Commission (n 97, above)
paras 258–259 and 283.
104) Case T-66/01 ICI (n 97, above) para 258. See also Suiker Unie (n 93, above) paras
452–457 (90 per cent and 85 per cent shares).
105) Case AT.39740 Google Search (Shopping), decn of 27 June 2017: see Press Release
IP/17/1784 (27 June 2017), on appeal Case T-612/17 Google and Alphabet v
Commission, not yet decided.
106) COMP/37990 Intel, decn of 13 May 2009, appeal dismissed on other grounds, Case T-
286/09 Intel v Commission EU:T:2014:547, judgment set aside on other grounds Case
C-413/14P Intel v Commission EU:C:2017:632; the case has been referred back to the
GC, Case T-286/09 RENV, not yet decided). See also AstraZeneca (n 85, above) paras
246–252, listing shares well in excess of 50 per cent in Member States save where
parallel imports made a short inroad into AZ's market. The GC rejected the
submission that market shares were less relevant in the pharmaceutical sector
where innovation was an essential parameter of competition: para 254 (appeal
dismissed, Case C-457/10P (n 93, above)); Prokent/Tomra (n 94, above) para 84
(Tomra's market share was in excess of 60 per cent in every national market and
often around 90 per cent).
107) Case 322/81 Michelin v Commission [1983] ECR 3461, EU:C:1983:313, para 52. In
AstraZeneca (n 85, above), the GC held that AZ's possession of a particularly high
market share and, in any event, a share which was much higher than those of its
competitors, was an entirely relevant indicator of its market power. The fact that
this market power may have been the result of successful innovation in the
pharmaceutical sector did not detract from its relevance: para 252; AZ's further
appeal to the CJ was dismissed, Case C-457/10P (n 93, above). cf Meridian
Communication and Cellular Three v Eircell [2002] 1 IR 17, where the Irish High Court
found that Eircell was not dominant in the market for mobile telephony services
despite a market share of approximately 60 per cent because its share was
declining in favour of the competing mobile operator, at the time of the case a
third operator had just entered the market, and the significance of high barriers to
entry in the market was vastly reduced by the fact that barriers to expansion were
so low.
108) AKZO v Commission (n 84, above) para 61. In Telekomunikacja Polska (n 94, above),
the Commission considered that a share of 46–57 per cent by revenue of the retail
market, taking into account other factors, was sufficient to amount to dominance:
paras 668 et seq.
109) Case 27/76 United Brands v Commission [1978] ECR 207, EU:C:1978:22, paras 108–110.
110) United Brands v Commission, above, para 112.
111) Case C-250/92 Gøttrup Klim v Dansk Landbrugs [1994] ECR I-5641, EU:C:1994:413,
para 48. See also rejection of complaints against Elmo-Tech: 30 per cent share of
market for equipment for electronic monitoring of paroled offenders 'not normally
indicative of dominance' particularly where there was a wide diversity and
abundance of firms active in the market: (2003) 3 Competition Policy Newsletter 53.
112) Case 26/76 Metro v Commission ('Metro No. 1') [1977] ECR 1875, EU:C:1977:167, para 17.
See also Case 75/84 Metro v Commission ('Metro No. 2') [1986] ECR 3021,
EU:C:1986:399, para 85 (share of less than 10 per cent too small to be evidence of
dominance).
113) Case T-321/05 AstraZeneca [2010] ECR II-2805, EU:T:2010:266 (appeal dismissed,
Case C-457/10P (n 93, above)); Case T-65/98 Van den Bergh Foods (n 41, above) para
155; Prokent/Tomra (n 94, above) para 84; Case T-340/03 France Télécom v
Commission (n 94, above) para 109 (WIN had more than eight times the number of
subscribers than its number one competitor).
114) Case T-219/99 British Airways v Commission [2003] ECR II-5917, EU:T:2003:343,
dismissing the appeal against Virgin/British Airways, OJ 2000 L244/56. This was the
first time that a share of less than 40 per cent of the relevant market was held by
the EU Courts to confer a dominant position. (Dominance not challenged on further
appeal: Case C-95/04P [2007] ECR I-2331, EU:C:2007:166). See similarly, Prokent-
Tomra (n 94, above) paras 84 and 85 (point not discussed on appeal). By contrast,
in Flybe (n 43, above) the UK OFT concluded that despite a 56 per cent share of the
relevant market (the Newquay-London Gatwick route), the conduct of Flybe, a
relatively new entrant, was constrained by actual competition from Air Southwest,
the incumbent, which had the remaining 44 per cent: para 5.14.
51
115) Hoffmann-La Roche (n 99, above) para 41. See also Case 77/77 BP v Commission
[1978] ECR 1513, EU:C:1978:107, where AG Warner rejected (at 1537) the proposition
that Art 102 is applicable to a situation where 'owing to an emergency causing a
temporary scarcity of supplies of a particular commodity, the customers or the
“normal” customers of each supplier may become dependent upon him'; Der Grüne
Punkt — Duales System Deutschland, OJ 2001 L166/1: stability of a high (82 per cent)
market share over time supported finding of dominance (appeal on other grounds
dismissed, Case T-151/01 Der Grüne Punkt — DSD v Commission [2007] ECR II-1607,
EU:T:2007:154, further appeal dismissed, Case C-385/07P Der Grüne Punkt — DSD v
Commisison [2009] ECR I-6155, EU:C:2009:456); Google (n 105, above): the
Commission attached importance to the fact that Google's market share of general
search in all EEA countries had exceeded 90 per cent for nine years, from 2008 to
2017 (from 2011 in the Czech Republic). See also SMP Guidelines in the context of
electronic communications networks and services, OJ 2002 C165/6, paras 72 et seq;
in February 2018 the Commission published drafts of the revised SMP Guidelines
and an accompanying Explanatory Note, available on DG Markt's website.
116) Case T-340/03 France Télécom v Commission (n 94, above) paras 105–111 (appeal
dismissed, Case C-202/07P [2009] ECR I-2369, EU:C:2009:214). The Commission
rejected a similar argument in COMP/38784 Wanadoo España v Telefónica, decn of 4
July 2007, para 247 (appeals dismissed, Case T-336/07 Telefónica de España
EU:T:2012:172 and Case C-295/12P EU:C:2014:2062).
117) Cases T-24/93, etc, Compagnie Maritime Belge Transports v Commission [1996] ECR
II-1201, EU:T:1996:139, para 77; appeal dismissed, Cases C-395&396/96P [2000] ECR
I-1365, EU:C:2000:132. See also British Airways (n 114, above): decline of BA's share
from 47.7 per cent in 1990 to 39.7 per cent in 1998 did not rebut dominance. Whilst
the Article 102 Enforcement Priorities Guidance (n 86, above) does not express a
view as to the length of time over which a high and stable market share is
indicative of dominance, it does suggest (at fn 6) that a firm which is able
profitably to increase prices above the competitive level for a period of two years
will normally be considered dominant.
118) General Electric (n 98, above) paras 148 et seq (the GC nevertheless upheld the
Commission's finding that GE was dominant in the market for jet engines for large
commercial aircraft: 'Even on a bidding market, the fact of a manufacturer
maintaining, or even increasing, its market share over a number of years in
succession is an indication of market strength'); the UK CAT in Independent Media
Services v Office of Communications [2008] CAT 13, paras 41 and 66. See also M.4956
STX/Aker Yards (5 May 2008) (market shares in the cruise ship building market
examined over a four-year period to reflect the limited number of orders and
deliveries: para 40); M.4647 AEE/Lentjes (5 December 2007) (market position
examined over a five-year period, together with a detailed analysis of tenders and
projects in which both AEE and Lentjes had taken part as bidders: paras 57 et seq);
M.4662 Syniverse/BSG Wireless Business (4 December 2007); M.5983 Tyco
Electronics/ADC Telecommunications (7 December 2010) (major customers usually
launched tenders every 1–2 years, suggesting that even relatively high market
shares did not give a clear indication of merged entity's market power: para 29);
M.6007 Nokia Siemens Networks/Motorola Network Business (15 December 2010)
para 35. cf M.5669 Cisco/Tandberg (29 March 2010) para 46 (bidding process not
sufficient to eliminate competition concerns given the fact that end users tend to
look for interoperability with the installed base when launching a request for
tenders); M.7278 GE /Alstom (8 September 2015) para 233 (even on a bidding
market, the fact that an undertaking maintains or increases its market share over a
number of years in succession is an indication of market strength; in bidding
markets there is no presumption that a few bidders are sufficient to generate a
competitive outcome: ibid, para 239); also Prokent-Tomra (n 94, above) para 90
(market in reverse vending machines not a bidding market).
119) United Brands (n 109, above); Hoffmann-La Roche (n 99, above); British Airways (n
114, above).
120) Article 102 Enforcement Priorities Guidance, OJ 2009 C45/7, para 14. Compare the
approach of the Commission in its SMP Guidelines, OJ 2002 C165/06. The
Commission there suggests that market shares below 25 per cent are unlikely to
support a dominance finding, whereas 'single dominance concerns normally arise
in the case of undertakings with market shares of over 40 per cent'; at para 75 it
states that market shares greater than 50 per cent would give rise to a
presumption of dominance and indicates the potential importance of a high
market share over time. The concept of significant market power in this context is
considered at paras 12.013 et seq, below.
121) Case 322/81 Michelin v Commission (n 107, above) para 55.
122) Case T-321/05 AstraZeneca v Commission (n 113, above), para 286 (appeal
dismissed, Case C-457/10P (n 93, above)). See also Case T-65/98 Van den Bergh
Foods (n 41, above) para 156. The CJ did not address this issue on appeal.
123) Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461, EU:C:1979:36, para 47.
52
124) See Metro No. 2 (n 112, above) paras 79 et seq, in which the CJ refused to consider
the activities of other undertakings in the Thomson-Brandt group in the absence of
evidence that the undertakings in the group followed a coordinated marketing
strategy. See also Suiker Unie (n 93, above) paras 376–382 and 451–452; Ahmed
Saeed (n 49, above) para 35. In Intel (n 106, above), the Commission relied in part
on Intel's financial data as evidence of its market power (its operating margins
being comparable to those of Microsoft): para 880.
125) Hoffmann-La Roche (n 123, above) para 48; Telekomunikacja Polska (n 94, above)
para 678; Case T-340/03 France Télécom v Commission (n 94, above) para 115 but cf
para 120.
126) Case T-321/05 AstraZeneca (n 113, above) paras 276 et seq, referring to paras 541 et
seq of COMP/37507, decn of 15 June 2005.
127) See the DG Comp Discussion Paper (n 10, above) para 40.
128) Wanadoo España v Telefónica (n 116, above) paras 226–228, upheld on appeal Case
T-336/07 (n 116, above) paras 153 et seq (further appeal dismissed on other
grounds, Case C-295/12P EU:C:2014:2062). The Commission noted that 'Early entry in
the telecommunications sector confers a major advantage on a firm where it has
been able to establish a significant preference for its brand in the eyes of the
consumer, not necessarily by providing an objectively better service than its
competitors, but simply because it has enjoyed a monopoly in many mass markets
of the telecommunications sector for many years': ibid, para 252.
129) See also the Article 102 Enforcement Priorities Guidance (n 120, above) paras 16
and 17.
130) Market Definition Notice, OJ 1997 C372/5, paras 24, 28–31.
131) COMP/37990 Intel, decn of 13 May 2009, para 863 (the appeals are discussed at n
106, above). See also Wanadoo España v Telefónica (n 116, above) para 226, upheld
on appeal, Case T-336/07 (n 116, above) paras 154–158.
132) Case T-336/07 Telefónica de España (n 116, above) para 154. See also United Brands
(n 109, above) where the CJ noted the exceptionally large capital investments
required for the creation and running of banana plantations; the need to increase
sources of supply to meet unforeseen crop failure; and the economies of scale in
distribution possessed by United Brands that were not available to newcomers:
ibid, para 122.
133) The possession of an established sales network may be important: Hoffmann-La
Roche (n 123, above) para 48; Case 322/81 Michelin (n 107, above) para 58; Cases T-
24/93, etc, Compagnie Maritime Belge Transports (n 117, above) para 78. See also
Warner Lambert/Gillette (n 94, above) para 9 (minimum economically viable size
for new razor blade factory); P&I Clubs, IGA, OJ 1999 L125/12 (economies of scale in
insurance and long-time lag in achieving them by any potential new entrant).
134) See, eg the Commission's analysis in Intel (n 131, above) para 866. The Commission
also discussed the link between high fixed costs and barriers to entry: ibid, paras
875 et seq. In Telekomunikacja Polska (n 94, above) the Commission referred (at
para 661) to economies of scale achieved for broadband access to the incumbent
operator's network as the greater number of end users, the lower the unit cost per
line.
135) Intel (n 131, above) para 878.
136) Case T-83/91 Tetra Pak v Commission ('Tetra Pak II') [1994] ECR II-755, EU:T:1994:246,
paras 133 and also 110. (The point was not considered by the CJ on the further
appeal, Case C-333/94P Tetra Pak [1996] ECR I-5951, EU:C:1996:436.)
Note that the fact that a product is always stocked by a distributor because of its
high quality does not establish dominance but is a legitimate form of competition:
Case 26/76 Metro No. 1 (n 112, above) para 17.
138) Case T-321/05 AstraZeneca (n 113, above) para 272.
139) COMP/38636 Rambus, commitment decn of 9 December 2009, para 22. Note that in
Telekomunikacja Polska (n 94, above) the Commission found that the limited
ability for TP's rivals to differentiate their retail offerings constituted a barrier to
expansion, in part because the quality of wholesale products, such as speed of
connections, supplied by TP was poor: ibid, para 688.
140) See Chap 9, above. Although intellectual property is a common source of a
monopoly right, it is not the only such possibility. For an example of an alternative
and analogous situation see Nurendale (trading as Panda Waste Services) v Dublin
City Council [2009] IEHC 588, [2010] ECC 21 (local authorities providing refuse
collection services were dominant not only because of their own provision of
services but because they could, by regulation, control who else was able to
provide services: para 133).
141) Cases C-241&C-242/91P RTE and ITP v Commission ('Magill') [1995] ECR I-743,
EU:C:1995:98, para 46 upholding Case T-69/89 RTE v Commission [1991] ECR II-485,
EU:T:1991:39, Case T-70/89 BBC v Commission [1991] ECR II-535, EU:T:1991:40, and
Case T-76/89 ITC v Commission [1991] ECR II-575, EU:T:1991:41.
53
142) In Case 238/87 Volvo v Veng [1988] ECR 6211, EU:C:1988:477, one of the questions
referred to the CJ was whether the owner of the rights in an industrial design for a
car body panel necessarily had a dominant position in the supply of that body
panel. The CJ did not answer the question but AG Mischo said that this would
depend on whether there were substitutes for that body panel available, ie
whether it was possible to make an adequate copy of the part without infringing
the industrial design rights.
143) Case 78/70 Deutsche Grammophon v Metro [1971] ECR 487, EU:C:1971:59, para 18.
144) See Magill (n 141, above) para 47. Note that in Unwired Planet v Huawei [2017] EWHC
711 (Pat) (the final public version is at [2017] EWHC 2988 (Pat) (Rev 2)) Birss J held
that when considering the specific position of an individual standard-essential
patent (SEP) owner's conduct, 'the only appropriate way to assess whether that SEP
owner is in a dominant position as a matter of fact is to take the practical effect of
the FRAND obligation into account'; the ease of enforcement of the FRAND
obligation and its clarity are relevant factors: paras 654–655. The judge granted
both parties permission to appeal to the Court of Appeal: [2017] EWHC 1304 (Pat),
paras 62–69.
145) Art 28(1) of the WTO Agreement on Trade-Related Aspects of Intellectual Property.
146) See, eg Hilti (n 156, below) para 93. In Intel (n 131, above) the Commission noted
that Intel's main competitor AMD manufactured its x86 CPUs on the basis of a
cross-licence agreement with Intel. That agreement followed on from a number of
patent infringement cases brought by Intel against AMD and a global settlement
between the two companies in 1995. The Commission commented that 'the
extensive litigation history highlights the significant intellectual property-related
barriers that any new entrant to the x86 CPU market would have to overcome':
para 858. See also Case CE-9531/11 Paroxetine, UK NCA decn of 12 February 2016,
paras 4.118–4.123, on appeal the UK CAT decided it was necessary to refer
questions on Arts 101 and 102 to the CJ for a preliminary ruling: [2018] CAT 4 and the
order of 27 March 2018.
147) COMP/39985 Motorola — Enforcement of GPRS standard essential patents, decn of 29
April 2014, paras 226–236.
148) See also Unwired Planet v Huawei [2017] EWHC 711 (Pat), paras 630–670 (Unwired
Planet held 100 per cent market share in the relevant market for licences under its
SEPs; neither the fact that the technology covered by SEPs was implemented
before a licence was obtained nor the fact that Unwired Planet had agreed to grant
licences under its SEPs on FRAND terms precluded its dominance).
149) See, in particular, Case 127/73 BRT v SABAM [1974] ECR 51, EU:C:1974:25; Case 22/79
Greenwich Film Production v SACEM [1979] ECR 3275, EU:C:1979:245; Case 7/82 GVL v
Commission [1983] ECR 483, EU:C:1983:52; Case 125/78 GEMA v Commission [1979] ECR
3173, EU:C:1979:237; the three GEMA decns: OJ 1971 L134/15; OJ 1972 L166/22; OJ 1982
L94/12; the SACEM decisions: Case 402/85 Basset v SACEM [1987] ECR 1747,
EU:C:1987:197; Case 395/87 Ministère Public v Tournier [1989] ECR 2521, EU:C:1989:319;
Cases 110/88, etc, Lucazeau v SACEM [1989] ECR 2811, EU:C:1989:326.
150) Cases C-241&242/91P Magill (n 141, above).
151) Magill (n 141, above), para 47. See also the discussion in Case T-321/05 AstraZeneca
(n 113, above) of the strength of the patent protection owned by AstraZeneca over
its new drug and its vigorous enforcement of its rights: paras 270 et seq. The GC
firmly rejected the assertion that considering intellectual property rights and their
exercise, even if not abusive, in order to establish the existence of a dominant
position was liable to reduce the incentive to create innovative products. AZ's
further appeal was dismissed, Case C-457/10P (n 93, above); see in particular para
188.
152) Case T-340/03 France Télécom v Commission [2007] ECR II-107, EU:T:2007:22, paras
112–120 (appeal dismissed on other grounds, Case C-202/07P [2009] ECR I-2369,
EU:C:2009:214).
153) COMP/39525 Telekomunikacja Polska, decn of 22 June 2011, para 678 (appeal
dismissed, Case T-486/11 Telekomunikacja Polska EU:T:2015:1002, on further
appeal, Case C-123/16P Orange Polska v Commission not yet decided); see similarly
COMP/38784 Wanadoo España v Telefónica, decn of 4 July 2007, para 237 (upheld on
appeal and on further appeal: Case T-336/07 and Case C-295/12P (n 116, above)).
154) Case C-82/01P Aéroports de Paris v Commission [2002] ECR I-9297, EU:C:2002:617.
54
155) Further cases involving airports include FAG—Flughafen Frankfurt/Main AG, OJ 1998
L72/30, para 69 (Flughafen Frankfurt/Main ('FAG'), the owner and operator of
Frankfurt airport and the sole supplier of ramp-handling services at the airport,
found to be dominant in the supply of those services since alternative suppliers
were not in a position to assail FAG's monopoly so long as FAG denied them access
to the ramp where the services had to be provided) and Purple Parking v Heathrow
Airport (n 21, above); see also Case T-9/93 Schöller v Commission [1995] ECR II-1611,
EU:T:1995:99, paras 83–84 (a case under Art 101 where the GC held that a system of
lending freezer cabinets to retailers for the exclusive use of the lender's products
constituted a barrier to entry into the ice cream market). See also the three cases
arising at Arlanda airport in para 4.069, n 288, above. Note that in Telekomunikacja
Polska (n 153, above), the Commission referred to the numerous administrative
obstacles, such as obtaining permits from local authorities, complying with local
development plans, etc which made rolling out a competing network economically
unfeasible and unreasonably difficult in a reasonable period: para 676.
156) United Brands (n 109, above) para 68. See also Case T-30/89 Hilti v Commission
[1991] ECR II-1439, EU:T:1991:70, para 93: 'it is highly improbable in practice that a
non-dominant supplier will act as Hilti did, since effective competition will
normally ensure that the adverse consequences of such behaviour outweigh any
benefits'; Tetra Pak II, OJ 1992 L72/1, para 146(1). See also Genzyme v OFT [2004] CAT
4, para 255: the ability of Genzyme to resist the wishes of its consumers and users
was described by the UK CAT as 'the hallmark of dominance'.
157) The Report by the EAGCP (n 10, above) p 4, suggested that as a matter of economic
theory there is no justification for a two-stage analysis and that it would be more
appropriate to consider unilateral allegedly anti-competitive conduct as a single
issue.
158) AstraZeneca (n 113, above) paras 261 et seq; appeal dismissed, Case C-457/10P (n
94, above); on this point, see para 185. Note that AstraZeneca was not accused of
excessive pricing. See also Wanadoo España v Telefónica (n 153, above) paras 251–
253.
159) Michelin II, OJ 2002 L143/1, paras 197–199 (appeal dismissed, Case T-203/01 Michelin
('Michelin II') [2003] ECR II-4071, EU:T:2003:250).
160) Case T-139/98 Amministrazione Autonoma dei Monopoli di Stato (AAMS) v
Commission [2001] ECR II-3413, EU:T:2001:272, para 52.
161) Hilti (n 156, above).
162) BBI/Boosey & Hawkes, OJ 1987 L286/36; Prokent-Tomra (n 94, above) para 91.
163) See, eg Phenytoin sodium capsules: suspected unfair pricing, UK CMA decn of 7
December 2016, paras 4.222–4.225 (on appeal to the CAT, Pfizer and Flynn Pharma v
CMA, not yet decided).
164) Case 322/81 Michelin (n 107, above) para 59; Case T-228/97 Irish Sugar v Commission
[1999] ECR II-2969, EU:T:1999:246, paras 102–103; appeal dismissed, Case C-497/99P
Irish Sugar [2001] ECR I-5333, EU:C:2001:393. Similarly, the fact that prices are
falling is not inconsistent with the existence of a dominant position:
Telekomunikacja Polska (n 153, above) para 907 and Intel (n 131, above) (rapid
technological progress meant that falling prices were an intrinsic feature of this
industry according to 'Moore's Law' named after Gordon Moore, the founder of
Intel: para 908).
165) Intel (n 131, above) para 867. See also Cases 142&156/84 BAT & RJ Reynolds v
Commission [1987] ECR 4487, EU:C:1987:490, paras 43–44; Telekomunikacja Polska (n
153, above) para 685: 'New entrants must make a much higher effort to acquire
customers if they wish to make up for the lost time and bridge the resulting image
gap and confer on their broadband service the same brand recognition as that of
the dominant undertaking's flagship offering'.
166) See, in the context of the Merger Reg, Case T-342/07 Ryanair Holdings v Commission
[2010] ECR II-3457, EU:T:2010:280, para 287; and under Art 102, Prokent/Tomra (n 94,
above) para 86. See also Flybe (n 43, above) para 5.61 and fn 188. See also
CA98/01/2008 Cardiff Bus, UK OFT decn of 18 November 2008, para 6.90: the fact of
Cardiff Bus's municipal ownership may have affected incentives for potential
competitors to enter or expand, in that it was willing to run services on much
smaller profit margins than would be entertained by a private sector commercial
operator.
167) See, eg Case 51/75 EMI Records v CBS United Kingdom [1976] ECR 811, EU:C:1976:85,
para 36. See also Case 86/75 EMI Records v CBS Grammofon [1976] ECR 871,
EU:C:1976:86, para 33; Case 96/75 EMI Records v CBS Schallplatten [1976] ECR 913,
EU:C:1976:87, para 19 and United Brands (n 109, above).
168) See, eg the UK CAT in Hutchison 3G (UK) v Office of Communications [2005] CAT 39,
para 110(c); see also paras 100–134 (a case under the Communications Act 2003).
169) See paras 8.262 et seq, above; see, eg M.4662 Syniverse/BSG Wireless Business (4
December 2007); and M.4523 Travelport/Worldspan (21 August 2007). See also the
comments on countervailing buyer power in the Article 102 Enforcement Priorities
Guidance (n 120, above) para 18. The degree of countervailing buyer power was
considered by the UK CAT in National Grid v GEMA [2009] CAT 14, paras 60–78, in
particular the economic effect of substantial sunk costs on the part of the
allegedly dominant firm (appeal on liability on other grounds dismissed, National
Grid v GEMA [2010] EWCA Civ 114).
55
170) Cases T-68/89, etc, Società Italiana Vetro v Commission ('Italian Flat Glass') [1992]
ECR II-1403, EU:T:1992:38, para 366.
171) Although such cases are relatively rare in practice, in principle buying power may
itself be such as to constitute dominance. In British Airways (n 114, above), BA's
dominant position was as a purchaser from travel agents of the services of
marketing and distribution of airline tickets. For assessment of buyer power in
merger analysis, see the Commission's Horizontal Mergers Guidelines, OJ 2004
C31/5, para 64, and paras 8.262 et seq, above.
172) See rejection of complaints against Elmo-Tech, (2003) 3 Competition Policy
Newsletter 53, citing evidence (a) that contracts for equipment for electronic
monitoring of paroled offenders were put out to tender and many companies
submitted bids; and (b) of many 'concrete instances' where penitentiary
authorities exercised their countervailing bargaining power: 'In bidding markets, a
high market share normally is an ex post indicator of low prices, not an ex ante
indicator of high prices. What really matters in such a market is the existence of a
significant number of likely bidders willing to apply for tenders'.
173) COMP/38113 Prokent-Tomra, decn of 29 March 2006, paras 88 et seq (appeal
dismissed on other grounds: Case T-155/06 Tomra Systems [2010] ECR II-4361,
EU:T:2010:370 and further appeal dismissed, Case C-549/10P EU:C:2012:221). See
also the discussion in AstraZeneca (n 113, above) of the relative bargaining power of
a pharmaceutical company supplying a new product and the national health
services: para 256. The GC upheld the Commission's finding that AZ could behave
independently vis-à-vis the health systems to a significant extent: para 268. See
also Wanadoo España v Telefónica (n 153, above) para 223; Unwired Planet v Huawei
(n 148, above) para 646, where Birss J noted that the key issue is whether the
allegedly dominant undertaking can act independently of the customers in the
market in general; the fact that it cannot act independently vis-à-vis one
particular large customer does not affect the analysis.
174) Intel (n 131, above) para 890. Further, the Commission held that the fact that
customers were willing to accept that discounts were conditional on their buying
exclusively from Intel showed they did not have buyer power. The Commission
distinguished the GC's judgment in Italian Flat Glass (n 170, above) on the basis that
the glass manufacturer's customer (Fiat) was a monopsony and the market position
of the collectively dominant suppliers was different from that of Intel: para 901.
175) Case C-250/92 Gøttrup-Klim v Dansk Landbrugs Grovvaresklab [1994] ECR I-5641,
EU:C:1994:413, para 32.
176) See, eg OECD Best Practices Roundtable, Competition issues in aftermarkets (2016),
available at the OECD's website.
177) Case 26/75 General Motors Continental v Commission [1975] ECR 1367, EU:C:1975:150;
followed in Case 226/84 British Leyland (n 97, above). The CJ held that where the
alleged abuse relates to the supply of certificates of conformity for imported
motor vehicles under the type approval system the relevant market for assessing a
dominant position is that of the service of supplying such certificates, which is
separate from that of the sale of the vehicles themselves; applied in Carrozeria
Grazia v Volvo Italia, XVIIth Report on Competition Policy (1987), point 82. See also
XXth Report on Competition Policy (1990), point 61; Case C-18/88 RTT v GB-INNO-BM
[1991] ECR I-5941, EU:C:1991:474; Netherlands Express Delivery Services, OJ 1990
L10/47 (annulled on other grounds, Cases C-48&66/90 Netherlands [1992] ECR I-565,
EU:C:1992:63); Spanish International Express Courier Services, OJ 1990 L233/19.
178) Case T-427/08 Confédération européenne des associations d'horlogers-réparateurs
(CEAHR) v Commission [2010] ECR II-5865, EU:T:2010:517, discussed at para 4.067,
above. The Commission subsequently re-investigated and rejected the complaint:
Case AT.39097 Watch Repair, decn of 29 July 2014, upheld on appeal, Case T-712/14
CEAHR v Commission EU:T:2017:748, a further appeal was withdrawn, Case C-3/18P
EU:C:2018:182. See also Case T-269/09 EFIM v Commission EU:T:2011:693 (separate
markets for printers and ink-jet cartridges), upheld on further appeal to the CJ,
Case C-56/12P EU:C:2013:575.
179) COMP/39692 IBM Maintenance Services, commitment decn of 13 December 2011,
paras 20–24 (relevant product market definition) and 26–30 (dominance).
180) Cases 6&7/73 Commercial Solvents v Commission [1974] ECR 223, EU:C:1974:18, paras
21–22. Commercial Solvents argued that there was effective competition from
other anti-tuberculosis drugs in the market for the finished product, ethambutol.
The CJ rejected this argument as irrelevant when the complaint was the refusal to
supply aminobutanol, the raw material.
181) See, eg COMP/39525 Telekomunikacja Polska (n 153, above) and para 12.082, below.
182) See, eg COMP/37792 Microsoft, decn of 24 March 2004 (appeal on infringement and
penalty dismissed, Case T-201/04 Microsoft [2007] ECR II-3601, EU:T:2007:289); Case
T-340/03 France Télécom (n 152, above) paras 112–118 (Wanadoo benefited from
technical support and preferential treatment from the France Télécom group of
which it was part); see also refusal to license intellectual property rights discussed
at paras 9.051 et seq, above. But cf English High Court in Sockell v Body Shop
International [2000] FSR 33, [2000] EuLR 85: a franchisor does not hold a dominant
position in relation to its franchisees simply because they depend on the
franchisor for supplies of the franchised products.
56
183) See, eg Port of Rødby, OJ 1994 L55/52; Sealink/B&I Line [1992] 5 CMLR 255; Sea
Containers/Stena Sealink, OJ 1994 L15/8; Brussels Airport, OJ 1995 L216/8.
184) This may be the case when the price of secondary products over the lifetime of the
product can be estimated and is a significant proportion of the primary product
value.
185) See, eg COMP/36431 Info-Lab/Ricoh, rejection of complaint decn of 7 January 1999;
COMP/34330 Pelikan/Kyocera, rejection of complaint decn of 22 September 1999;
COMP/39391 EFIM, rejection of complaint decn of 20 May 2009, upheld on appeal,
Case T-296/09 European Federation of Ink and Ink Cartridge Manufacturers (EFIM) v
Commission EU:T:2011:693 and on further appeal, Case C-56/12P EU:C:2013:575).
186) Case C-393/92 Almelo [1994] ECR I-1477, EU:C:1994:171, paras 41–42; Case C-96/94
Centro Servizi Spediporto v Spedizioni Marittima del Golfo [1995] ECR I-2883,
EU:C:1995:308, paras 32–33; Cases C-140/94, etc, DIP v Comune di Bassano del
Grappa and Comune di Chiogga [1995] ECR I-3257, EU:C:1995:330, paras 25–26; Italian
Flat Glass (n 170, above) paras 357–359.
187) Cases T-24/93, etc, Compagnie Maritime Belge Transports v Commission (n 117,
above) para 60.
188) Cases C-395&396/96P Compagnie Maritime Belge (n 117, above) para 39.
189) Case T-228/97 Irish Sugar (n 164, above) para 61.
190) DIP (n 186, above) para 26.
191) COMP/39388&39389 E.ON German electricity markets, commitment decn of 26
November 2008 (although a collectively dominant position might be held by two or
three electricity companies in the German wholesale market, only E.ON was
suspected of the abusive conduct: para 27).
192) Cases T-191/98, etc, Atlantic Container Line v Commission ('TACA') [2003] ECR II-3275,
EU:T:2003:245, paras 655 et seq (a collective dominant position does not require
proof that all competition between the undertakings concerned has been
eliminated: para 654).
193) In Cases C-68/94&C-30/95 France v Commission ('the Kali und Salz case') [1998] ECR
I-1375, EU:C:1998:148, the CJ referred to undertakings which 'together, in particular
because of [factors giving rise to a connection between them], are able to adopt a
common policy on the market and act to a considerable extent independently of
their competitors, their customers, and also of consumers' (para 221, emphasis
added). The words in parenthesis are rendered in the official English translation as
'correlative factors which exist between them', but the version given here seems a
better reflection of the original French text ('des facteurs de corrélation existant
entre elles') and follows the wording used by the GC when paraphrasing this
passage in a subsequent merger case: Case T-102/96 Gencor v Commission [1999]
ECR II-879, EU:T:1999:65, para 163. See also, the Opinion of AG Fennelly in Cases C-
395&396/96P Compagnie Maritime Belge (n 117, above) para 26 (criticising the
official English translation).
194) DIP (n 186, above) para 26.
195) Cases C-395&396/96P Compagnie Maritime Belge (n 117, above) para 36 and at para
44: 'a collective entity vis-à-vis their competitors, their trading partners and
consumers'.
196) Note that in Case T-228/97 Irish Sugar (n 164, above) paras 46–49, the absence of
practical control by a company with a 51 per cent shareholding of another did not
negate joint dominance; such a finding depends on their ability to adopt a
common policy on the market. However, the shareholding links, common directors
and exclusive supply arrangements between them were factors pointing to
collective dominance. For an application of collective dominance principles by a
national court, Nurendale (trading as Panda Waste Services) v Dublin City Council
[2009] IEHC 588, [2010] ECC 21 (Irish High Court).
197) See, eg Atlantic Container Line ('TACA') (n 192, above); Cases C-395&396/96P
Compagnie Maritime Belge (n 117, above) para 48.
198) See, eg Almelo (n 186, above).
199) See, eg Cases 40/73, etc, Suiker Unie v Commission [1975] ECR 1663, EU:C:1975:174;
Case T-228/97 Irish Sugar v Commission (n 164, above).
200) Italian Flat Glass (n 170, above) para 360. The UK CAT dealt with a similar concern
about 'recycling' facts in Independent Media Support v OFCOM [2008] CAT 13, para
114.
201) See, per AG Fennelly in Cases C-395&396/96P Compagnie Maritime Belge (n 117,
above) para 29.
202) Hoffmann-La Roche v Commission (n 137, above); Ahmed Saeed (n 49, above) para
37; Decca, OJ 1989 L43/27; Cases C-395&396/96P Compagnie Maritime Belge (n 117,
above) para 33.
57
203) Italian Flat Glass (n 170, above) para 358. In Case C-323/93 Centre d'Insémination de
la Crespelle v Coopérative de la Mayenne [1994] ECR I-5077, EU:C:1994:368, the CJ, in
considering the local monopolies granted under French law to bovine insemination
centres, appears to have treated the centres as jointly holding a dominant position
by virtue of the rights granted to each of them over a contiguous series of areas.
See also Peña Castellot, 'Commission settles allegations of abuse and clears
patent pools in the CD market' (2003) 3 Competition Policy Newsletter 56: joint
operation by Philips and Sony of a patent pool created through a series of cross-
licences made it possible to conclude that they were jointly dominant in the
market for the licensing of CD technology.
204) Case T-228/97 Irish Sugar (n 164, above) paras 46–49. See also the discussion in
Case T-210/01 General Electric (n 98, above) on whether the market shares of
various joint venture companies of which GE was a parent should be aggregated
with GE's own share to establish dominance: paras 127 et seq.
EU:T:2003:245.
206) TACA, above, para 695. On the facts, the GC upheld the finding of collective
dominance but annulled the finding of abuse.
207) Cases C-395&396/96P Compagnie Maritime Belge (n 117, above) paras 51–57.
208) Cases C-395&396/96P Compagnie Maritime Belge (n 117, above) para 45. See also
Telecoms Access Agreements Notice, OJ 1998 C265/2, para 79.
209) See, para 285 of the Opinion of AG Lenz in Case C-415/93 Union Royale Belge des
Sociétés de Football Association v Bosman [1995] ECR I-4921, EU:C:1995:293 (the CJ
did not address the point: EU:C:1995:463).
210) Case T-193/02 Piau v Commission [2005] ECR II-209, EU:T:2005:22, paras 107 et seq.
211) Case C-309/99 Wouters [2002] ECR I-1577, EU:C:2002:98, paras 64, 113–114.
212) In P&I Clubs, IGA (n 133, above) paras 121–122, the Commission decided that
sufficient economic links were provided by (a) the sharing of claims between Clubs;
(b) common restrictive procedures in offering cover to members of other Clubs; (c)
cooperation in a number of commercial areas; and (d) the single and identical
level of cover provided to members.
213) In Case T-464/04 Impala [2006] ECR II-2289, EU:T:2006:216, para 466 the GC held
that the Commission had not proven either that deviations from common policy
had occurred in the past or that there had been no retaliatory measures taken and
therefore held that the Commission could not be satisfied that the second
requirement was not met (on appeal the CJ did not deal specifically with the issue
of retaliatory measures).
214) Case T-102/96 Gencor v Commission [1999] ECR II-879, EU:T:1999:65, paras 206 and
276.
215) Case T-342/99 Airtours v Commission [2002] ECR II-2585, EU:T:2002:146, para 62.
216) Case C-413/06P Bertelsmann and Sony Corporation of America v Impala and
Commission [2008] ECR I-4951, EU:C:2008:392, para 123.
217) See paras 8.244 et seq, above.
218) Piau (n 210, above) para 111 (citing Airtours); see also EFIM (n 185, above) para 71.
See also the DG Comp Discussion Paper (n 10, above) paras 48–50. In
COMP/39388&39389 E.ON German electricity markets, commitment decn of 26
November 2008 the Commission considered that at least two companies were
collectively dominant: they were linked by a network of agreements on production
and wholesale supply; the product was homogenous and 'not evolving'; the price
was transparent; decisions on capacity were transparent; the market was growing
at a modest rate; and new entry was severely restricted. A common policy on
pricing and production was possible because they could detect and counter any
deviation and react immediately by doing the same: paras 19–22. See also the
Bundeskartellamt's 'Final Report on the Fuel Sector Inquiry' (26 May 2011) finding
that an oligopolistic market structure enabled the large oil companies to set
prices more or less uniformly at their petrol stations.
219) Framework Directive, Dir 2002/21, OJ 2002 L108/33 (although set out in the specific
context of the telecommunications sector, they would appear to be of general
relevance).
220) Impala (n 216, above) para 125.
221) See para 10.001, above.
222) Case C-280/08P Deutsche Telekom v Commission [2010] ECR I-9555, EU:C:2010:603,
para 176 and the case law cited. For discussion of the development of the CJ's case-
law under Art 102 see Bailey, 'The new frontiers of Article 102 TFEU: antitrust
imperialism or judicious intervention?' (2018) 6 Journal of Antitrust Enforcement 25.
223) Case C-202/07P France Télécom v Commission [2009] ECR I-2369, EU:C:2009:214, para
105 and the case law cited.
224) For the effect on inter-State trade, see paras 1.113 et seq, above. Note that an
effect on the structure of competition within the EU can itself be a relevant effect
on inter-State trade: Commercial Solvents (n 180, above) para 33.
225) Case C-209/10 Post Danmark v Konkurrencerådet EU:C:2012:172 ('Post Danmark I'),
para 22; Case C-413/14P Intel v Commission EU:C:2017:632, para 134.
58
226) Post Danmark I, above, para 25; Intel, above, para 136. See also Streetmap v Google
[2016] EWHC 253 (Ch), paras 62–63. As to how the 'as efficient competitor' standard
applies in the context of rebates, see para 10.101, below.
The English Court of Appeal has held that there is no legal requirement to establish
first what normal competition entails in respect of a product before going on to
consider the effect of the allegedly abusive conduct: National Grid v GEMA [2010]
EWCA Civ 114, para 36. Thus, the CAT (in National Grid v GEMA [2009] CAT 14, paras 88
et seq) had been 'entitled not to isolate the question of normal competition as a
separate issue but to ask itself whether the foreclosing effect of the agreements
was too severe and to look at matters in the round in deciding whether the conduct
was abusive': para 40.
228) The definition has also been applied in certain cases alleging excessive pricing:
see, eg Humber Oil Terminals Trustee v Associated British Ports [2011] EWHC 352,
para 34, upheld on appeal, [2012] EWCA Civ 36, para 40 (allegations of abusively
high rents were struck out because, in particular, there was no pleading of any
anti-competitive effects).
229) For a clear identification of this issue, see Marsden and Bishop 'Editorial — Article
82 review: “What is your theory of harm?”?' (2006) European Competition
Journal257.
230) There is no exhaustive list of theories of harm as they will inevitably be fact-
specific. Note that in National Grid v GEMA [2010] EWCA Civ 114 the English Court of
Appeal held that there was no need for a finding of abuse to be based on a
benchmark. Although benchmarks were often used in pricing cases, '[t]here is,
however, no rule requiring the use of a benchmark in every case, let alone a
benchmark that will tell one precisely where the line between lawful and unlawful
conduct is to be drawn': para 54.
231) See, in particular, Case C-280/08P Deutsche Telekom v Commission [2010] ECR I-
9555, EU:C:2010:603, paras 250–254, upholding Case T-271/03 [2008] ECR II-477,
EU:T:2008:101, para 235; and Case C-52/09 TeliaSonera [2011] ECR I-527, EU:C:2011:83,
paras 61–77; Post Danmark I (n 225, above) paras 34–39.
232) Intel (n 225, above).
233) Intel (n 225, above) para 139; the Commission must assess the conditions and
arrangements for granting the rebates in question, their duration and their amount
and the possible existence of a strategy aiming to exclude competitors that are at
least as efficient as the dominant undertaking from the market. See also Case C-
525/16 MEO — Serviços de Comunicações e Multimédia v Autoridade da Concorrência
EU:C:2018:270, para 31 (citing para 139 of the CJ's judgment in Intel).
234) See also the list of factors that are relevant to the existence of 'anti-competitive
foreclosure' and thus the likelihood of enforcement by the Commission: Article 102
Enforcement Priorities Guidance, OJ 2009 C45/7, para 20. See also Intel (n 225,
above) paras 139–140 (referring to some of the factors set out at para 20 of the
Article 102 Enforcement Priorities Guidance). Note paras 122–172 of the AG opinion
in Intel EU:C:2016:788, includes detailed discussion of factors relevant in
considering an allegation of abuse.
235) Note that in respect of pricing practices the recent case law of the CJ has
emphasised the need to demonstrate an exclusionary effect on competitors
considered to be as efficient as the dominant undertaking itself: see, eg Post
Danmark I (n 225, above) para 25 (selective price-cutting) and Intel (n 225, above)
para 136 (exclusivity rebates). See also Case C-23/14 Post Danmark v
Konkurrencerådet EU:C:2015:651 ('Post Danmark II'), paras 51–62; and see para
10.101, below.
236) In National Grid (n 230, above) the Court of Appeal also held that the use of
counterfactuals as a tool of appraisal is plainly permissible and of potential value.
The purpose of the counterfactual is to cast light on the effect of the conduct in
issue: 'This is an area of appreciation, not of legal rules': para 57.
237) See in particular the costs-based tests approved by the CJ in cases of predatory
pricing and margin squeeze discussed at paras 10.080 and 10.130, below. As those
cases make clear, application of these principles are likely in practice to lead to
costs 'benchmarks' against which the pricing strategies of the dominant firm are
assessed.
238) See the Opinion of Judge Kirschner, acting as AG in the GC, in Case T-51/89 Tetra
Pak v Commission [1990] ECR II-309, paras 68–74 (on appeal from Tetra Pak I (BTG
Licence), OJ 1988 L272/27). See also Cases C-468/06, etc, Sot Lélos kai Sia EE v
GlaxoSmithKline [2008] ECR I-7139, EU:C:2008:504, para 70 and the case law cited.
For the issue of objective justification, see para 10.069, below.
239) See, eg para 10.096, below.
240) For a recent summary of these principles and the relevant case law in the context
of exclusionary pricing, see TeliaSonera (n 231, above) paras 20–31.
241) However, see para 10.041, above for certain forms of conduct that have been
recognised as indicators of market power, ie as indicators of an ability to act
independently of competitors or customers.
59
242) The equivalent paragraph of the 6th edn of this work was cited by the English Court
of Appeal in National Grid (n 230, above) para 39; Case 322/81 Michelin v
Commission [1983] ECR 3461, EU:C:1983:313, para 57; Case T-111/96 ITT Promedia v
Commission [1998] ECR II-2937, EU:T:1998:183, para 139; Case T-65/98 Van den Bergh
Foods v Commission [2003] ECR II-4653, EU:T:2003:281, para 159 (appeal dismissed,
Case C-552/03P Unilever Bestfoods [2006] ECR I-9091, EU:C:2006:607); Cases T-
191/98, etc, Atlantic Container Line ('TACA') (n 205, above) paras 1124–1125. In the
Article 102 Enforcement Priorities Guidance (n 234, above) the Commission states
that the scope of the 'special responsibility' will depend on the specific
circumstances: para 9.
243) Case 322/81 Michelin (n 242, above) para 57, quoted at para 10.008, above; see also
Warner-Lambert/Gillette, OJ 1993 L116/21, para 23.
244) Case T-111/96 ITT Promedia (n 242, above) para 139, citing Case T-51/89 Tetra Pak (n
238, above) para 23; Cases T-191/98, etc, Atlantic Container Line ('TACA') (n 205,
above) para 1125: contractual terms can be an abuse even if adopted by most, if
not all of the dominant undertakings' competitors.
245) See paras 10.149 et seq, below.
246) Case C-549/10P Tomra Systems v Commission EU:C:2012:221, para 21. See also Case
C-457/10P AstraZeneca v Commission EU:C:2012:770, where the CJ found that serious
misrepresentations to public authorities for the purposes of acquiring exclusive
rights constituted abuse insofar as it was clearly not consistent with 'competition
on the merits': paras 71, 74 et seq and 98–99.
247) Tomra Systems, above, paras 19–20. See Melícias, 'The Use and Abuse of Intent
Evidence in Antitrust Analysis' (2010) 33 World Competition 569; and O'Grady, 'The
Role of Exclusionary Intent in the Enforcement of Article 102 TFEU' (2014) 37 World
Competition 459.
248) See para 10.085, below.
249) Case 27/76 United Brands v Commission [1978] ECR 207, EU:C:1978:22, para 189. In
Tomra Systems (n 246, above) the CJ held that the Commission had been right to
examine the applicants' internal documents to see whether they showed that the
exclusion of competition was intended or alternatively suggested another
explanation for the practices. It was legitimate for the Commission to refer to
subjective factors namely the motives underlying the business strategy in question
although there was no obligation to establish the existence of exclusionary intent.
Moreover, an intention to compete on the merits, even if established on the facts
could not prove the absence of abuse: para 22.
250) Case C-280/08P Deutsche Telekom (n 231, above) para 254. The CJ went on to say,
however, that 'in the absence of any effect on the competitive situation of
competitors, a pricing practice such as that at issue cannot be classified as
exclusionary if it does not make their market penetration any more difficult'. See
also Cases T-24/93, etc, Compagnie Maritime Belge Transports v Commission [1996]
ECR II-1201, EU:T:1996:139, para 149 and Case C-53/03 Syfait v GlaxoSmithKline
[2005] ECR I-4609, EU:C:2004:673, where AG Jacobs cautioned (Opinion, para 71):
'The issue of intent should … not deflect attention from the essential question
whether such a refusal is in all the circumstances justified'. The CJ held that the
reference was inadmissible and so did not address this issue.
251) Case T-321/05 AstraZeneca v Commission [2010] ECR II-2805, EU:T:2010:266, para 804
and see also para 816 (appeal dismissed, Case C-457/10P (n 246, above); on this
point, see para 129).
252) Tomra Systems (n 246, above) para 22.
253) See, eg AstraZeneca (n 246, above), paras 75, 93, 98, and 130.
254) Case T-286/09 Intel EU:T:2014:547 para 209 (on further appeal this issue was not
considered by the CJ).
255) Case AT.39767 BEH Electricity, commitment decn of 10 December 2015, para 62.
256) On the concepts of object and effects see speech by former DG Italianer of 10
December 2014, 'The object of effects', available at DG Comp's website.
257) Case AT.39813 Baltic rail transport, decn of 2 October 2017, imposing a fine of €28
million, on appeal to the GC, Case T-814/17 Lietuvos geležinkeliai v Commission, not
yet decided.
258) See, eg Hoffmann-La Roche (n 227, above) para 89 (which, read literally, could be
taken to mean that exclusivity rebates are abusive); see however the CJ's
clarification of that case law in Intel (n 225, above) paras 137–140.
259) For discussion of the undesirability of per se rules under Art 102 see, eg the AG
Opinion in Cases C-468/06, etc, Sot Lélos kai Sia v GlaxoSmithKline [2008] ECR I-
7139, EU:C:2008:180, paras 62–76.
260) See Case C-280/08P Deutsche Telekom (n 231, above) paras 252–254; TeliaSonera (n
231, above) paras 61–77; Case C-549/10P Tomra Systems (n 246, above) para 22; Post
Danmark I (n 225, above) para 44; Case C-457/10P AstraZeneca (n 246, above) para
112; Case C-413/14P Intel (n 225, above) para 136 (setting aside the GC's judgment in
Case T-286/09 (n 106, above) that had erroneously accepted, at paras 76–77 and
80–81, that the Commission was not required to demonstrate the capability of
exclusivity rebates to restrict competition).
261) See paras 10.103 and 10.131, below.
262) See Intel (n 225, above) paras 138–139.
60
263) See Socrates v Law Society of England and Wales [2017] CAT 10, paras 148–150 and
case law cited.
264) See TeliaSonera (n 231, above) para 64. As to the policy reasons for this, see also
Case T-201/04 Microsoft (n 182, above) para 561.
265) See, eg Case T-155/06 Tomra Systems (n 173, above) para 289 (appeal dismissed,
Case C-549/10P (n 246, above)). Note that some cases refer to whether the conduct
of a dominant undertaking is likely to restrict competition, Case C-280/08P
Deutsche Telekom (n 231, above) and TeliaSonera (n 231, above), referred to at n
260, above, as well as the Opinions of AG Mazák in both cases (at paras 64 and 40
respectively), where he warned that 'a mere claim that there may be remote,
abstract anti-competitive effects will not suffice'; Post Danmark I (n 225, above)
para 44; Post Danmark II (n 235, above), para 67; Case T-336/07 Telefónica v
Commission EU:T:2012:172; and Case T-398/07 Spain v Commission EU:T:2012:173,
where the GC held that the conduct must have an anti-competitive effect on the
market but this 'does not necessarily have to be concrete'—it is enough to show
that it 'may potentially exclude' as-efficient competitors: para 90 (on appeal from
COMP/38784 Wanadoo España/Telefónica, decn of 4 July 2007, esp recital 544. An
appeal against the GC judgment in Case T-336/07 was dismissed, Case C-295/12P
EU:C:2014:2062). For the purpose of applying Art 102, however, it appears that the
EU Courts refer to 'capability' and 'likelihood' interchangeably, eg Case T-201/04
Microsoft v Commission (n 182, above) para 561 (rejecting any difference between
the expressions 'risk of elimination of competition' and 'likely to eliminate
competition' as irrelevant). See also AG Kokott's discussion in Post Danmark II
EU:C:2015:34 of how likely the anti-competitive effect of a rebate scheme has to be
in order to constitute an abuse, paras 79–85. See also the Article 102 Enforcement
Priorities Guidance (n 234, above) paras 20, 21 and 23, and the EAGCP Report 'An
economic approach to Article 82 EC' (July 2005), p 13.
266) Post Danmark II (n 235, above) para 65.
267) AstraZeneca (n 246, above) para 112.
268) See Streetmap v Google (n 226, above) para 88 (asking whether there is 'a
reasonable likelihood' that the conduct will have an anti-competitive foreclose
effect); if however there were evidence that conduct had no actual anti-
competitive effect over a period, that evidence would be highly relevant to the
question of whether it was abusive (para 90, distinguishing Case T-219/99 British
Airways v Commission [2003] ECR II-5917, para 297). See also the UK CAT in Socrates
v Law Society (n 263, above) paras 149–150.
269) See, eg Case C-95/04P British Airways v Commission [2007] ECR I-2331, EU:C:2007:166,
paras 106–107. However, in Case C-280/08P Deutsche Telekom (n 231, above) para
253 and Case C-209/10 Post Danmark I (n 225, above) paras 20–22 the CJ placed
more emphasis on consideration of the effect on end consumers. See the Opinion
of AG Jacobs in Case C-7/97 Bronner v Mediaprint [1998] ECR I-7791, EU:C:1998:264,
para 58; and the Opinion of AG Mazák in Case C-202/07P France Télécom v
Commission (n 223, above) para 74. See also Socrates (n 263, above) paras 147–148.
270) TeliaSonera (n 218, above), although the 'as efficient competitor' test is not
necessarily relevant when considering alleged abusive rebates: see para 10.101,
below. The CJ has said that it would be artificial to establish a threshold for market
foreclosure beyond which the practices of a dominant undertaking may have an
exclusionary effect: see Case C-549/10P Tomra Systems (n 246, above) para 43.
271) For comment, see Wils, 'The Judgment of the EU General Court in Intel and the So-
Called “More Economic Approach” to Abuse of Dominance' (2014) 37 World
Competition 405 and Akman, 'The Tests of Illegality under Articles 101 and 102
TFEU' (2016) Antitrust Bulletin 84.
272) Post Danmark II (n 235, above), paras 70–74; and AG Kokott (n 265, above), paras 86–
94; see also MEO (n 233, above) para 29.
273) See Streetmap v Google (n 226, above) paras 92–98 (English High Court); see also
Socrates v Law Society of England and Wales [2017] CAT 10, paras 151 and 154–160
(UK CAT).
274) Case T-128/98 Aéroports de Paris v Commission [2000] ECR II-3929, EU:T:2000:290,
para 173 (further appeal dismissed, Case C-82/01P [2002] ECR I-9297, EU:C:2002:617);
Rose J relied on Aéroports de Paris in Arriva Shires v London Luton Airport
Operations [2014] EWHC 64 (Ch), para 99 ('it is not necessary for there to be some
commercial benefit to be gained by the dominant undertaking from its conduct
before that conduct can be condemned as abusive').
61
275) See also SEL-Imperial v British Standards Institution [2010] EWHC 854 (Ch), in which
the English High Court considered (in the context of an application to strike out a
civil claim) whether conduct could be an abuse even if the dominant undertaking
derived no competitive advantage from it: Roth J held that although the GC's dicta
in SELEX Sistemi supported the contention that competitive advantage was an
element in the concept of abuse, the position was insufficiently clear on this point,
and thus the allegation of abuse should not be struck out. In Google Ireland
(Practices in the sector of on line advertising) Case No. 10-MC-01, decn of 30 June
2010, interim measures were granted on the basis Google had abused its dominant
position by refusing to host adverts for equipment that alerts drivers to speed
cameras because its policy on this was not expressed clearly and appeared to be
applied in a discriminatory manner. The NCA held that the fact that Google may
not derive a commercial or other advantage from its actions did not preclude the
application of Art 102, referring to the EU Commission decn in COMP/36888 1998
Football World Cup (20 July 1999) para 102. The matter was subsequently resolved
by commitments: Case No. 10-D-30, 28 October 2010. See also the discussion of
price discrimination at paras 10.089 et seq, below.
276) Arriva Shires (n 274, above) para 99.
EU:T:2003:245, para 1109.
278) Syfait (n 250, above) para 72 of the Opinion. In Purple Parking v Heathrow Airport
[2011] EWHC 987 (Ch) Mann J agreed with the criticism by AG Jacobs of the two-stage
analysis of abuse and objective justification but nonetheless applied it: para 180.
279) See, eg Telefónica (n 265, above) where a section of the decision is entitled
'Objective Justification and Efficiencies': Section F, paras 619 et seq; and
Telekomunikacja Polska (n 153, above) Section X, paras 873 et seq. See also Albors
Llorens, 'The Role of Objective Justification and Efficiencies in the Application of
Article 82 EC' (2007) 44 CML Rev 1727; Loewenthal, 'The Defence of “Objective
Justification” in the Application of Article 82 EC' (2005) 28 World Competition 455;
van der Vijver, 'Objective Justification and Article 102 TFEU' (2012) 35 World
Competition 55.
280) See Case C-95/04P British Airways (n 269, above) paras 68–69; and TeliaSonera (n
231, above) paras 75–76; cf the approach of the English Court of Appeal in D?r Cymru
v Albion Water [2008] EWCA Civ 536, para 91.
281) See, eg United Brands (n 249, above) paras 189–190; BBI/Boosey & Hawkes, OJ 1987
L286/36; Case C-95/04P British Airways (n 269, above); see also the UK CAT in
Genzyme v OFT [2004] CAT 4, para 583.
282) Case T-201/04 Microsoft (n 249, above) para 688; see also Case T-321/05
AstraZeneca (n 251, above) para 686 (appeal dismissed on other grounds: Case C-
457/10P (n 246, above)); and the judgment of the UK CAT in Genzyme, above, paras
476–479, citing Case 395/87 Ministère Public v Tournier [1989] ECR 2521, para 38 and
Case T-128/98 Aéroports de Paris v Commission [2000] ECR II-3929, EU:T:2000:290,
para 202. See also the Article 102 Enforcement Priorities Guidance (n 234, above)
para 31.
283) See the Opinion of Judge Kirschner, acting as AG in the GC, in Case T-51/89 Tetra
Pak (n 238, above) paras 68–74. See also Streetmap v Google (n 226, above), para
149. For comment see Bailey, 'The new frontiers of Article 102 TFEU: antitrust
imperialism or judicious intervention?' (2018) 6 Journal of Antitrust Enforcement 25,
at 48–50.
284) Post Danmark I (n 225, above) para 42. See also Case C-95/04P British Airways (n
269, above) para 86; TeliaSonera (n 231, above) para 76; Post Danmark II (n 235,
above) para 49; Case C-413/14P Intel (n 225, above) para 140. In Streetmap v Google
(n 226, above) Roth J noted that the efficiencies of displaying a thumbnail map in a
general search engine qualified as a 'technical improvement' in the quality of the
general search service provided by Google: para 145.
285) cf Cases T-191/98, etc, Atlantic Container Line ('TACA') (n 277, above) paras 1114–1117
(drawing a distinction between the contention that 'the practices in question
should be permitted because they confer certain advantages' and evidence that
'the purpose of those practices is reasonably to protect its commercial interests in
the face of action taken by certain third parties': in the GC's view, only the latter
could be an objective justification relevant to rebutting an alleged abuse).
286) Article 102 Enforcement Priorities Guidance, OJ 2009 C45/7, para 30; see also
possible efficiencies in relation to each of the specific forms of exclusionary abuse
identified in the Guidance: see paras 46, 62, 74 and 89–90.
287) For a summary of the economic issues, see Vickers, 'Abuse of Marker Power' (2005)
Economic J F244. For case law (of particular relevance to the issue of 'price
squeezes'), see Case C-280/08P Deutsche Telekom (n 231, above) para 200; and
TeliaSonera (n 231, above) paras 45–46.
288) The importance of 'exclusionary' abuse is reflected in the fact that the Article 102
Enforcement Priorities Guidance (n 286, above) is exclusively concerned with these
abuses, and is focused (at paras 19–22) on the criteria relevant to determining
whether there is 'anti-competitive foreclosure' in a market.
62
289) See, eg Case C-333/94P Tetra Pak v Commission [1996] ECR I-5951, EU:C:1996:436,
para 37; and Streetmap v Google (n 226, above) para 60 (potential abuse of
preferentially promoting, by means of a dominant undertaking's market power on
market A, a separate product on related market B with the effect of strengthening
the undertaking's position on market B, if not otherwise objectively justified). See
also Case AT.39740 Google Search (Shopping), decn of 27 June 2017, para 335 and
case law cited, on appeal Case T-612/17 Google and Alphabet v Commission, not yet
decided.
290) See TeliaSonera (n 231, above) in which TeliaSonera argued that it should remain
free to fix its terms of trade, unless those terms are so disadvantageous that they
may be regarded, in the light of the relevant criteria set out in Bronner v Mediaprint
as entailing a refusal to supply. The Court rejected this, holding that conduct which
consists in imposing disadvantageous conditions on the sale of goods may, in
itself, constitute an independent form of abuse distinct from that of refusal to
supply: para 31. In Purple Parking (n 278, above), the English High Court similarly
rejected the submission that because the alleged abuse could be described as an
'essential facilities'-type case, the claimants were precluded from arguing that it
was any other kind of abuse: the Court held that such pigeon-holing of conduct was
inconsistent with the case law: para 105.
291) Case C-549/10P Tomra (n 246, above) paras 73 and 78.
292) See paras 10.129 et seq, below.
293) Article 102 Enforcement Priorities Guidance, OJ 2009 C45/7, paras 23–27. However,
the Commission recognises that sometimes a less efficient competitor may also
exert a competitive constraint which should be taken into account: para 24. See
also paras 63 et seq of the Article 102 Enforcement Priorities Guidance.
294) COMP/37990 Intel, decn of 13 May 2009, paras 1002–1576 applying the AEC test; on
appeal the GC held that the AEC test was irrelevant: Case T-286/09 Intel v
Commission EU:T:2014:547, paras 140–166; on further appeal the CJ held that the GC
had wrongly failed to examine Intel's arguments seeking to call into question the
AEC test carried out by the Commission: Case C-413/14P EU:C:2017:632, paras 142–
147; the case has been referred back to the GC: Case T-286/09 RENV Intel v
294a) Commission decn of 24 January 2018, on appeal, Case T-235/18 Qualcomm v
295) See, eg Alleged abuse of a dominant position by IDEXX Laboratories, UK OFT no
grounds for action decn of 17 November 2011; and Investigation relating to supplies
of impulse ice cream, UK CMA no grounds for action decn of 10 August 2017, para 13.
296) Article 102 Enforcement Priorities Guidance (n 293, above) para 19. But note how
the 'as efficient competitor' standard (as opposed to a price/cost test) applies in
relation to fidelity and other rebates: see para 10.101, below.
297) See Article 102 Enforcement Priorities Guidance (n 293, above) paras 63–74; and the
Telecoms Access Agreements Notice (n 208, above) paras 110–116; Bishop and
Walker (n 6, above) paras 6.084 et seq. See also Valio, judgment of the Finnish
Supreme Administrative Court of 29 December 2016 (imposing a penalty of €70
million on Valio for predatory pricing with the aim of foreclosing Finland's fresh
milk markets: ECN Brief of 28 March 2017).
298) Post Danmark I (n 225, above) para 26.
299) See, eg Niels, Jenkins and Kavanagh, Economics for Competition Lawyers (2nd edn,
2016), Chap 4.
300) Article 102 Enforcement Priorities Guidance (n 293, above) paras 26, 27, 64 and 65.
301) Examples of variable costs include the costs of raw materials, distribution,
electricity, fuel for transport.
302) An example of a fixed cost might be the monthly rental of a company's premises.
303) See, eg British Telecommunications v Office of Communications [2011] CAT 5, para 70.
304) Case C-62/86 AKZO Chemie v Commission [1991] ECR I-3359, EU:C:1991:286.
305) Case C-333/94P Tetra Pak v Commission ('Tetra Pak II') [1996] ECR I-5951,
EU:C:1996:436, para 41, summarising AKZO v Commission (n 304, above) paras 70–72.
306) COMP/38233 Wanadoo Interactive, decn of 16 July 2003, upheld on appeal, Case T-
340/03 France Télécom v Commission [2007] ECR II-107, EU:T:2007:22, paras 224–228;
upheld on further appeal, Case C-202/07P France Télécom v Commission [2009] ECR
I-2369, EU:C:2009:214. The UK CAT has also held that there is no requirement to
show recoupment under EU law: Aberdeen Journals v OFT (No. 2) [2003] CAT 11, paras
437–443.
307) Case C-202/07P France Télécom, above, paras 109–111; cf Case C-209/10 Post
Danmark I (n 225, above) para 27 where the CJ said that prices below average
variable costs must 'in principle' be regarded as abusive. See also Case T-83/91
Tetra Pak v Commission [1994] ECR II-755, EU:T:1994:246 ('Tetra Pak II'), para 147. In
Cases C-395&396/96P Compagnie Maritime Belge Transports v Commission [2000]
ECR I-1365, EU:C:1998:518, Opinion, para 127, AG Fennelly referred to the first part of
the AKZO rule as a presumption which a dominant firm could rebut by showing that
such pricing was not part of a plan to eliminate a competitor. See also the
Commission's decn in Wanadoo Interactive (n 306, above) recital 262.
63
308) Although the Article 102 Enforcement Priorities Guidance (n 293, above) does not
refer to this justification in terms, it does state that the Commission will consider
claims by the dominant undertaking that the low pricing enables it to achieve
economies of scale or efficiencies related to expanding the market: para 74. But cf
Wanadoo Interactive, para 10.087, below. For the approach of the UK CAT, see
Aberdeen Journals v OFT (No. 2) [2003] CAT 11, paras 357–358; see also First
Edinburgh/Lothian, UK OFT decn of 29 April 2004 (First Edinburgh's below-AVC
pricing on a local bus services market not abusive but rather part of a larger battle
with Lothian which was the strong incumbent in an adjacent territory).
309) AKZO v Commission (n 304, above) para 94.
310) AKZO v Commission (n 304, above) para 95. In Statens Järnvägar v Konkurrensverket,
Case MD 2000:2 judgment of 1 February 2000, the Swedish Market Court considered
whether a proposed bid for a contract for the supply of public transport by rail
services would be predatory. The Court found that the dominant bidder had left
out a number of costs which should have been included in the tender, that the
bidder must have been aware that the tendered price was below its variable costs
and that the bid was aimed at undermining its competitor.
311) See the UK CAT in Aberdeen Journals (No. 2) (n 308, above) para 353: 'the longer the
period that is taken, the more likely it is that cost will be classified as variable…
Indeed, in the long run, almost all costs are “variable”.'
312) See also para 12.166 and n 657, below.
313) Deutsche Post AG — mail order parcel services, OJ 2001 L125/27, paras 35–36:
predatory pricing each year for six years. The decn refers to 'incremental cost' but
on the facts this corresponded to what is often referred to as 'avoidable cost'. See
also CA98/01/2008 Cardiff Bus, decn of 18 November 2008, para 7.157 in which the
UK OFT explained that '[o]ften the AAC benchmark will be the same as the AVC
benchmark, because in many cases only variable costs can be avoided. However,
where the dominant company makes specific investments, such as expanding
capacity in order to predate, then the fixed or sunk investments made for this
extra capacity will be included within AAC, causing AAC to exceed AVC'. At para
7.161 the UK NCA referred to the use of AAC as 'the logical extension of the AKZO
test' in that it identifies the extent to which an equally efficient competitor would
be able to operate profitably. For other national cases, see Régie départmentale
des passages d'eau de la Vendée, judgment of the Cour de Cassation of 17 June 2008,
BOCCRF No. 4 of 8 April 2009, [2009] ECC 63, and the subsequent judgment of the
Paris Court of Appeal, judgment of 9 June 2009, BOCCRF No. 8 of 3 August 2009 and
Alleged abuse of a dominant position by Flybe, UK OFT decn of 5 November 2010,
para 6.34.
314) See Post Danmark I (n 225, above) paras 31–34.
315) See also the comments in Post Danmark I (n 225, above) Opinion of AG Mengozzi
which were not followed by the CJ in its judgment of 27 March 2012. Note that Post
Danmark had been found not to have predatory intent.
317) AKZO v Commission (n 304, above).
318) Tetra Pak II, OJ 1992 L72/1, para 158.
319) Case T-83/91 Tetra Pak v Commission (n 307, above) para 151, upheld by the CJ, Case
C-333/94P (n 305, above) para 42.
320) Case T-340/03 France Télécom v Commission [2007] ECR II-107, EU:T:2007:22, paras
199–216 (on appeal from COMP/38233 Wanadoo Interactive, decn of 16 July 2003,
paras 271–299) (further appeal dismissed, Case C-202/07P France Télécom (n 306,
above) paras 89–94). The Article 102 Enforcement Priorities Guidance (n 293, above)
refers to 'direct evidence' of predatory strategy in documents from the dominant
undertaking: see para 66. cf Flybe (n 313, above) para 6.78, where the OFT stressed
the need for caution when analysing assertions of executives of the dominant
undertaking as part of a broader consideration of intention to eliminate
competitors.
321) See, eg the UK CAT in Aberdeen Journals (No. 2) (n 308, above) para 356.
322) Aberdeen Journals (No. 2) (n 308, above) para 356.
323) Claymore Dairies v OFT [2005] CAT 30, para 270.
324) Tetra Pak II, OJ 1992 L72/1, paras 147–159; Case T-83/91 Tetra Pak v Commission
[1994] ECR II-755, EU:T:1994:246, paras 142–152, on further appeal to the CJ, Case C-
333/94P Tetra Pak v Commission [1996] ECR I-5951, EU:C:1996:436, paras 39–45.
325) Case C-202/07P France Télécom (n 306, above) paras 110–112. In the Article 102
Enforcement Priorities Guidance (n 293, above) the Commission indicates that it is
unlikely that consumers are harmed by predatory conduct unless the dominant
undertaking is likely to benefit from its sacrifice. This does not mean that the
dominant undertaking must be likely to be able to increase its prices; it is
sufficient if, for instance, the conduct would be likely to prevent or delay a decline
in prices that would otherwise have occurred: paras 70–71.
326) In the Article 102 Enforcement Priorities Guidance (n 293, above) the Commission
has indicated that it is unlikely that predatory conduct will create efficiencies
though it will consider claims that low pricing enables the dominant firm to
achieve economies of scale or efficiencies relating to expanding the market: para
74.
64
327) Wanadoo Interactive (n 306, above) para 337. cf Case T-83/91 Tetra Pak (n 324,
above) para 147, not considered by the CJ on further appeal, Case C-333/94P (n 324,
above).
328) Wanadoo Interactive (n 306, above) para 307, upheld on appeal Case T-340/03
France Télécom (n 306, above) para 217.
329) Wanadoo Interactive (n 306, above) para 301. The Commission also considered that
the high-speed internet access market had strong links with the market for local
access in the telecommunications sector which was a market in the throes of
deregulation. This created risks of leveraging that justified particular vigilance:
para 302. cf the discussion by the UK CAT in Freeserve.com v Director General of
Telecommunications [2003] CAT 5, paras 221–224.
330) The Article 102 Enforcement Priorities Guidance (n 293, above) anticipates this as a
possible form of defence: para 65; the UK NCA has also recognised this possibility:
see Cardiff Bus (n 313, above) para 7.23. Similar issues arise in respect of
allegations of margin squeeze, in respect of both a possible defence and the
relevant costs test: see 10.130, below.
331) A justification suggested in, eg AKZO (n 304, above) para 135. In Tetra Pak II, OJ 1992
L72/1, the measures ordered by the Commission did not allow for meeting
competition but required that discounts on cartons should be granted solely
according to the quantity of each order without aggregating different kinds of
cartons for that purpose. cf ECS/AKZO, OJ 1983 L252/13, where the Commission, in
ordering interim measures to stop predatory pricing, provided for an exception to
enable AKZO to match (but not price below) a lower offer made to its customer by
a competitor. Although that was not reproduced in the final order (OJ 1985 L374/1),
note the observations of the CJ in the appeal, Case C-62/86 AKZO Chemie v
Commission [1991] ECR I-3359, EU:C:1991:286, paras 153–156.
332) Wanadoo Interactive (n 306, above) para 315. cf Telefónica de España v Retevisión,
Case 9174/2003, judgment of 20 June 2006, in which the Spanish Supreme Court
found that heavy expenditure on advertising to promote special prices, above
cost, designed to match those of a new entrant on the market, and offered to
customers generally, was not in itself an abuse. See also the decision of the French
Autorité de la concurrence, fining the owners of a daily sports newspaper for
having launched a product to compete with a new entrant, using the same format,
price, and date of launch as the new entrant's product, at a cost to it that included
sacrificing some of its sales of its traditional product in favour of the new product:
Decision 14-D-02 of 20 February 2014: see ECN Brief 02/2014, p7, the French NCA
decn was upheld on appeal by the Paris Court of Appeal, judgment of 15 May 2015
(2014/05554) and on further appeal by the Cour de Cassation: judgment of 1 March
2017 (Arrêt n° 255 F-D).
333) Case T-340/03 France Télécom (n 306, above) para 187 (further appeal on this point
dismissed by the CJ as inadmissible: Case C-202/07P France Télécom (n 306, above)
para 56).
334) See the discussion of 'Ramsey pricing' in Bishop and Walker (n 6, above), paras
6.34–6.36. 'Ramsey pricing' (named after the English economist and philosopher,
Frank Ramsey) involves differential pricing to reflect the different degrees of price
sensitivity of different classes of customers for products sharing common or fixed
costs, with prices set much lower for price sensitive customers: eg private
consumers as against business users.
ECR I-1365, EU:C:2000:132.
336) Compagnie Maritime Belge Transports v Commission, above, EU:C:1998:518, Opinion,
para 132; EU:C:2000:132, judgment, para 117. The Court endorsed the AG's finding of
abuse on the specific facts of that case although it did not seek to lay down a clear
legal principle in such cases. See also Case T-228/97 Irish Sugar v Commission
[1999] ECR II-2969, EU:T:1999:246, paras 173 et seq (grant of 'border rebates' to Irish
retailers in the border area to meet competition from Northern Irish suppliers was
abusive where the rebates prevented the development of free competition across
Ireland. The GC emphasised that Irish Sugar had more than 88 per cent of the
relevant market and stated that its ruling was made as regards 'an undertaking in
a dominant position with the characteristics of that of the applicant at the time in
question' ibid, paras 187–189 (appeal on other grounds dismissed, Case C-497/99P
Irish Sugar [2001] ECR I-5333, EU:C:2001:393). See also the application of the EU
case law by the UK CAT (applying the UK equivalent of Art 102) in Napp
Pharmaceutical Holdings v Director General of Fair Trading [2002] CAT 1, paras 337–
339: Napp had over 90 per cent market share and its conduct was directed at its
only significant competitor.
337) See Case C-209/10 Post Danmark v Konkurrencerådet ('Post Danmark I'),
EU:C:2012:172. Note that the Danish NCA had found that there was no intention to
eliminate the competitor so that abusive below-cost pricing had not been
established. In T-Link and Grandi Navi Veloci Case A 417 Bull No. 20/2010, 19 May
2010, the Italian NCA accepted commitments after indicating that a policy
whereby the dominant company grants higher discounts to clients who are
exposed to competitors' offers and that remain loyal, and conversely punishes
other clients who switch to competitors, is abusive.
65
338) Post Danmark had a statutory monopoly over addressed mail deliveries and was
also subject to a universal service obligation in respect of addressed mail. Post
Danmark was not super-dominant as it had a 50 per cent market share: see
Opinion of AG Mengozzi, EU:C:2011:342, paras 27 and 94. See also Post Danmark A/S
— Magasinpostsagen, Danish Competition Council decn, 4/0120/0204/0153; 22
December 2010 (individualised rebates and minimum purchase requirements on
periodicals distribution constituted abuse. On appeal the case was remitted for
further consideration of the economic justification for the minimum purchase
requirements: judgment of the Danish Competition Appeals Tribunal of 8
December 2011, Case No. 2011-0023661).
339) The CJ noted, however, that the Danish NCA's calculation of what it called 'average
variable costs' included the great bulk of costs attributable to the delivery of
unaddressed mail: para 34.
340) Post Danmark I (n 337, above) para 36.
341) Post Danmark I (n 337, above) para 38. The CJ noted that Forbruger-Kontakt had in
fact managed to keep its business going and win back the Coop group's custom:
para 39.
342) Post Danmark I (n 337, above) paras 39–44.
343) See the judgment of Danish Supreme Court of 15 February 2013.
344) Case C-525/16 MEO — Serviços de Comunicações e Multimédia SA v Autoridade da
Concorrência EU:C:2018:270, para 27. Note, however, that the element of
competitive disadvantage has been interpreted broadly in cases of discrimination
based on nationality: see para 10.094, below.
345) See Post Danmark I (n 337, above). Note that the Danish NCA referred to 'primary-
line price discrimination' as occurring when the abuse affected competition
between the dominant undertaking and its direct competitor and 'secondary line
price discrimination' as occurring where the abuse affected competition between
the dominant undertaking's customer and that customer's competitors. AG
Mengozzi described this distinction as 'expedient' and supported by
commentators (para 45 of his opinion) but the CJ did not adopt these terms in its
judgment—the Danish court referring the questions was concerned only with
primary-line price discrimination since PD had not appealed against a finding of
'secondary-line' abuse: see para 14 of the judgment.
346) COMP/36568 and 36570 Scandlines v Port of Helsingborg; Sundbusserne v Port of
Helsingborg, rejection of complaints decn of 23 July 2004, paras 249 et seq.
347) See also COMP/39351 Swedish Interconnectors, decn of 14 April 2010 (accepting
commitments under Art 9 of Reg 1/2003) para 44. The English High Court has held
that terms on which facilities are made available to a dominant undertaking's own
ancillary business can form the basis of a comparison for the terms offered to
independent undertakings seeking to operate a competing business: Purple
Parking (n 278, above) paras 134 et seq.
348) Case T-301/04 Clearstream v Commission [2009] ECR II-3155, EU:T:2009:317, para 179.
348a) MEO (n 344, above) paras 26–28; the CJ indicated the factors that may be relevant
to this assessment: para 31 (citing Intel (n 225, above) para 139).
349) See Case C-52/07 Kanal 5 and TV 4 AB v STIM [2008] ECR I-9275, EU:C:2008:703, para
46 (CJ stating that it needs to be shown that the dominant firm's customers are
indeed competitors of each other).
350) Case T-128/98 Aéroports de Paris v Commission [2000] ECR II-3929, EU:T:2000:290,
para 215, appeal dismissed, Case C-82/01P [2002] ECR I-9297, EU:C:2002:617, para
116. For other cases of price discrimination under Art 102(c), see, eg Case T-229/94
Deutsche Bahn v Commission [1997] ECR II-1689, EU:T:1997:155, appeal dismissed,
Case C-436/97P [1999] ECR I-2387, EU:C:1999:205 (charges for transporting containers
higher on some routes than others); Case T-228/97 Irish Sugar (n 336, above) paras
125, 137 et seq (export rebates on sale of industrial sugar to customers exporting
part of their production); Deutsche Post AG—Interception of cross-border mail, OJ
2001 L331/40, paras 121–132 (surcharge on 'remail' originating from senders in
Germany). See also P&I Clubs, IGA, OJ 1999 L125/12, paras 134–136 (terms for access
to reinsurance market discriminatory prior to amendment). Note also national
court judgments: in SABAM, 3 November 2005, [2006] ECC 195 Brussels Court of
Appeal (inadequate justification for differential tariffs); Luftfartsverket (LFV) v
Scandinavian Airline Systems, 27 April 2001 (additional airport fees found to be
discriminatory) and Purple Parking (n 278, above) paras 132 et seq.
351) See, eg Case T-228/97 Irish Sugar (n 336, above) paras 150 et seq: abuse on the
market for industrial sugar by charging sugar packers who competed with Irish
Sugar in the downstream retail market a higher price for bulk sugar than those
packers who did not compete; Case C-242/95 GT Link v DSB [1997] ECR I-4449,
EU:C:1997:376: port did not levy duty on its own ferry service (and those of its
trading partners) that were charged on independent ferry companies.
352) Case C-95/04P British Airways (n 269, above) para 145; see also Clearstream (n 348,
above) paras 192 and 194; MEO (n 344, above) para 27.
353) Case C-18/93 Corsica Ferries [1994] ECR I-1783, EU:C:1994:195.
66
354) Corsica Ferries, above, para 43. See also the Opinion of AG van Gerven, EU:C:1994:49,
para 34, suggesting that it is not necessary for the trading partners of the dominant
undertaking to suffer a competitive disadvantage either against it or against each
other. However, para 21 of the judgment suggests that the differential tariffs were
in practice found to place Corsica Ferries at a competitive disadvantage in the
provision of maritime transport services more broadly.
355) Case C-163/99 Portugal v Commission ('Portuguese Airports') [2001] ECR I-2613,
EU:C:2001:189: infringement of Art 102 in conjunction with Art 106. The CJ upheld the
Commission's decision that, inter alia, the 50 per cent reduction in fee for
domestic flights as opposed to international flights infringed Art 102(c),
irrespective of whether that had the effect of discriminating on the grounds of the
nationality of the airlines. See also Ilmailulaitos/Luftfartsverket ('Finnish Airports'),
OJ 1999 L69/24; AENA ('Spanish Airports'), OJ 2000 L208/36. cf Brussels airport, OJ
1996 L216/8 (direct competitive disadvantage to British Midland in competing with
Sabena on Brussels—London route). In The RIX airport case, decn of the Latvian
Competition Council of 22 November 2006, Case No. 897/04/05/9 a similar discount
structure was condemned as abusive.
356) See COMP/38745 BdKEP — restrictions on mail preparation, decn of 20 October 2004,
paras 92–96: infringement of Art 106 in conjunction with Art 102 by German postal
law barring commercial mail preparation firms from earning discounts for handing
over pre-sorted letters at Deutsche Post ('DP') sorting centres, the relevant
provisions inducing DP to discriminate between bulk mailers, who have access to
sorting centres and related discounts, and commercial providers of such services,
who do not have such discounts. DP argued that bulk mailers and commercial
senders acting for third parties were not competing. However, it seems that
competitive disadvantage could have been found on the same basis as in
Aéroports de Paris: see para 10.093, above.
357) Case C-525/16 MEO — Serviços de Comunicações e Multimédia SA v Autoridade da
Concorrência EU:C:2018:270, paras 28, 31 and 37; note that the CJ reiterated that
fixing a de minimis threshold for determining whether there is an abuse is not
justified: para 29.
358) Cases KZR 14/02&13/02, Horserace transmission ('Galopprennübertragung'), BGH
judgment of 10 February 2004, WuW/E DE-R 1251 (annulling the judgment of the
Düsseldorf Higher Regional Court).
359) Attheraces v British Horseracing Board [2007] EWCA Civ 38 (reversing the judgment
of the High Court, [2005] EWHC 3015).
360) Attheraces, above, para 271. The Court of Appeal stressed that on the facts there
was no question of discrimination seeking to partition the market, distinguishing
United Brands, nor was the price exploitative. See also, eg Purple Parking (n 278,
above) esp para 165.
361) Case 27/76 United Brands v Commission [1978] ECR 207, EU:C:1978:22. See Zanon di
Valgiurata, 'Price Discrimination under Article 86 of the EEC Treaty, The United
Brands Case' (1982) 32 ICLQ 36; and Bishop, 'Price Discrimination under Article 86:
Political Economy in the European Court' (1981) 44 MLR 282, for a trenchant
criticism of this aspect of United Brands as leading to a redistribution of income
from poorer to richer countries.
362) See also, eg Case 226/84 British Leyland v Commission [1986] ECR 3263,
EU:C:1986:421 (prices based on whether LHD or RHD certificates of conformity were
required were designed to deter parallel importation); Tetra Pak II (n 319, above).
Corsica Ferries (para 10.094, above) can also be explained on this basis; cf Case C-
266/96 Corsica Ferries France v Gruppo Antichi Ormeggiatori del Porto di Genova
[1998] ECR I-3949, EU:C:1998:306 (ports could charge different tariffs, which applied
to any vessel irrespective of its nationality, based on the particular characteristics
of each port).
363) See, eg Case 7/82 GVL v Commission [1983] ECR 483, EU:C:1983:52, paras 55–56
(discrimination by the only German music copyright collecting association against
artists not resident in Germany); similarly GEMA, OJ 1971 L134/15. cf Case 402/85
Basset v SACEM [1987] ECR 1747, EU:C:1987:197. See also 1998 Football World Cup, OJ
2000 L5/55: ticket sales arrangements for the football World Cup in France
discriminated in favour of purchasers giving an address in France; cf the
arrangements made for the 2006 World Cup to prevent discrimination against
purchasers outside the Eurozone: COMP/39177 2006 World Cup/Which?/DFB, Press
Release IP/05/519 (2 May 2005).
364) Deutsche Post AG — Interception of cross-border mail (n 350, above). This was an
alternative ground of the decn to the finding of anti-competitive abuse under Art
102(a) and (b) and as a constructive refusal to supply. See also Cases C-147&148/97
Deutsche Post [2000] ECR I-825, EU:C:2000:74, paras 56–61.
365) Deutsche Post AG — Interception of cross-border mail (n 350, above) para 133. The
German addressees were similarly regarded as consumers affected by the non-
price discrimination.
366) Post Danmark I (n 337, above) para 41, referring to the general principles on
objective justification and efficiencies affirmed by the CJ in TeliaSonera (n 231,
above) paras 31, 75–76.
367) United Brands (n 361, above) paras 189–190. cf para 10.088, above in respect of
meeting competition as a defence to allegations of predatory pricing.
67
368) Cases C-395&396/96P Compagnie Maritime Belge (n 335, above).
369) Case T-228/97 Irish Sugar v Commission [1999] ECR II-2969, EU:T:1999:246, paras 173
et seq, appeal on other grounds dismissed, Case C-497/99P Irish Sugar v
Commission [2001] ECR I-5333, EU:C:2001:393.
370) In Cases IV/35471, etc, Digital Equipment, 9 October 1997, the Commission accepted
undertakings to end proceedings under Art 102 that allowed non-standard price
reductions, as they were justified as a proportionate response to a competitor.
371) For an example of practices similar to fidelity rebates, see the GC's discussion of
'other financial inducements' offered by ICI in Case T-66/01 ICI v Commission [2010]
ECR II-2631, EU:T:2010:255, paras 326–328.
372) For discussion about the assessment of fidelity rebates in different jurisdcitions,
including in the EU, see OECD Best Practices Roundtable Fidelity rebates (2016),
available at the OECD's website.
373) Cases 40/73, etc, Suiker Unie v Commission [1975] ECR 1663, EU:C:1975:174, para 518
(the CJ contrasted a fidelity rebate with a quantity rebate exclusively linked with
the volume of purchases from the producer concerned).
374) See, eg Post Danmark II (n 235, above) para 27.
375) Note that if a rebate scheme is capable of restricting competition in the
dominated market, there is no need to prove that the restriction is serious or
appreciable see Post Danmark II (n 235, above) paras 70–74. See also the Opinion
of AG Kokott in Case C-109/10P Solvay v Commission [2011] ECR I-10329,
EU:C:2011:256, paras 74–77. AG Kokott also rejected Solvay's arguments that, at 1.5
per cent, the group rebate offered to Saint Gobain was too small to have been
capable of having a noticeable effect on the Saint Gobain group's business
decisions: see paras 81–86; see also, to similar effect, paras 349, 352 and 354 of the
GC judgment under appeal (Case T-57/01 Solvay v Commission [2009] ECR II-4621,
EU:T:2009:519). The CJ found in favour of Solvay on procedural grounds, and did not
consider Solvay's Art 102 arguments.
376) See Case C-549/10P Tomra Systems (n 246, above) paras 69–80 (discussing
retroactive rebates). See also AG Mázak's Opinion in Tomra Systems EU:C:2012:55,
para 54: whilst no price-cost comparison was required, 'such an analysis may be
useful in assessing more precisely the extent of the effects of those practices. For
instance, it could assist the Commission in determining whether the practices
made entry and expansion merely more difficult or whether they made them
economically impossible.
377) Article 102 Enforcement Priorities Guidance, OJ 2009 C45/7, paras 43–44; the
Commission adds that this price/cost analysis will be integrated in the general
assessment, taking into account other relevant quantitative or qualitative
evidence: para 45.
378) Case C-95/04P British Airways v Commission [2007] ECR I-2331, EU:C:2007:166, paras
69 and 84–86. On the question of objective justification of discount schemes, see
the Article 102 Enforcement Priorities Guidance (n 293, above) which refers to
transaction-related cost advantages and cases where relationship-specific
investment is needed by the dominant undertaking: para 46.
379) Hoffmann-La Roche (n 227, above) para 120, reiterated in Case C-393/92 Almelo
[1994] ECR I-1477, paras 44–51. See also Cases T-24/93, etc, Compagnie Maritime
Belge Transports v Commission [1996] ECR II-1201, EU:T:1996:139, paras 84–86
(insistence on exclusivity provision in an agreement that expressly enabled
derogations to be accepted). See also UCB/Almirall, XXIVth Report on Competition
Policy (1994), p 362 (free 'samples' as a fidelity discount); Deutsche Post AG — mail
order parcel services (n 313, above) (discounts linked to exclusivity).
380) Case C-209/10 Post Danmark I EU:C:2012:172, paras 28–35 (selective prices); Case C-
202/07P France Télécom v Commission EU:C:2009:214, paras 107–108 (predatory
prices); Case C-52/09 TeliaSonera EU:C:2011:83, paras 40–46 (margin squeeze).
381) Case C-549/10P Tomra v Commission EU:C:2012:221, para 73.
382) Post Danmark II (n 235, above) paras 51–62 and in particular para 61; AG Kokott,
EU:C:2015:343, paras 56–75. See also Opinion of the AG in Intel EU:C:2016:788, paras
161–172.
383) Post Danmark II (n 235, above) para 61.
384) In COMP/37990 Intel, decn of 13 May 2009, paras 1002–1576 the Commission carried
out a very detailed price/cost assessment of Intel's rebates, which, the CJ noted,
meant that the as efficient competitor test played an important role in deciding
that the rebates were capable of restricting competition and meant that the GC
should have assessed all Intel's arguments concerning that test: Intel (n 225, above)
paras 142–144.
385) See, eg Post Danmark II (n 235, above) para 59 (the AEC test was not relevant where
a dominant undertaking held a statutory monopoly, which applied to 70 per cent
of mail on the relevant market); Article 102 Enforcement Priorities Guidance (n 293,
above) para 24 (the Commission recognises that in certain circumstances a less
efficient competitor may also exert a constraint that should be taken into account
when considering whether a pricing practice leads to anti-competitive
foreclosure).
386) See, eg Post Danmark II (n 235, above) para 60.
386a) See Press Release IP/18/421 (24 January 2018). Qualcomm has appealed to the GC:
Case T-235/18 Qualcomm v Commission, not yet decided.
68
387) Case T-286/09 Intel v Commission EU:T:2014:547, para 75 (the GC's observation
about quantity rebates was not considered by the CJ on further appeal).
388) Case T-203/01 Michelin v Commission [2003] ECR II 4071, EU:T:2003:250, para 58.
389) Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461, EU:C:1979:36.
390) Hoffmann-La Roche, above, para 89.
391) COMP/37990 Intel, decn of 13 May 2009.
392) Case T-286/09 (n 387, above); for supportive comment on the GC's judgment see, eg
Wils, 'The judgment of the EU General Court in Intel and the so-called “more
economic approach” to abuse of dominance' (2014) 37 World Competition 405; for
critical comment see, eg Rey and Venit, 'An Effects-Based Approach to Article 102:
A Response to Wouter Wils' (2015) 38 World Competition 3.
393) Case C-413/14P Intel v Commission EU:C:2017:632. For comment see, eg Venit, 'The
judgment of the European Court of Justice in Intel v Commission: a procedural
answer to a substantive question?' (2017) 13 European Competition Journal 172.
394) In Intel (n 391, above) para 852 (the Commission found that Intel consistently held
market shares in excess of or around 70 per cent); note also para 1005 (Intel was an
unavoidable trading partner, which gave it a non-contestable share of demand for
each customer).
395) In Intel (n 391, above) para 1597 the Commission found that the customers targeted
by Intel held a significant part of market and were strategically important; the
coverage of the abuse was therefore significant.
396) Intel (n 393, above) para 139. The criteria mentioned by the CJ are similar to those
used by the Commission in its Article 102 Enforcement Priorities Guidance (n 293,
above) para 20. According to the AG in Intel (n 382, above) para 76, the CJ analysed
'all the circumstances' in Hoffmann-La Roche: para 75 of the Opinion.
397) The CJ rejected the view of the GC in Case T-286/09 Intel (n 387, above) paras 77 and
81 that exclusivity rebates are always 'by their very nature' capable of restricting
competition such that it is unnecessary to consider the individual circumstances of
the case to determine whether they have a foreclosure effect. The CJ referred the
case back to the GC to examine all of Intel's arguments seeking to call into
question the validity of the Commission's findings concerning the foreclosure
capability of the rebate concerned and its application of the AEC test: Case C-
413/14P EU:C:2017:637, paras 141 and 144; Case T-286/09 RENV Intel v Commission,
not yet decided.
397a) Qualcomm (n 386a, above).
398) Michelin, OJ 1981 L353/33; see also Coca-Cola, XIXth Report on Competition Policy
(1989), point 50; COMP/39116 Coca-Cola, commitment decn of 22 June 2005, para 32;
Case T-66/01 ICI v Commission (n 371, above) paras 326–328.
399) Case 322/81 Michelin v Commission [1983] ECR 3461, EU:C:1983:313, para 73.
400) Michelin I, above, paras 81–84. Note that a competitor would have had to match
the accumulated discount forgone by the Michelin dealer. On the facts, the CJ
found the Commission had failed to prove that Michelin had discriminated by
applying unequal criteria for sales targets (paras 87 et seq) or that it had abusively
linked discounts paid on car tyres to sales of heavy vehicle tyres. See also Case T-
228/97 Irish Sugar (n 369, above) paras 194–225.
401) Michelin I (n 399, above) para 72.
402) Michelin I (n 399, above) para 85.
403) Case C-95/04P British Airways (n 378, above).
404) Case T-219/99 British Airways v Commission [2003] ECR II-5917, EU:T:2003:343
(dismissing an appeal against Virgin/British Airways, OJ 2000 L30/1).
405) Case C-95/04P British Airways (n 378, above) para 68 (exclusionary effect referred to
'whether they are capable, first, of making market entry very difficult or impossible
for competitors of the undertaking in a dominant position and, secondly, of making
it more difficult or impossible for its co-contractors to choose between various
sources of supply or commercial partners.')
406) Case C-95/04P British Airways (n 378, above) paras 74–77.
407) Article 102 Enforcement Priorities Guidance (n 293, above) paras 39–45. A useful
example of the Commission's analysis is given in Albaek and Claici, 'The Velux case
— an in-depth look at rebates and more' (2009) 2 Competition Policy Newsletter
44.
408) COMP/38113 Prokent-Tomra, decn of 29 March 2006. For economic analysis of the
anti-competitive effect of rebates, see Maier-Rigaud and Vaigauskaite,
'Prokent/Tomra, a textbook case? Abuse of dominance under perfect information'
(2006) 2 Competition Policy Newsletter 19.
409) Case T-155/06 Tomra Systems [2010] ECR II-4361, EU:T:2010:370, upheld on further
appeal, Case C-549/10P EU:C:2012:221.
410) Tomra, above, para 42.
411) Portugal v Commission (n 355, above) paras 48 et seq.
412) Portugal v Commission (n 355, above) paras 51–53. The CJ found that this was indeed
the case: only the Portuguese airlines TAP and Portugalia could qualify for the
highest rate band which, moreover, involved an appreciably greater increase in
discount rate than lower bands.
69
413) Case T-203/01 Michelin v Commission ('Michelin II') [2003] ECR II-4071, EU:T:2003:250.
The GC noted that the Commission had been incorrect in its statement, at para 216
of its decision, that the CJ had consistently ruled against the granting of quantity
rebates where the reference period exceeds three months: para 85.
414) Michelin II, above, paras 61–66 and 95. See also Prokent/Tomra (n 408, above).
415) Michelin II (n 413, above) para 98. The Court also held that transparency cannot
save an otherwise abusive quantity rebate system, while noting that complex
pricing systems which placed dealers in positions of uncertainty and dependence
contribute to their abusive nature: para 111.
416) Michelin II (n 413, above) para 239.
417) Michelin, OJ 2002 L143/1.
418) Case T-203/01 Michelin II (n 416, above) paras 139–141. See also Case 322/81
Michelin (n 399, above) para 83; and Prokent-Tomra (n 408, above), in which the
Commission held that the lack of transparency in a discount scheme was liable to
strengthen its loyalty-building character: para 324. The decision was upheld on
appeal by the GC and CJ see Case T-155/06 Tomra Systems v Commission (n 409,
above). See also Intel (n 391, above) para 942.
419) Hoffmann-La Roche, OJ 1976 L223/27, para 60.
420) Hoffmann-La Roche v Commission (n 389, above).
421) See, eg COMP/39116 Coca-Cola, decn of 22 June 2005 (decn under Art 9(1) of Reg
1/2003 to accept commitments from Coca-Cola and its three main bottling
companies). See Report on Competition Policy 2005, paras 147–152; IDEXX
Laboratories (n 295, above) paras 6.14 and 6.18.
423) Article 102 Enforcement Priorities Guidance, above, para 60.
425) British Airways (n 378, above) para 86; Post Danmark II (n 235, above) paras 47–49.
426) Intel (n 393, above) para 140.
427) For a helpful summary of the relevant literature see Selective price cuts and fidelity
rebates, OFT 804, July 2005, paras 4.19–4.35.
428) cf British Airways (n 404, above) paras 279–292 (no relationship between bonus and
reduced costs).
429) Case T-65/89 BPB Industries and British Gypsum v Commission [1993] ECR II-389,
EU:T:1993:31, para 68 (upheld on appeal, Case C-310/93P [1995] ECR I-865,
EU:C:1995:101).
430) BPB Industries and British Gypsum, OJ 1992 C321/9, 10, 11, 12. See also Press Release
IP/99/504 (14 July 1999) setting out the principles the Commission applies to
rebate schemes offered by airlines to travel agents, namely that target discounts
or any other discounts not reflecting cost savings or differences in value, are not
allowed.
432) Post Danmark, ECN Brief 03/2010, p 2 (Danish High Court upheld the NCA's finding
of abuse by applying a retroactive rebate scheme relating to unaddressed bulk
mail, judgment of 10 May 2010) (Supreme Court referred questions to the CJ twice:
first, regarding another aspect of this case, see para 10.090, above; and secondly,
regarding the rebate scheme); Romanian Post, ECN Brief 01/2011, p 2 (the
Romanian NCA imposed a fine of €26m for an illegal rebate scheme and other
abusive conduct); AB Orlen Lietuva, ECN Brief 02/2011, p 2 (Lithuanian courts have
upheld the NCA's finding of various abuses, including loyalty rebates, by the
dominant provider of fuel); and Czech Railways ECN Brief 03/2011, p 2 (Czech courts
upheld an NCA finding of abusive loyalty schemes).
433) Case MD 2001:4 Konsortiet Scandinavian Airlines Systems (SAS) v Konkurrensverket,
judgment of 27 February 2001: See, subsequently, decision No. 324/2008 of 9
January 2009 (Swedish NCA held that the previous ruling and injunction applied to
the situation as at the time of the Market Court's judgment and therefore would not
apply to potential operation of the programme in current conditions on domestic
routes exposed to competition).
434) French NCA intervention in respect of practices by the Société des Caves et des
Producteurs réunis de Roquefort, Decn 04-D-13, 8 April 2004, BOCCRF 31 March 2005
(retrospective price reductions to major distributors and supermarkets in return
for agreement to purchase all or almost all of their requirements of Roquefort
cheese condemned under French equivalent of Art 102).
435) National Grid v Gas and Electricity Markets Authority [2010] EWCA Civ 114.
436) Danish Supreme Court has upheld the NCA's decision against TV2/Danmark A/S for
applying an abusive rebate scheme in the market for TV advertising: ECN Brief
02/2011.
437) Decision No. 434/V/2009 Nestle Hellas, Greek Competition Commission decn of 12
February 2009.
70
438) In Schneider Electric Danmark A/S v Competition Council, U.2008.851/1H, the
Supreme Court (judgment of 7 January 2008) upheld the finding of the Danish
Competition Council that the advance order and delivery rebate system applied
for the supply of electrical socket outlets infringed the domestic equivalent of Art
102 TFEU. See also Viasat Broadcasting UK v Competition Council, ØLR B-3926-06,
judgment of the High Court of Eastern Denmark, upheld Danish Supreme Court: ECN
Brief 2/2011, p2.
439) See Article 102 Enforcement Priorities Guidance (n 422, above) paras 33–36 as
regards the factors that the Commission will consider when deciding whether to
intervene. For the position under Art 101 in respect of exclusive dealing, see paras
7.065 et seq, above. Given the market power of a dominant undertaking, the
concerns expressed in respect of Art 101 are likely to be intensified.
440) See paras 10.099 et seq, above. In Case T-286/09 Intel v Commission (n 387, above)
paras 167 et seq, the GC found payments by a dominant undertaking to a
distributor for exclusive purchase of the dominant undertaking's products were
equivalent to rebates granted to the dominant undertaking's direct customers; on
further appeal the CJ set aside the GC's judgment because it had failed to examine
Intel's arguments that its rebates were not capable of restricting competition and
alleged errors committed by the Commission in the AEC test: Intel (n 393, above)
para 147. See also Case AT.40220 Qualcomm, decn of 24 January 2018 (imposing a
fine of €997 million for making significant payments to Apple on condition that
Apple use exclusively Qualcomm LTE baseband chipsets), on appeal to the GC,
Case T-235/18 Qualcomm v Commission, not yet decided.
441) eg Suiker Unie v Commission (n 373, above); Hoffmann-La Roche (n 389, above) para
90 (the CJ left open the possibility of exceptional circumstances that could justify
such arrangements); Case T-66/01 ICI v Commission (n 371, above), paras 315–323;
IRI/Nielsen, XXVIth Report on Competition Policy (1996), point 64 and p 144
(Nielsen undertook not to conclude agreements that restricted retailers' freedom
to supply information to competitors); COMP/39116 Coca-Cola, commitment decn
of 22 June 2005, para 28.
442) See Carlsberg/Interbrew, XXIVth Report on Competition Policy (1994), points 209,
213 and p 351: exclusive licence by Carlsberg to Interbrew to produce or distribute
certain luxury beers. See also Finnish amusement machine market, XXVIth Report
on Competition Policy (1996), p 141: exclusivity obligation removed from contracts
with State-owned company that was formerly monopoly operator of amusement
machines in Finland, following discussions with Commission; IRE/Nordion, XXVIIIth
Report on Competition Policy (1998), point 74: exclusivity clauses in long-term
supply agreements for molybdenum 99 removed after Commission commenced
proceedings. See also the decision of the Danish Competition Council of 12 June
2013 finding an abuse of dominance by Deutz, a German engine manufacturer, in
preventing the supply of spare parts for its engines (which were used in trains
owned and operated by the Danish State Railway) outside of its exclusive
dealership network: ECN Brief 03/2013, p 5.
443) eg FEBIAC, Brussels Court of Appeal, judgment of 10 November 2005: abuse by
imposing on exhibitors and distributors wishing to take part in its annual transport
exhibition a requirement not to participate in any similar exhibitions during a
period starting six months beforehand. See also Exclusive distribution of iPhones,
Interim measures, judgment of Cour de Cassation, Commercial Chamber, 16
February 2010 Case No. 226 FS-D (interim measures prohibiting grant of exclusive
licence to distribute iPhones in France upheld). See also, eg Western Isles Road
Fuels, UK CMA commitment decn of 24 June 2014, in which the allegedly dominant
firm gave commitments to amend or terminate contracts which contained five-
year exclusive purchasing obligations.
444) In COMP/38113 Prokent-Tomra, decn of 29 March 2006 a wide range of exclusivity
arrangements were condemned: paras 281 et seq. The Commission found that
because there was a peak in demand in the years when national legislation
mandating recycling or the introduction of empty container deposit schemes was
introduced, even a short-term exclusive agreement could have a significant
foreclosure effect if it covered a 'key year': para 287 and paras 303 et seq and para
343 (upheld on appeal, Case T-155/06 Tomra Systems v Commission [2010] ECR II-
4361, EU:T:2010:370 and on further appeal, Case C-549/10P Tomra Systems v
Commission EU:C:2012:221). For an example of a different form of exclusionary
contractual conduct, see the decision of the Polish NCA to open an investigation
into a break clause in gas supply contracts, providing for a termination notice
period of up to 15 months; the NCA was concerned that this extended period may
deter customers from terminating their contracts and thereby foreclose the
market: ECN Brief 04/2011, p2.
71
445) See Swedish Match Sverige/Skandinavisk Tobakskompagni, XXVIIth Report on
Competition Policy (1997), point 66 and p 138 (sole manufacturer and distributor of
cigarettes in Sweden held an exclusive licence since 1961 for manufacture,
distribution and sale of Prince brand of cigarettes belonging to dominant Danish
tobacco conglomerate: agreement amended to place marketing and pricing in
Sweden under control of Danish brand owner). See also paras 12.113 et seq, below
for particular issues that have arisen in the privatised energy markets, which are
frequently characterised by former State monopolies entering into long-term
supply arrangements.
446) COMP/38381 De Beers, decn of 22 February 2006: De Beers undertook to phase out
its agreement with the Russian diamond producer Alrosa for a substantial
proportion of the latter's rough diamonds and to cease making any purchases after
2008 (decn annulled on appeal to the GC, Case T-170/06 Alrosa v Commission [2007]
ECR II-2601, EU:T:2007:220, but subsequently re-instated on further appeal to the
CJ, Case C-441/07P Commission v Alrosa [2010] ECR I-5949, EU:C:2010:377). See also,
eg Western Isles Road Fuels (n 443, above).
447) The etymology of this expression is obscure.
448) See, eg Decision No. 434/V/2009 Nestle Hellas, Greek Competition Commission
decn of 12 February 2009. For the effect of an 'English clause' in a vertical
agreement as regards Art 101, see para 7.146, above.
449) Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461, EU:C:1979:36, paras
102–108. See also Industrial Gases, XIXth Report on Competition Policy (1989), point
62.
ECR I-1365, EU:C:2000:132. It appears that the Commission decided not to proceed
against the exclusivity itself in this case because the agreements predated former
Council Reg 4056/86: Cases T-24/93, etc, Compagnie Maritime Belge (n 379, above)
para 104 (for subsequent proceedings see Case T-276/04 Compagnie Maritime Belge
v Commission [2008] ECR II-1277, EU:T:2008:237).
451) Cases T-24/93, etc, Compagnie Maritime Belge Transports (n 450, above) paras 108–
109. See also CJ on appeal in Cases C-395&396/96P (n 450, above) paras 78, 84–86.
452) Case AT.40153 E-book MFNs and related matters (Amazon), commitment decn of 4
May 2017. See further para 10.167, below. See further Buehler, Coublucq, Hariton,
Langus and Valletti, 'Recent Developments at DG Competition: 2016/2017' (2017) 51
Review of Industrial Organisation 397, at 411–420 (the authors are members of the
Chief Competition Economist team).
453) Case T-65/98 Van den Bergh Foods v Commission [2003] ECR II-4653, EU:T:2003:281,
paras 157 et seq (on appeal from Van den Bergh Foods, OJ 1998 L246/1).
454) Van den Bergh Foods v Commission, above, para 159.
455) The further appeal against this part of the judgment was dismissed as partly
inadmissible and partly manifestly unfounded, Case C-552/03P Unilever Bestfoods
(Ireland) v Commission [2006] ECR I-9091, EU:C:2006:607. For an illustration of the
fact-sensitive nature of such cases see Masterfoods, Paris Court of Appeal, 7 May
2002, BOCCRF No. 10, 24 June 2002, where the Court found on the facts that there
was no firm evidence that the cumulative effect of parallel contracts to loan
freezers, accompanied by brand exclusivity clauses, would have anti-competitive
effects. See also Henkel-Ecolab, Decn 04-D-28 of 2 July 2004, BOCCRF 8 November
2004, where the French NCA held, again distinguishing Van den Bergh Foods, that
the provision of free loan of dosage equipment by a company dominant in the
supply of industrial washing powders to laundries, hospitals, etc, in return for
exclusivity of supply did not constitute abuse: the practice was common in the
industry, it was not difficult for the customer to return the equipment when seeking
to switch provider and there was evidence of such switching.
456) Case T-228/97 Irish Sugar (n 369, above) paras 226–235. See also Société des Caves
et des Producteurs réunis de Roquefort (n 434, above). In Intel (n 391, above) the
Commission referred to Irish Sugar and product swapping when condemning the
conduct of Intel which led to customers delaying, cancelling or restricting the
marketing of products incorporating processors made by Intel's rival, AMD: para
1643, upheld on appeal Case T-286/09 Intel (n 387, above), paras 198 et seq (these
'naked restrictions' were not considered by the CJ). See also Swedish Match,
Swedish Market Court judgment of 15 February 2017 (imposing fines of around €4
million on Swedish Match for restricting competitors' opportunities to market their
snus tobacco products in refrigerated snus displays in stores. Swedish Match
removed shelf labels of its competitors and replaced them with more generic
labels, often without price information, in order to soften competition: ECN Brief of
6 April 2017).
457) See, eg Case 395/87 Ministère Public v Tournier [1989] ECR 2521, EU:C:1989:215, per AG
Jacobs.
458) See discussion of predatory pricing in paras 10.078 et seq, above.
459) In principle, Art 102(a) also captures unfairly low prices demanded by a dominant
purchaser: see Case 298/83 CICCE v Commission [1985] ECR 1105, EU:C:1985:150.
72
460) For the arguments for and against using competition law to control the level of
prices, see Whish and Bailey Competition Law (9th edn, 2018), Chap 18. See also
OECD Best Practices Roundtable, Excessive Prices (2012), available at the OECD's
website.
461) Case 226/84 British Leyland v Commission [1986] ECR 3263, EU:C:1986:421.
462) Case 30/87 Bodson v Pompes Funèbres [1988] ECR 2479, EU:C:1988:225, para 31. See
also, eg Case C-242/95 GT-Link v DSB [1997] ECR I-4449, EU:C:1997:376, paras 39–40;
Case 78/70 Deutsche Grammophon v Metro [1971] ECR 487, EU:C:1971:59 (at least
impliedly, para 19); Case 247/86 Alsatel v Novasam [1988] ECR 5987, EU:C:1988:469,
para 10 and per AG Mancini, EU:C:1988:267, para 6.
463) eg the English High Court has held that to propose, in the course of negotiations,
prices which are excessive does not of itself, and without more, amount to abusive
conduct: Humber Oil Terminals v Associated British Ports [2011] EWHC 352, para 20
(appeal dismissed on other grounds, [2012] EWCA Civ 36). See also the judgment of
Birss J in Unwired Planet v Huawei [2017] EWHC 711 (Pat), paras 756–784 and the
Opinion of the AG in Case C-177/16 AKKA/LAA v Konkurences padome EU:C:2017:286,
considering that there is 'no need to apply [Art 102(a)] in a free and competitive
market', but that the position 'may … be different in markets with legal barriers to
entry or expansion and, in particular, in those in which there is a legal monopoly':
paras 2–4. In the context of the liberalised utilities, price regulation is relatively
common under sectoral legislation rather than competition law: see Chap 12,
below. In Spain, the NCA has opened a formal investigation into alleged excessive
pricing for wholesale origination and termination services for short SMS and MMS
messages: ECN Brief 01/2011, p2. In Denmark, the NCA rejected a complaint of
excessive pricing in the wholesale electricity markets: Energi E2/Nord Pool, Case
4/0120-0204-0018/EMS, 22 December 2010.
464) See, eg Aspen, Press Release IP/17/1323 (15 May 2017) (a Commission investigation
into suspected excessive pricing in relation to the supply of cancer medicines);
and Pfizer/Flynn Pharma, UK CMA decn of 7 December 2016 imposing substantial
fines on Pfizer and Flynn Pharma in respect of their pricing of phenytoin sodium
capsules (on appeal to the UK CAT: Pfizer and Flynn Pharma v CMA, not yet
decided). See also Commissioner Vestager's speech of 21 November 2016
'Protecting consumers from exploitation', available at DG Comp's website.
465) Case 26/75 General Motors Continental v Commission [1975] ECR 1367, EU:C:1975:150.
466) General Motors, above, para 12. See similarly Case C-52/07 Kanal 5 and TV 4 [2008]
ECR 9275, EU:C:2008:703, para 28.
467) Chiquita, OJ 1976 L95/1.
468) Case 27/76 United Brands v Commission [1978] ECR 207, EU:C:1978:22, para 251.
469) United Brands, above, para 249.
470) United Brands (n 468, above) para 252.
472) Case C-177/16 EU:C:2017:689, para 37. See also the AG Opinion in AKKA/LAA (n 463,
above) paras 15–24 and in particular para 36 ('at the current stage of legal and
economic thinking, there is no single method, test or set of criteria which is
generally accepted in economic writings or across jurisdictions for that purpose.
Different authorities as well as lawyers and economists have suggested a number
of methods of analysis (as well as a variety of criteria, tests or “screens”)'.
473) AKKA/LAA, above, para 38; see also the AG Opinion in the same case (n 463, above)
paras 35–81.
474) In Albion Water v Water Services Regulation Authority [2008] CAT 31 the UK CAT
pointed out that 'whether a given price bears “no reasonable relation” to its
“economic value” is a matter of degree, which involves a considerable margin of
appreciation, not least because the concept of “economic value”, and whether the
price has a “reasonable” relation to that value, are matters of judgment': para 216.
477) Different methods and techniques for assessing profitability are described in
Oxera, Assessing profitability in competition policy analysis (2003).
478) For an example of an NCA finding pricing to be excessive but not abusive, see SEA
SpA and AdR SpA, ECN Brief 4/2010, p 2.
479) See Case KVR 2/76 Valium I, judgment of 16 December 1976, WuW/E BGH 1445
(German Supreme Court).
480) Attheraces v British Horseracing Board [2007] EWCA Civ 38, para 119.
481) Attheraces v British Horseracing Board, above, para 208, approving Laddie J in BHB
Enterprises v Victor Chandler (International) [2005] EWHC 1074.
73
482) As early as its Fifth Report on Competition Policy (1975), point 3, the Commission
observed that 'it is difficult to tell whether in any given case an abusive price has
been set for there is no objective way of establishing exactly what price covers cost
plus a reasonable profit margin'. The Dutch Competition Authority has adopted the
approach of comparing the profit to a standard return deemed to be the minimum
profit which would have to be achieved to meet the cost of capital. In determining
the standard return, the Authority applies the weighted average cost of capital
method ('WACC'). The WACC comprises an amount for the cost of shareholders'
equity and loan capital, weighted for the relative share of the respective capital
components. For example, in UPC Nederland and NV Casema, Cases 3528 and 3588
UPC Nederland and N.V. Casema, decn of Dutch Competition Authority of 27
September 2005: the Authority found no abuse since it was unlikely that the return
rates achieved by two cable television companies were durable and significantly
higher than the WACC. The Authority also noted that a high return, in the long run,
enhances competition because it creates an incentive for new parties to enter the
market. See also Case 05-46 Interpay, the Dutch Competition Authority decn of 22
December 2005, withdrawing its earlier decn that the JV between eight banks that
supplied network services for PIN payments had charged excessive tariffs, since
there was insufficient proof that the tariffs were excessive (but the decn finding a
violation of the prohibition on cartels by reason of the horizontal agreement
between the constituent banks was confirmed). cf the Austrian case, Europay,
discussed at n 497, below.
483) General Motors (n 465, above) para 12; and United Brands (n 468, above) para 250.
484) See, eg Case 298/83 CICCE v Commission [1985] ECR 1105, EU:C:1985:150: although
the case concerned an allegation of unfairly low prices paid by French television
companies for film rights, the CJ's approach in upholding the Commission's
rejection of the complaint shows that the question of fair pricing in such a case
cannot be reduced to a simplistic cost+ formula; see also per AG Lenz at 1114.
485) Attheraces v British Horseracing Board [2007] EWCA Civ 38, para 212.
486) Attheraces v British Horseracing Board, above, para 205.
487) COMP/36568 and 36570 Scandlines v Port of Helsingborg, Sundbusserne v Port of
Helsingborg, decns of 23 July 2004.
488) Scandlines, paras 227–228; Sundbusserne, paras 205–206. Scandlines referred the
Commission to para 9-073 of the 5th edn of this work: see para 229. The Commission
also rejected the allegations by Scandlines of discriminatory pricing and by both
operators of cross-subsidisation (see para 10.137, below and para 10.092, above).
The Commission concluded that there was insufficient evidence to conclude that
the port charges bore no reasonable relation to the economic value of the services.
See also Attheraces (n 485, above), paras 212–214 (economic value of pre-racing
data should take into account its value to the purchaser and the positive
externality of horse racing).
489) COMP/37792 Microsoft, decn of 27 February 2008 (decn imposing penalty payments
for setting too high a price for the non-patented interoperability information).
490) Microsoft, above, para 107.
491) Case T-167/08 Microsoft v Commission EU:T:2012:323, para 142. See also Albion
Water [2008] CAT 31 where, after a detailed analysis of costs led to the conclusion
that prices were excessive, the CAT considered the issues of economic value and
unfairness as a distinct legal issue and concluded that the economic value was not
more, or significantly more, than the costs reasonably attributable to the service in
question.
492) See, eg Case C-159/08P Isabella Scippacercola and Ioannis Terezakis v Commission
EU:C:2009:188, para 47. See also Albion Water (n 491, above) para 255; Unfair pricing
in respect of the supply of phenytoin sodium capsules in the UK, UK CMA decn of 7
December 2016, paras 1.38 and 5.244, on appeal Pfizer and Flynn Pharma v CMA, not
yet decided.
493) Albion Water (n 491, above) para 266.
494) Albion Water (n 491, above) para 263.
495) Unfair pricing in respect of the supply of phenytoin sodium capsules in the UK, UK
CMA decn of 7 December 2016, on appeal Pfizer and Flynn Pharma v CMA, not yet
decided.
496) Cases 110/ 88, etc, Lucazeau v SACEM [1989] ECR 2811, EU:C:1989:326, paras 28–29.
497) British Leyland v Commission (n 461, above) paras 25–30. The abuse could equally
be seen as a form of price discrimination. See also Case C-351/12 OSA (n 312,
above), discussed at para 10.125, below; Europay, 16 Ok 4/07, judgment of 12
September 2007, where the Austrian Supreme Court upheld a finding of
infringement of the domestic equivalent of Art 102 by a joint venture of Austrian
commercial banks that offered card transaction processing systems to merchants,
for the excessive charges that it was agreed would be made by the JV parent banks
to competing systems. The charge was found to be excessive both based on the
basis of a comparison with the much lower price charged by the parent banks to
Europay and by reference to the actual costs (€0.06 per transaction, for which the
charge levied was €0.36–0.40). The agreement was also found to violate the
Austrian equivalent of Art 101.
74
498) Bodson v Pompes Funèbres (n 462, above) para 31. See also Ministère public v
Tournier (n 457, above) paras 37–41; Lucazeau v SACEM (n 496, above) para 25
(comparison with other Member States may indicate abuse). In Case 626/07
Canarias de Explosivos, decn of 12 February 2008, the Spanish competition
authority found the sole distributor in the Canary Islands of explosives for
demolitions committed an abuse by charging prices that were about eight times
higher than those charged in mainland Spain where the market was more
competitive; transport costs could not account for this difference. In Case 166/07
Iberdrola Generación, judgment of the Spanish National High Court of 2 July 2009,
upheld a finding of infringement in respect of the prices charged over relatively
short periods when there were so-called 'technical restrictions' causing a
temporary local monopoly. The Court compared the impugned prices with those
charged by Iberdrola in preceding periods and also the difference between
variable cost and prices charged in the daily market pool, a measure whereby
Iberdrola's prices were found to be some 40 per cent higher.
499) As in the Port of Helsingborg decns, para 10.092, above. See also the AG Opinion in
AKKA/LAA (n 463, above) para 38. See also COMP/37761 Euromax/IMAX, decn of 25
March 2004: complainant Euromax had failed to produce a valid comparator
against which to assess IMAX's equipment rental prices, particularly because the
IMAX brand had a high value not shared by competitors' brands; also no evidence
that IMAX's rental charges were excessive or unfair and that it was not an abuse for
IMAX to have moved from a business model where it sold projection equipment to
a model where it only offered the equipment on rental terms. In Microsoft (n 489,
above): the Commission found that comparable protocol technology was being
made available royalty free by other undertakings and held that Microsoft's fee for
its non-patented technology was unreasonable.
500) See also Case KVR 2/76 Valium I, judgment of 16 December 1976, WuW/E BGH 1445
(German Supreme Court). In the first decision of the French NCA to find excessive
pricing, the NCA found that France Télécom was abusing its dominant position on
the fixed telephony and internet markets in the French overseas departments
(DOM), which it previously monopolised, by making its competitors' entry into
these markets more difficult and costly. In particular, its annual profit margin on
wholesale rental of lines on the undersea connection between la Réunion and the
mainland was 493 per cent in 2002 and rose to 1794 per cent in 2004. Charging such
prices to competing operators made it impossible for them to develop in the retail
market on la Réunion. Thus, excessive pricing operated in practice as part of an
exclusionary abuse (along with other forms of exclusionary conduct): Decision No.
09-D-24 of 28 July 2009.
501) Napp Pharmaceutical Holdings v Director General of Fair Trading [2002] CAT 1.
502) Napp, above, para 392.
503) See, eg Case 395/87 Ministère Public v Tournier [1989] ECR 2521, EU:C:1989:319, para
38; Cases 110/88, etc, Lucazeau v SACEM [1989] ECR 2811, EU:C:1989:326, para 25;
Case C-177/16 AKKA/LAA EU:C:2017:689, para 38. Those cases concerned royalties
charged by collecting societies.
504) Case C-52/07 Kanal 5 and TV 4 v STIM [2008] ECR I-9275, EU:C:2008:703. For copyright
collecting societies generally, see paras 9.075 et seq, above.
505) Calculating a royalty as a percentage of the turnover or profit made by the
purchaser is not abusive merely because it is unrelated to the supplier's cost of
production.
506) Attheraces v British Horseracing Board [2007] EWCA Civ 38. The principles to be
derived from the Court of Appeal judgment were summarised by the UK CAT in
Albion Water v Water Services Regulation Authority (n 491, above) para 224. cf the
position where the primary activity is itself a profitable monopoly: ITT/Belgacom,
XXVIIth Report on Competition Policy (1997), p 152: after the Commission
commenced proceedings, the Belgian incumbent telephone operator reduced to a
cost-oriented basis the prices on which it made available to publishers of
telephone directories data regarding subscribers to its voice telephony services.
See also the decision of the Brussels Commercial Court, ITT Promedia NV v
Belgacom [1996] 3 CMLR 130.
507) Case C-351/12 Ochranný svaz autorský pro práva k díl?m hudebním o.s. v Lé?ebné
lázn? Mariánské Lázn? a.s. EU:C:2014:110.
508) Case C-177/16 AKKA/LAA EU:C:2017:689.
509) AKKA/LAA, above, paras 44–46 and 51. There is no minimum number of markets to
compare and the choice of appropriate analogue markets depends on the
circumstances specific to each case: ibid, para 41.
510) AKKA/LAA (n 508, above) para 50–51.
511) AKKA/LAA (n 508, above) para 56 ('the difference must be significant for the rates
concerned to be regarded as “abusive”. Furthermore, that difference must persist
for a certain length of time and must not be temporary or episodic').
512) AKKA/LAA (n 508, above) para 55.
513) Tournier (n 503, above) para 38; Lucazeau (n 503, above) para 25.
514) AKKA/LAA (n 508, above) paras 58 and 60.
515) Tournier (n 503, above) para 42; Lucazeau (n 503, above) para 29.
75
518) See, eg Case 311/84 CBEM v CLT and IPB ('Télémarketing') [1985] ECR 3261,
EU:C:1985:394; Napier Brown/British Sugar, OJ 1988 L 284/41; Case T-30/89 Hilti v
Commission [1991] ECR II-1439, EU:T:1991:70 (on appeal from Hilti, OJ 1988 L65/19);
Case C-333/94P Tetra Pak v Commission [1996] ECR I-5951, EU:C:1996:436. See also
the UK CAT in Genzyme v Office of Fair Trading [2004] CAT 4, para 489.
519) Paras 10.129 et seq, below.
522) See, eg Case C-333/94P Tetra Pak II (n 518, above) where Tetra Pak was found to
have engaged in predatory pricing in the market for non-aseptic packaging where
it was not dominant. See also Case MPINF-PSWA001 Flybe, decn of the UK OFT of 5
November 2010 (OFT investigated whether Flybe had engaged in predation on one
market on which it was not dominant in order to strengthen its position on a
related market on which it was).
523) On the one monopoly profit theory see Bishop and Walker, The Economics of EC
Competition Law: Concepts, Application and Measurement (3rd edn, 2010), para 6-
609; cf Elhauge, 'Defining Better Monopolization Standards' (2003) 56 Stanford Law
Review 253, at 282–93.
524) See, eg the issues of objective justification raised in the Hilti and Tetra Pak II cases
in relation to tying abuses, considered at para 10.148, below.
525) Case T-5/97 Industrie des Poudres Sphériques v Commission [2000] ECR II-3755,
EU:T:2000:278, para 178.
526) Case C-280/08P Deutsche Telekom [2010] ECR I-9555, EU:C:2010:603 on appeal from
the GC's judgment in Case T-271/03 Deutsche Telekom [2008] ECR II-477,
EU:T:2008:101, paras 159 and 183. Subsequently, the Commission accepted
commitments to put an end to a separate alleged margin squeeze in relation to
charges for shared access to local loops: COMP/38436 QSC AG/Deutsche Telekom,
Press Releases IP/04/281 (1 March 2004) and IP/05/1033 (3 August 2005). For
economic discussion arguing that only if the downstream market is uncompetitive
can price squeezing constitute an abuse, see Crocini and Veljanovski, 'Price
Squeezes, Foreclosure and Competition Law' (2003) 4 J Network Ind 3. As to the
relevance of whether the input is indispensable to the business of the downstream
competitors, see also both the GC and CJ judgments in Deutsche Telekom, above,
para 237 (GC) and para 255 (CJ); Case T-336/07 Telefónica v Commission
EU:T:2012:172, paras 176–182 and 185–187 (further appeal dismissed, Case C-295/12P
EU:C:2014:2062); and Case T-398/07 Spain v Commission EU:T:2012:173, paras 73 et
seq.
527) Case C-52/09 TeliaSonera [2011] ECR I-527, EU:C:2011:83. TeliaSonera owned and
operated the local loop through which various telecoms services could be
supplied to householders.
528) TeliaSonera, above.
529) TeliaSonera (n 527, above) paras 32 and 33. For other cases on margin squeeze see
Napier Brown/British Sugar (n 518, above) para 66; COMP/38784 Wanadoo España v
Telefónica, decn of 4 July 2007, upheld on appeal, Case T-336/07 Telefónica
EU:T:2012:172 and on further appeal, Case C-295/12P EU:C:2014:2062; see also Case
T-398/07 Spain v Commission EU:T:2012:173); COMP/39678 Deutsche Bahn,
commitment decn of 18 December 2013 (commitments released on 8 April 2016);
Case AT.39523 Slovak Telekom, decn of 15 October 2014, paras 822–1045, on appeal,
Cases T-851/14, etc, Slovak Telekom v Commission, not yet decided.
530) TeliaSonera (n 527, above) paras 54–58 and paras 180–181; see similarly Case T-
336/07 Telefónica and Case T-398/07 Spain (n 526, above).
531) As to the relevance of sector-specific regulation in margin squeezing cases, see
TeliaSonera (n 527, above) paras 49–59 and Deutsche Telekom (n 526, above), where
the CJ rejected arguments based on the involvement of the German telecoms
regulator in the setting of DT's retail prices. The appeal proceeded in the CJ on the
premise that the wholesale price for local loop access was fixed by the regulator
without leaving DT scope for changing those prices. The CJ held that this did not
preclude a finding of margin squeeze since there was still scope for DT to adjust its
retail prices to avoid the squeeze (para 85).
532) See paras 10.078 et seq, above in respect of predatory pricing. The downstream
profitability of a pricing policy can be measured on a historical basis (assessing
profits using actual costs and revenues of the undertaking) or on a forward-looking
basis (assessing profits on the basis of business plan forecasts). The Commission
has said that 'undertakings should not be penalised for incurring ex post losses
where the ex ante decision to engage in the conduct was taken in good faith, that is
to say, if they can provide conclusive evidence that they could reasonably expect
that the activity would be profitable': Article 102 Enforcement Priorities Guidance
OJ 2009 C45/7, n 43. There may be important questions as to the correct measure of
costs and the relevant period.
533) See the judgment of the English Court of Appeal in D?r Cymru v Albion Water [2008]
EWCA Civ 536 for a discussion of this issue. See also Telecoms Access Agreements
Notice, OJ 1998 C265/2, paras 117–119.
534) Case T-271/03 Deutsche Telekom (n 526, above) paras 186–194; and Case C-280/08P
Deutsche Telekom (n 526, above) paras 187–204.
76
535) TeliaSonera (n 527, above) paras 38–46.
536) See Case T-271/03 Deutsche Telekom (n 526, above) para 193; and Case C-280/08P
Deutsche Telekom (n 526, above) para 200; and TeliaSonera (n 527, above) paras 41–
44. At paras 45–46 of TeliaSonera, the CJ suggested that an alternative approach
may exceptionally be needed (ie the costs and prices of competitors may be
relevant): (i) where the cost structure of the dominant undertaking is not precisely
identifiable for objective reasons; (ii) where the costs of the dominant firm are
artificially low because of the use of infrastructure the production cost of which
has already been written off; or (iii) in particular market conditions, for example,
where the undertaking's market power places it in a competitively advantageous
situation. See also Case T-336/07 Telefónica, paras 188–195 and 200–211 and Case T-
398/07 Spain, paras 80–87 (both n 529, above).
537) Wanadoo España/Telefónica (n 529, above); appeals dismissed in Case T-336/07
Telefónica v Commission EU:T:2012:172 and Case T-398/07 Spain v Commission
EU:T:2012:173. The GC rejected Telefónica's argument that the case should be
analysed as an 'essential facilities' refusal to supply case and held that the criteria
laid down in Case C-7/97 Bronner v Mediaprint [1998] ECR I-7791, EU:C:1998:569 did
not apply: Case T-336/07 EU:T:2012:173, paras 180–181.
538) Case T-336/07 Telefónica (n 529, above) paras 191–194.
539) As to the role of actual and potential effects in Art 102 analysis, see para 10.064,
above.
540) TeliaSonera (n 527, above) paras 64–66 (citing Deutsche Telekom v Commission (n
526, above) para 254); see also Case C-295/12P Telefónica v Commission
EU:C:2014:2062, para 124. See also Fairfield Competition Act 1998 investigation,
OFWAT no grounds for action decn of 22 December 2015 (insufficient evidence that
a margin squeeze in relation Anglian Water's pricing providing water and sewerage
services to a development site in Milton Keynes would have actual or potential
anti-competitive effects).
542) TeliaSonera (n 527, above) para 73.
549) TeliaSonera (n 527, above) paras 105–111; see also Case T-336/07 Telefónica (n 529,
above) paras 266–284 and Case T-398/07 Spain (n 529, above) paras 88–96.
550) Albion Water (n 533, above) para 59 and 106.
551) COMP/38784 Wanadoo España v Telefónica, decn of 4 July 2007, paras 619–664.
552) In PT Group/ZON Group, ECN Brief 1/2010, p 2, the Portuguese NCA imposed
substantial fine for margin squeeze in the retail broadband access market. PT
Group was the sole provider of wholesale broadband access and had over 70 per
cent of the retail market. By raising wholesale prices and reducing retail prices PT
Group prevented an as efficient competitor from competing profitably. Over the
period of the margin squeeze competitors saw their market share shrink from 36
per cent to 19 per cent whilst PT Group experienced a 193 per cent growth rate in
customers. The PT Group companies were fined over €53 million. In
Belgacom/Proximus, ECN Brief 1/2010, p 2, in n° 2009-P/K-10 the Belgian
Competition Council fined Proximus €66.3m for a margin squeeze in 2004 and 2005,
in which the margin between Proximus's on-net prices (ie between two of its own
customers) and the mobile termination rates charged to competitors (ie for
terminating a call originated by a competitor's customer on Proximus's network)
was clearly negative. The Belgian Competition Council applied Art 102 and its
domestic equivalent. The Court of Appeal of Brussels delivered an interim ruling
on the 28 June 2013 (R. n° 2013/5232). In the UK see, eg Case CW/988/06/08
Complaint from THUS plc and Gamma Telecom Limited against BT about alleged
margin squeeze in Wholesale Calls pricing, OFCOM no grounds for action decn of 20
June 2013 (BT had earned a negative margin on its wholesale calls product, but
there was insufficient evidence that BT's pricing conduct for wholesale calls was
likely to, or has had an anti-competitive effect or that it is likely to have such an
effect in future); Case CW/1103/03/13 Complaint from TalkTalk Group against BT
about alleged margin squeeze in relation to superfast broadband pricing, OFCOM no
grounds for action decn of 22 October 2014 (BT had earned sufficient margins to
cover its downstream costs of providing superfast broadband products, which
meant that an equally efficient competitor would be able to compete with BT).
553) Genzyme v Office of Fair Trading [2004] CAT 4. See also Freeserve.com v Director
General of Telecommunications [2003] CAT 5; Albion Water v Water Services
Regulation Authority (D?r Cymru/Shotton Paper) [2006] CAT 23 and 36. See also
CA98/20/2002 BSkyB, UK OFT decns of 17 December 2002 and 29 July 2003; and the
decision on the practices of France Télécom in French overseas departments
(DOM), Decision No. 09-D-24 of 28 July 2009, discussed at n 500, above, where the
French Competition Authority found a margin squeeze in the pricing of broadband
internet connections in la Réunion in addition to a distinct abuse of excessive
pricing.
77
554) Genzyme, above, para 552. The CAT also rejected Genzyme's case on objective
justification, holding that it was for Genzyme to raise a prima facie case although
the legal burden of proof remained with the competition authority: see paras 576
et seq.
555) Albion Water v Water Services Regulation Authority [2006] CAT 23 and [2006] CAT 36.
556) Albion Water v Water Services Regulation Authority (D?r Cymru/Shotton Paper)
[2008] EWCA Civ 536, para 103. The Court of Appeal also recognised that it is
possible for the dominant undertaking to put forward an objective justification for
the squeeze and that arguments over displacement of the dominant undertaking's
activity and avoided costs are relevant and important considerations when
considering that: para 106.
557) This issue does not appear to have been considered in the EU case law.
558) Genzyme [2003] CAT 8 and Albion Water, order of 2 June 2004, as varied by the
following Rulings, [2005] CAT 19 and [2006] CAT 33.
559) Genzyme [2005] CAT 32.
560) The use of a 'reasonably efficient' rather than 'equally efficient' test in this case
was justified by the fact that Genzyme Homecare was in fact a new entrant so that
it was not thought that its costs were representative of the market as a whole,
where Healthcare at Home was in fact the market leader.
561) Albion Water v Water Services Regulation Authority [2009] CAT 12. At para 55 the
Tribunal indicated, with reference to the judgment of the English Court of Appeal in
Attheraces v BHB (n 485, above), that it was not normally appropriate for the
Tribunal to become involved in price regulation. In Genzyme, that difficulty had
been overcome by the Tribunal through a final order entrusting ongoing
enforcement to the OFT. Note that in a subsequent damages claim brought by
Albion Water, the CAT rejected D?r Cymru's argument that for the purposes of
quantifying the damage that Albion had suffered as a result of the margin squeeze
it had to determine what price could lawfully have been charged. It held that
where a dominant undertaking could have charged a range of prices, absent its
unlawful conduct, the counterfactual should be constructed using a figure in the
middle of the range of lawful prices, not the highest that could lawfully have been
charged: paras 69–71.
562) See para 12.166, below. In Deutsche Post AG — mail order parcel services, OJ 2001
L125/27, the Commission found an abuse involving a degree of cross-subsidisation;
however, on analysis it does not appear that Deutsche Post is authority for the
proposition that cross-subsidisation is an abuse in itself. It was the below-cost
predatory pricing of a particular service that the Commission condemned: the
cross-subsidisation merely facilitated that predatory pricing. See also Case T-
175/99 UPS Europe v Commission [2002] ECR II-1915, EU:T:2002:78: rejection of
complaint upheld re alleged abuse by Deutsche Post in the use profits derived
from activities for which it enjoyed a legal monopoly to finance the acquisition of
control in a company which was active on a non-reserved market — in the absence
of any evidence to show that the funds used by Deutsche Post for the acquisition
were derived from abusive practices in the reserved letter market, the mere fact
that it used those funds to acquire control did not in itself, even if the source of
those funds was the reserved market, constitute an infringement of Art 102. See
also the Opinion of AG Mengozzi in Case C-209/10 Post Danmark I EU:C:2011:342,
which was not followed by the CJ, EU:C:2012:172.
563) Deutsche Post AG — mail order parcel services (n 562, above) para 6. It is not clear
what distinguishes this case as a matter of law from the principles of predatory
pricing already addressed at paras 10.078 et seq, above, although see the Opinion
of AG Mengozzi in Case C-209/10 Post Danmark I, above, para 124.
564) See, to this effect, Article 102 Enforcement Priorities Guidance, OJ 2009 C45/7, fn to
para 63.
565) COMP/36568 and 36570 Scandlines v Port of Helsingborg, Sundbusserne v Port of
Helsingborg, decn of 23 July 2004, discussed at para 10.122, above.
566) Scandlines, above, para 271; Sundbusserne, above, para 228. See also the decision
of the French Autorité de la concurrence accepting commitments from the
monopoly provider of horse race betting at physical outlets in France that it will
keep bets placed at its physical outlets separate from those placed with it online,
the concern in that case being that the revenues generated in one market were
used to enhance the product offered in the related market, resulting in an
advantage that commercial rivals could not match: Decision 14-D-04 of 25 February
2014; see also ECN Brief 02/2014, p 8.
567) See also, to similar effect, Flybe (n 522, above).
568) The only other natural rationale for such conduct would be pressure from powerful
purchasers to strengthen their own position on the downstream market by limiting
supplies to their competitors. Such conduct can form the basis for a serious breach
of Art 101 where there is collusion between competitors and their suppliers that
distorts competition on the downstream market (see, eg the decn of the UK CAT, JJB
Sports and Allsports v OFT [2004] CAT 17; upheld on appeal, JJB Sports v OFT [2006]
EWCA Civ 1318: see further para 2.083, above).
78
569) The overlap with margin squeeze is illustrated by the UK case of Genzyme (n 553,
above): Genzyme's bundled pricing to the NHS of a drug with a homecare service
made it impossible for competing homecare service providers to charge for their
services or to obtain the drug at a competitive price.
570) For economic analysis, including case studies, see Nalebuff and Majerus, Bundling,
Tying, and Portfolio Effects, UK DTI Economics Paper No. 1 (2003).
571) In the Article 102 Enforcement Priorities Guidance (n 564, above) paras 50 et seq,
the Commission has stated that, as regards its own enforcement priorities, it will
normally take action where an undertaking is dominant in the tying market and (a)
the tying and tied products are distinct products; and (b) the tying practice is
likely to lead to anti-competitive foreclosure. The risk of such foreclosure is
greater where the tying or bundling strategy is a lasting one, for example in
technical tying which is costly to reverse.
572) Case T-210/01 General Electric v Commission [2005] ECR II-5575, EU:T:2005:456.
573) General Electric v Commission, above, para 406.
574) In contrast, 'pure' or 'technical' bundling may not only be exclusionary but also
enable the dominant firm to extract a higher effective price for the second, tied
product than if it was sold separately. For an example of mixed bundling, see La
Post/De Post, OJ 2002 L61/32, where the Commission imposed a fine of €2.5 million
on the Belgian national postal operator for offering to customers of its general
letter mail service (in which it held a statutory monopoly) a preferential rate on
condition that they accepted a supplementary contract with regard to a new
business-to-business mail service (an area open to competition).
575) See Hilti discussed at para 10.143, below. The converse situation, where a firm
dominant on one market offers a rebate on the price of a product on condition that
the purchaser does not use another supplier on the market where the supplier is
dominant, may be more controversial (see the discussion at para 10.099, above),
but see, eg Telekom Austria, Case 16 Ok 11/03, 17 November 2003, [2005] ECC 541,
where the Austrian Supreme Court upheld the order of the Austrian competition
authority finding abuse by the former monopoly telephone network operator
through its sales offer of cordless telephones at half price on condition that the
purchaser agreed to exclude call-by-call carrier pre-selection (ie the facility to
select which network would carry the call); Telekom Austria was dominant in the
market for fixed line call origination but not in the market for the sale of
telephones.
576) COMP/37792 Microsoft, decn of 24 March 2004, para 794, upheld on appeal, Case T-
201/04 Microsoft v Commission [2007] ECR II-3601, EU:T:2007:289, paras 859 and 867.
577) Microsoft, above, paras 860 et seq. This issue was also raised in both Case T-30/89
Hilti (n 518, above) (not challenged in the appeal to the CJ in Case C-53/92P [1994]
ECR I-667, EU:C:1994:77, paras 45 et seq) and Tetra Pak II, OJ 1992 L72/1, paras 118–
119. For those cases, see further para 10.143, below. See also Case AT.39230 Rio Tinto
Alcan, commitment decn of 20 December 2012, paras 60–65 (aluminium smelting
technologies and pot tending assemblies constitute distinct products); see also
the UK CAT in Socrates v Law Society of England and Wales [2017] CAT 10 (tying the
Law Society's training in mortgage fraud and anti-money laundering to its
Conveyancing Quality Scheme, which provided a form of accreditation for firms of
solicitors engaged in residential conveyancing).
578) Microsoft (n 576, above) paras 887, 917–922; see also the Irish Supreme Court in
Competition Authority v O'Regan [2007] IESC 22, paras 116 et seq holding that the
supply of savings protection by the Irish League of Credit Unions (ILCU) to its
member unions was not a distinct product that could be distinguished from the
ILCU's function in representing its members. Hence in the example given in the
text, there is no demand for laced shoes without shoelaces. See also Streetmap v
Google [2016] EWHC 253 (Ch), para 15 (online maps were assumed to be distinct
from general search engines).
579) See also COMP/39530 Microsoft (Tying), decn of 16 December 2009, where the
Commission accepted commitments in relation to the tying of Microsoft's web
browser Internet Explorer to its dominant PC operating system: see also Buhr et al,
'The Commission's decision in the Microsoft Internet Explorer cases and recent
developments in the area of interoperability' (2010) 1 Competition Policy
Newsletter 37. The Commission has rejected a complaint against Microsoft alleging
anti-competitive behaviour on the market for the provision of Enterprise Resource
Planning or Enterprise Application Software: COMP/39784 Omnis/Microsoft, decn of
1 December 2010 (appeal dismissed, Case T-74/11 Omnis Group v Commission
EU:T:2013:283).
581) Case T-30/89 Hilti (n 518, above) para 67; and Case T-427/08 Confédération
européenne des associations d'horlogers-réparateurs (CEAHR) v Commission [2010]
ECR II-5865, EU:T:2010:517, para 108.
79
582) Case T-30/89 Hilti v Commission [1991] ECR II-1439, EU:T:1991:70 (on appeal from
Hilti, OJ 1988 L65/19) (further appeal dismissed, Case C-53/92P [1994] ECR I-667,
EU:C:1994:77). In particular, Hilti (a) refused to supply customers with cartridge
strips without the accompanying appropriate number of nails; (b) granted special
discounts for the combined purchase of nails and cartridge strips; (c) refused to
supply the competing nail producers with cartridge strips and took steps to
prevent its customers and its exclusive distributors from supplying cartridge strips
to the other nail suppliers; and (d) refused to honour its guarantee for the tools
where they had been used with consumables of other than Hilti provenance.
583) Case T-30/89 Hilti, above. See also London European/SABENA, OJ 1988 L317/47;
Napier Brown/British Sugar (n 518, above); Decca Navigator System, OJ 1989 L43/27;
Novo Nordisk, XXVIth Report on Competition Policy (1996), point 62 and p 142
(refusal by pharmaceutical manufacturer to honour guarantees for its 'insulin pens'
when used in conjunction with other manufacturer's components).
584) Tetra Pak II, OJ 1992 L72/1 (appeal and further appeal dismissed, Case T-83/91 Tetra
Pak v Commission [1994] ECR II-755, EU:T:1994:246; Case C-333/94P Tetra Pak v
Commission [1996] ECR I-5951, EU:C:1996:436).
585) Case C-333/94P Tetra Pak, above, para 37. See also Soda-Club, WUW DE-R 2268,
judgment of the German Federal Supreme Court of 4 March 2008 in relation to the
terms offered to customers by the dominant supplier of home water carbonation
systems that enabled consumers to make their own soda water. The restriction
imposed in the rental agreement for the gas carbonation bottles that prevented
consumers from obtaining gas refills from anyone other than a Soda-Club licensed
dealer was found to be an abuse.
586) Case T-201/04 Microsoft (n 576, above) para 861.
587) Case T-83/91 Tetra Pak (n 584, above) para 135 (the point was not raised on the
appeal to the CJ). See also Digital, XXVIIth Report on Competition Policy (1997),
point 69 and p 153. cf COMP/37761 Euromax/IMAX, decn of 25 March 2004: IMAX's
insistence that hirers of its film projection equipment use its maintenance services
was held not to be an abuse. The Commission distinguished Tetra Pak, finding that
IMAX's requirements regarding maintenance were justified by the fact that the
equipment remained its property so it was entitled to ensure that it was
maintained in good condition. IMAX also had a right to protect its know-how. See
also Case AT.39230 Rio Tinto Alcan, commitment decn of 20 December 2012, in
which the Commission accepted commitments offered by Rio Tinto Alcan to
address concerns relating to the tying of its aluminium smelting technology to the
supply of its aluminium smelter equipment.
588) Napier Brown/British Sugar, OJ 1988 L284/41.
589) See also FAG—Flughafen Frankfurt/Main AG, OJ 1998 L72/30 (airport authority, as the
exclusive provider of airport facilities, could not reserve to itself groundhandling
services); and see similar resolution of groundhandling problems at Athens airport:
XXVIIth Report on Competition Policy (1997), points 131–134. See also refusal of
access to essential facilities, paras 10.156 et seq, below.
590) Case AT.40099 Google Android: Press Release IP/16/1492 and MEMO/16/1484 (20
April 2016). The Commission is also investigating whether Google prevents
manufacturers from selling smart mobile devices running on competing operating
systems based on the Android open source code.
591) Microsoft (n 576, above) paras 955 and 961.
592) Microsoft (n 576, above) para 970.
593) cf the GC in Microsoft (n 576, above) para 970.
594) Streetmap v Google (n 578, above) paras 51–52.
595) Microsoft (n 576, above) para 1089. See similarly the Article 102 Enforcement
Priorities Guidance (n 564, above), paras 52–58. See also Socrates v Law Society of
England and Wales [2017] CAT 10, para 147.
596) COMP/37792 Microsoft, decn of 24 March 2004, para 841.
597) COMP/37792 Microsoft, above, paras 835–954.
598) Case T-201/04 Microsoft v Commission [2007] ECR II-3601, EU:T:2007:289, paras 1031–
1090. See also Socrates (n 595, above) (Law Society abused its dominant position
by operating a Conveyancing Quality Scheme for firms of solicitors engaged in
residential conveyancing, which required members of the Scheme to obtain
training in mortgage fraud and anti-money laundering exclusively from the Law
Society).
599) Case AT.39230 Rio Tinto Alcan, commitment decn of 20 December 2012, paras 66–
85.
80
600) Mixed bundling may in certain circumstances expand output and produce welfare-
enhancing effects that could exceed any potential foreclosure: see, eg Bishop and
Walker (n 6, above) para 6.67. But this has not been recognised as a defence so far
in the case law, and the GC judgment in General Electric (n 572, above) shows the
danger of reliance on an economic theory without firm factual foundation on the
evidence in the case. See also the Article 102 Enforcement Priorities Guidance (n
564, above) para 62. But see Euromax/IMAX (n 587, above). In Case AT.39230 Rio
Tinto Alcan, commitments decn of 20 December 2012, the Commission considered
that 'any efficiency enhancing tying must be driven by customer preferences for
joint consumption. It is not the task of an undertaking in a dominant position to
take steps on its own initiative (in particular by contractually tying its products) to
eliminate products which, rightly or wrongly, it regards as inferior in quality to its
own products': para 89.
601) Case T-30/89 Hilti v Commission (n 518, above) paras 118–119. See similarly Case T-
83/91 Tetra Pak v Commission (n 584, above) paras 134–141; Case C-333/94P Tetra
Pak II (n 584, above) paras 34–38. The GC relied on Case 85/76 Hoffmann-La Roche
[1979] ECR 461, EU:C:1979:36, paras 89–90; Case C-62/86 AKZO v Commission [1991]
ECR I-3359, EU:C:1991:286, para 149; and Case T-65/89 BPB Industries and British
Gypsum v Commission [1993] ECR II-389, EU:T:1993:31, para 68.
602) Case AT.39230 Rio Tinto Alcan, commitment decn of 20 December 2012, paras 86–
94.
603) See Case C-7/97 Bronner v Mediaprint [1998] ECR I-7791, EU:C:1998:264, para 56 of AG
Jacobs' Opinion; see also COMP/37792 Microsoft, decn of 24 March 2004, para 547,
upheld on appeal, Case T-201/04 Microsoft v Commission [2007] ECR II-3601,
EU:T:2007:289, para 319; COMP/38096 Clearstream, decn of 2 June 2004, para 217.
See similarly the Article 102 Enforcement Priorities Guidance (n 564, above) para
75.
604) These considerations were expressed by AG Jacobs in Bronner v Mediaprint, above,
paras 56–59. See in regard to the right to property generally, Case T-65/98 Van den
Bergh Foods v Commission [2003] ECR II-4653, EU:T:2003:281, paras 170–172 (appeal
on other grounds dismissed, Case C-552/03P Unilever Bestfoods (Ireland) v
Commission [2006] ECR I-9091, EU:C:2006:607).
605) The CJ did not enter into theoretical considerations in its judgment but made clear
that the positive obligations recognised in earlier case law were to be viewed as
exceptional, effectively endorsing the cautious approach articulated by AG Jacobs:
Bronner v Mediaprint (n 603, above) paras 37–47. For a discussion of Bronner
generally, see further para 10.157, below. See also the Article 102 Enforcement
Priorities Guidance (n 564, above) paras 75 and 79.
606) Case C-53/03 Syfait v GlaxoSmithKline [2005] ECR I-4609, EU:C:2005:333, para 67 (the
CJ held that the reference under Art 267 was inadmissible).
607) Note that some cases may involve refusals of both sorts: eg in British Midland v Aer
Lingus, OJ 1992 L96/34, para 26, concerning the supply of airline 'interlining'
facilities (enabling one airline to issue tickets covering travel partly carried on the
services of another airline), the Commission found that the withdrawal of existing
facilities and the refusal to grant new facilities may both be abusive.
608) See paras 9.051 et seq, above.
609) TACA, OJ 1999 L95/1, para 553 (on appeal, Cases T-191/98, etc, Atlantic Container Line
v Commission ('TACA') [2003] ECR II-3275, EU:T:2003:245); Cases C-147&148/97
Deutsche Post [2000] ECR I-825, EU:C:2000:74, paras 59–60; Deutsche Post —
Interception of cross-border mail, OJ 2001 L331/40, para 141. In Intecare Direct v
Pfizer [2010] EWHC 600, para 35, Roth J summarised the law in this way: 'it is well-
established that a constructive refusal to supply can amount to an abuse. For
example, if a dominant undertaking offers to supply only on terms, whether as to
price or otherwise, that renders the purchase commercially unviable, that would
be a constructive refusal'.
610) See, eg where an airport operator (assumed to be dominant) provided 'meet and
greet' valet parking services from the terminal forecourt but excluded competing
operators from the same forecourt and imposed a charge on the service they
provided from the car park, this was treated by the English High Court as abusive
discrimination which operated to the detriment of consumers: Purple Parking v
Heathrow Airport [2011] EWHC 987 (Ch). The Court rejected the suggestion that the
claim had to be analysed as an 'essential facilities' case: para 79.
611) TACA, OJ 1999 L95/1, para 553 (on appeal, Cases T-191/98, etc, Atlantic Container Line
('TACA') (n 609, above); Cases C-147&148/97 Deutsche Post [2000] ECR I-825,
EU:C:2000:74, paras 59–60; Deutsche Post — Interception of cross-border mail, OJ
2001 L331/40, para 141. See also Article 102 Enforcement Priorities Guidance (n 564,
above) para 79. See also Europe Investor Direct and OÜ E Direct v VPC Aktiebolag,
judgment of the Stockholm City Court, 20 November 2008 Case No. T 32799-05
(sudden substantial increase in the price of product amounted to refusal to
supply, upheld on appeal (but damages awarded reduced) in Case No. T 10012-
08Euroclear Sweden v Europe Investor Direct, judgment of the Svea Court of Appeal
of 19 January 2011).
81
612) COMP/39525 Telekomunikacja Polska, decn of 22 June 2011, paras 695 et seq and
the summary at para 712 (appeal dismissed, Case T-486/11 Orange Polska v
Commission EU:T:2015:1002, on further appeal to the CJ, Case C-123/16P, not yet
decided).
613) COMP/38096 Clearstream, decn of 2 June 2004, para 223, upheld on appeal Case T-
301/04 Clearstream v Commission [2009] ECR II-3155, EU:T:2009:317, para 151.
614) cf Case C-52/09 TeliaSonera [2011] ECR I-527, EU:C:2011:83, paras 90–95 (whether the
operators concerned are existing or new customers of the dominant undertaking
can be of no relevance to whether a pricing practice resulting in a margin squeeze
can be abusive).
615) Cases 6&7/73 Commercial Solvents v Commission [1974] ECR 223, EU:C:1974:18, paras
23–29. See also Napier Brown/British Sugar (n 588, above); Dahabshiil Transfer
Services v Barclays Bank [2013] EWHC 3379 (Ch) (grant of interim injunctions to
prevent an alleged refusal to supply money service business).
616) Case 27/76 United Brands v Commission [1978] ECR 207, EU:C:1978:22. See also Case
226/84 British Leyland v Commission [1986] ECR 3263, EU:C:1986:421 (refusal to
supply certificate of conformity for LHD vehicles required to license and use
vehicles in the UK, thereby deterring imports from the other Member States);
Polaroid/SSI Europe, XIIIth Report on Competition Policy (1983), point 157 (refusal
to supply customer with a large order of instant film); Liptons Cash Registers/Hugin,
OJ 1978 L22/23 (refusal to supply spare parts to firm which maintained and
repaired Hugin cash registers) (overturned on appeal because of lack of effect on
trade between Member States: Case 22/78 Hugin v Commission [1979] ECR 1869,
EU:C:1979:138).
617) Case 311/84 CBEM v CLT and IPB ('Télémarketing') [1985] ECR 3261, EU:C:1985:394.
See also Napier Brown/British Sugar (n 588, above); Case C-18/88 RT v GB-INNO-BM
[1991] ECR I-5941, EU:C:1991:474.
618) Télémarketing, above, para 26.
619) Télémarketing (n 617, above) para 27. See also Case T-504/93 Tiercé Ladbroke v
Commission [1997] ECR II-923, EU:T:1997:84: Ladbroke's claim that the French
racecourses were reserving to themselves or other licensees the market in French
sound and pictures ancillary to the betting market, by refusing Ladbroke a licence
for the Belgian market, was rejected on the grounds that the French racecourses
were not present on the Belgian market, which was the relevant market for the
purposes of Art 102. This tends to confirm that the underlying mischief is the
'leveraging' effect of refusal to supply rather than any free-standing obligation to
supply particular competitors or customers.
620) In JJ Burgess v OFT [2005] CAT 24, the UK CAT rejected the argument of the OFT that
the elimination of one of three funeral directors from a local market did not
amount to a substantial effect on competition when two viable choices remained
(and there was no evidence that prices would rise). The Tribunal adopted (at para
311(1)) the statement of AG Jacobs in Bronner v Mediaprint that it was clear from
Commercial Solvents , United Brands and Télémarketing 'that a dominant
undertaking commits an abuse where, without justification, it cuts off supplies to
an existing customer …': Bronner (n 603, above) Opinion, para 43. In Case AT.39097
Watch Repair, decn of 29 July 2014, however, the Commission considered that the
capturing of the downstream market by the dominant undertaking was an essential
element of the abuse: recitals 112 et seq, upheld on appeal, Case T-712/14
Confédération européenne des associations d'horlogers-réparateurs (CEAHR) v
Commission EU:T:2017:748).
621) Commercial Solvents (n 615, above) para 25; see similarly Case C-7/97 Bronner v
Mediaprint [1998] ECR I-7791, EU:C:1998:569 para 41.
622) Case C-418/01 IMS Health [2004] ECR I-5039, EU:C:2004:257, para 38; see similarly
Cases C-241&C-242/91P RTE and ITP v Commission ('Magill') [1995] ECR I-I-743,
EU:C:1995:98, para 93.
623) Case T-201/04 Microsoft v Commission [2007] ECR II-3601, EU:T:2007:289, paras 332
and 563. See also, eg the decn of the Slovakian Antimonopoly Office finding an
abusive refusal to supply electric locomotives to the dominant company's
competitors in the freight rail transport market, who were only able to access less
efficient and more costly diesel locomotives: ECN Brief 04/2013, p 9 (decn upheld
on appeal to the Council of the Antimonopoly Office); the decn of the Polish NCA
finding an abusive refusal to supply spare parts to one customer that had won a
tender to service Mi2 helicopters: PCA decision RLU-27/2014, decn of 1 December
2014.
624) Case T-201/04 Microsoft, above, para 688. One possible ground for refusal could be
that the intended use would be unlawful: see the UK CAT in VIP Communications v
OFCOM [2009] CAT 28; but cf SIM-Card, WuW DE-R 2427, judgment of the
Oberlandesgericht Düsseldorf of 13 March 2008, where the Court rejected
arguments in a similar case that the use of sim cards in GSM-Gateways would
jeopardise the position of the plaintiff under German telecommunications law and
that it could cause a technical deterioration of network connectivity.
625) Télémarketing (n 617, above).
82
626) Case 22/78 Hugin v Commission [1979] ECR 1869, EU:C:1979:138 is authority for the
proposition that it may be an abuse for a manufacturer to take over the
distribution and servicing of its own products. However, the correctness of that
decision appears to turn on the narrow market definition (limited to the supply of
parts for Hugin's own products). On a market defined more widely, a
manufacturer's inability to adopt its preferred means of distribution and servicing
may impede its ability to compete effectively in the wider market with other,
possibly more powerful, suppliers of competing products.
627) BBI/Boosey & Hawkes, OJ 1987 L286/36 (an interim measures decision). See also
Norbain SD v Dedicated Micros [1999] Eu LR 266 (QB).
628) See, eg Leyland DAF v Automotive Products [1994] 1 BCLC 245 (English Court of
Appeal).
629) United Brands (n 616, above); Sot Lélos kai Sia v GlaxoSmithKline discussed in para
10.162, below.
630) Case AT.40083 Irish Distillers, decn of 18 November 2014, para 15 (complainant had
failed to comply with its obligation under its old supply agreement to provide
Cooley with a schedule of its anticipated yearly supply, which caused inventory
problems and distillation difficulties to Cooleys Distillery).
631) Although this discussion incorporates the 'essential facilities' discussion within the
issue of supply to new customers, there is no reason why an existing customer
could not argue that the supply that had been or was to be withdrawn was not
'essential' in this sense: that might constitute an aggravation of the situation
described in para 10.152, above. However, existing customers may be entitled to
continuity of supply without proving that the product or service at issue is
'essential' in that sense.
632) To take two contrasting examples from the national courts, in Case 04-12.388
Messageries Lyonnaises de Presse (MLP) v Nouvelles Messageries de Presse Parisienne
(NMPP), judgment of 12 July 2005, BOCCRF No. 11, 16 December 2005, the French
Cour de Cassation emphasised that access to an essential facility must be subject
to strict conditions in order not to discourage investment, one such condition
being that the facility cannot be duplicated by competitors under reasonable
economic conditions. In Purple Parking v Heathrow Airport [2011] EWHC 987 the
English High Court held that, on the facts of that case, much less weight fell to be
given to the rights of the airport operator as the creator of the facility because the
meet-and-greet valet parking service which the claimants wanted to provide was
ancillary to the purpose for which the airport forecourts had been developed. This
was not, therefore, a case where the creator of the facility was being asked to
'share the real fruits of ownership with a competitor': para 174. Where the effect of
compelling supply might be materially to undermine rights of ownership or to
weaken incentives to invest, a court or competition authority might well be more
reluctant to intervene: see, to this effect, the Article 102 Enforcement Priorities
Guidance (n 564, above) paras 75 et seq.
633) See paras 9.051 et seq, above. Many of the principles applicable to 'essential
facilities' cases are strongly analogous to those developed in relation to
compulsory licensing: indeed, from a legal perspective, a monopoly intellectual
property right (IPR) can frequently represent one particularly clear form of
'essential facility' where the right to exercise that IPR is a necessary condition for
competition on a relevant market.
634) For discussion of the essential facilities 'doctrine' see, eg O'Donoghue and Padilla,
The Law and Economics of Article 102 TFEU (2nd edn, 2013) Chap 10; see also OECD
Best Practices Roundtable, Refusals to deal (2007), available at the OECD's website.
635) Case C-7/97 Bronner v Mediaprint [1998] ECR I-7791, EU:C:1998:569, para 44.
636) B&I Line/Sealink Harbours, decn of 11 June 1992, para 41; Sea Containers/Stena
Sealink, OJ 1994 L15/8, para 66. Both were interim measures decisions.
637) For a useful list of the types of facilities to which access has been mandated by the
Commission, see Whish and Bailey, Competition Law (9th edn, 2018), Chap 17.
638) Bronner v Mediaprint (n 635, above) AG Opinion at para 50. Tying is treated
separately in this work but the last sentence of the passage quoted illustrates the
overlaps that arise in identifying the various forms of abuse, as discussed at paras
10.072 et seq, above.
639) Such obligations may have specific statutory underpinning: see, eg paras 12.004 et
seq, below for the telecommunications sector. See also the Article 102
Enforcement Priorities Guidance (n 564, above) paras 81 et seq. The criteria set out
there apply to both cessation of existing supply and refusal of de novo supply: para
84.
83
640) Many of these cases concerned narrow transport monopolies over particular ports
or airports. See, eg Port of Rødby, OJ 1994 L55/52; Sealink/B&I Line [1992] 5 CMLR
255; Sea Containers/Stena Sealink (n 528, above); Brussels Airport, OJ 1995 L216/8;
and see Maltby, 'Restrictions on Port Operators' (1993) ECLR 223. cf the Northern
Irish decision, Application by the Anley Maritime Agencies for JR (1995) [1999] Eu LR
97 (QB, N Ir): Warrenpoint harbour not the relevant market as Belfast was an
alternative. Note that although in Sea Containers/Stena Sealink the Commission
found (at paras 63–64) that Holyhead was the only port capable of serving the
'central corridor' route between the UK and Ireland and that Liverpool was not a
realistic substitute, Sea Containers did not in fact take up the opportunity to
operate from Holyhead but eventually started a competing service out of
Liverpool: Bishop and Ridyard, 'Oscar Bronner: Legitimate Refusals to Supply', in
Grayson (ed), European Economics and Law (1999), 24–25. FAG — Flughafen
Frankfurt/Main, OJ 1998 L72/30. See Armani, 'One step beyond in the application of
the essential facility theory' (1999) 3 Competition Policy Newsletter 15.
641) Sea Containers/Stena Sealink (n 636, above) para 66.
642) Bronner v Mediaprint (n 635, above).
643) However, only the AG, not the CJ, referred to any of the prior Commission decisions
on 'essential facilities'. The CJ developed its response to the national court out of
its own existing case law.
644) Cases C-241&C-242/91P RTE and ITP v Commission ('Magill') [1995] ECR I-I-743,
EU:C:1995:98; on Magill and the case law relating to the refusal to license
intellectual property rights see paras 9.051 et seq, above.
645) Bronner v Mediaprint (n 635, above) para 41.
646) But see COMP/39315 ENI, decn of 29 September 2010, accepting commitments to
remedy an allegedly abusive refusal to grant competitors access to capacity on
ENI's gas transport networks: the Commission had formed the provisional view that
the test in Bronner was satisfied where '[t]he refusal is likely to lead either to the
elimination or the prevention of the development of effective competition on the
downstream market, resulting in consumer harm': para 40 (emphasis added). See
also Telekomunikacja Polska (n 612, above) para 815 ('it is sufficient that rivals are
disadvantaged and consequently compete less aggressively') and para 818
(referring to the difficulty for competitors to climb the 'investment ladder' due to
the dominant undertaking's conduct).
647) Case T-504/93 Tiercé Ladbroke v Commission [1997] ECR II-923, EU:T:1997:84, paras
124–132. The GC also held that the Commercial Solvents jurisprudence did not
assist Ladbroke since the French societies were not themselves operating on the
relevant downstream market. See also Cases T-374/94, etc, European Night Services
v Commission [1998] ECR II-3141, EU:T:1998:198, paras 207–219, a case under Art 101
where, in annulling the Commission's decn that certain railway services should be
supplied to third parties, the GC held that it had not been established that access
to those services was essential. Although this arose in the context of the conditions
of Art 101(3), the GC addressed the issue on the basis of the Magill and Tiercé
Ladbroke judgments, finding that such access could be regarded as essential only
if the relevant market could be defined on a much narrower basis than in fact
applied.
648) Bronner v Mediaprint (n 635, above).
649) The CJ emphasised that it was not sufficient for Bronner to argue that the creation
of a rival home delivery service was not economically viable solely by reason of
the small circulation of the newspaper(s) to be distributed; rather, it would be
necessary to establish that it was not economically viable to create a home
delivery scheme for the distribution of newspapers with a circulation comparable
to that of newspapers distributed by the existing scheme: Bronner v Mediaprint (n
635, above) paras 45–46.
651) Article 102 Enforcement Priorities Guidance (n 564, above) para 86. See also
Hungarian NCA decn of 21 March 2017 (applying the Article 102 Enforcement
Priorities Guidance to find that there were no grounds for action in respect of
Sanofi's refusal to supply a wholesaler of pharmaceutical products in the absence
of evidence of consumer harm).
652) See the interim measures decision regarding the Port of Roscoff, Irish Continental
Group v CCI Morlaix [1995] 5 CMLR 77, para 59: although the defendant port authority
held a minority interest in Brittany Ferries, that was expressly not regarded as a
condition of the decision. See also SWIFT, XXVIIth Report on Competition Policy
(1997), point 68 and p 143; and La Poste/SWIFT & GUF, OJ 1997 C335/3.
653) See, in this connection, E.I. du Pont de Nemours, UK OFT non-infringement decn of 9
September 2003, para 35 (taking into account the decision of the dominant firm to
withdraw from the downstream market in support of the NCA's view that the refusal
to supply was not anti-competitive).
84
654) See, eg Georg/Ferrovie, OJ 2004 L111/17 (Italian national railway carrier abused its
dominant position by refusing to grant access to the Italian railway network to a
small German competitor); COMP/38096 Clearstream, decn of 2 June 2004, paras
224 et seq, upheld on appeal, Case T-301/04 Clearstream [2009] ECR II-3155,
EU:T:2009:317, paras 146–155 (owner of the German central securities depository
abused its dominant position by refusing to provide primary clearing and
settlement services which were indispensable to be able to provide cross-border
secondary clearing and settlement services). See also, at national level: SE Vilnius
International Airport, ECN Brief 3/2010, p 2 (Lithuanian Supreme Administrative
Court); Port of Koper, Case 306-1/2008-84 (Slovenian NCA decn of 15 October 2009)
(refusal of access to port infrastructure); Scandlines/Port of Puttgarden, ECN Brief
2/2010, p 2 (German NCA decn of 27 January 2010); Milan and Rome Airports, ECN
Brief 4/2010, p 2 (Italian Consiglio dello Stato); Budapest Airport Handling Services
Vj-55/2006 (Hungarian NCA decn of 13 January 2010); Slovak Telekom Case
2009/DZ/R/2/026 (Slovakian NCA decn of 15 May 2009); Konkurrensverket v Ekfors
Kraft, Swedish NCA decn of 25 August 2010 Case dnr 533/2009 (electricity supply
company's refusal to allow the municipality of Haparanda access to the power
mains made it impossible for Haparanda to supply street and road lighting and
was an abuse). Note that under German competition law, the equivalent provision
to Art 102 includes in effect an 'essential facilities' doctrine that is expressly
limited to the situation where the party refused access is thereby prevented from
operating as a competitor of the dominant undertaking on the upstream or
downstream market: GWB, s 19(4).4.
655) See the discussion of Magill , IMS Health and Microsoft in paras 9.051 et seq, above.
Although in each of those cases the supplier could be regarded as active itself in
the relevant downstream market, the statements of principle could have wider
application. See also per AG Jacobs in Syfait (n 606, above) Opinion, para 66.
656) See Arriva The Shires v London Luton Airport Operations [2014] EWHC 64 (Ch), paras
99 et seq, relying on Case T-128/98 Aéroports de Paris v Commission [2000] ECR II-
3929, EU:T:2000:290, para 173, which was not considered to be confined to cases of
price discrimination.
657) See para 10.069, above.
658) See Bronner (n 635, above) para 41; and see para 10.154, above in respect of
objective justification for discontinuing supply to an existing customer. See, eg
Plaintiff v Niigata Power Systems NL:RBROT:2014:8245 (Dutch District Court of
Rotterdam held that a refusal to supply spare parts to a wholesaler that were
delivered to the dominant firm's own customer, with whom the dominant firm had
an agreement itself, was justified).
659) See, eg ENI (n 646, above) fn 43 ('the mere fact that the current capacities are fully
used by the essential facility holder is not sufficient to exclude an abuse… In such
a situation, a dominant essential facility holder is under an obligation to take all
possible measures to remove the constraints imposed by the lack of capacity and
to organise its business in a manner that makes a maximum amount of capacity of
the essential facility available'); see also Telekomunikacja Polska (n 612, above)
para 878; and COMP/38096 Clearstream, decn of 2 June 2004, paras 278–288
(appeal dismissed Case T-301/04 Clearstream (n 654, above)); and the cases
referred to in n 624, above).
660) Case AT.40083 Irish Distillers, rejection of complaint decn of 18 November 2014,
para 18.
661) Cases C-468/06, etc, Sot Lélos kai Sia v GlaxoSmithKline [2008] ECR I-7139,
EU:C:2008:504. For comment see Kingston, (2009) 46 CML Rev 683.
662) As regards those 'legitimate commercial interests' the CJ referred to GSK's
argument that it is necessary for pharmaceuticals companies to limit parallel
exports in order to avoid the risk of a reduction in their investments in the
research and development of medicines. This may explain the contrast between
the pragmatic approach to the effect of pricing differentials in this case and that
taken in Case C-403&429/08 Football Association Premier League v QC
Leisure/Murphy [2011] ECR I-9083, EU:C:2011:631, where the CJ held that the grant of
exclusive rights to broadcast football matches in a particular territory was not
justified by the desire to maintain 'artificial price differences between the
partitioned national markets': para 115.
663) Sot Lélos (n 661, above) para 70.
664) Sot Lélos (n 661, above) para 71.
665) In Chemistree Homecare v Abbvie [2013] EWHC 264 (Ch), paras 43–44, the English
High Court held that where a dominant undertaking has chosen to distribute its
product by supplying only to retailers, and has a policy of not supplying
wholesalers, then orders placed by a customer for the undisclosed purpose of
reselling the product on the wholesale market are not ordinary (upheld, on other
grounds, in Chemistree Homecare v Abbvie [2013] EWCA Civ 1338).
666) Case C-333/94P Tetra Pak v Commission ('Tetra Pak II') [1996] ECR I-5951,
EU:C:1996:436, para 37.
85
667) In addition to those examples of other forms of abuse noted below, see the Italian
NCA decision T-Link and Grandi Navi Veloci Case A 417 Bull No. 20/2010, 19 May 2010,
(accepting commitments) which provides the following examples of abusive
conduct by a dominant provider of ferry services to container lorries (with a stable
market share of over 90 per cent), including: selective increases in capacity (ie
more ships); punitive tariff increases for customers who used the competing new
entrant's services; and 'denigration' of the new entrant requiring it to divert
resources from investing in new entry to defending its reputation. For further
instances of abusive denigration, see the decns of the French NCA in respect of
Clopidogrel (Decn 13-D-11 of 14 May 2013) and Buprenorphine (Decision 13-D-21 of 18
December 2013), appeals to the Cour d'Appel de Paris dismissed by decisions of 18
December 2014 and 26 May 2015 respectively. See also the Italian NCA decn in
Saint Gobain PPC/Plasterboard market, 30 June 2010: ECN Brief 04/2010, p 2.
668) Telekomunikacja Polska (n 612, above) paras 714–721; see also Case AT.39523 Slovak
Telekom, decn of 15 October 2014, paras 428–821, in which the Commission found
Slovak Telekom and its parent company, Deutsche Telekom, to have infringed Art
102 by setting unfair terms and conditions for unbundled access to its local loop
and imposing a margin squeeze; on appeal, Case T-851/14 Slovak Telekom v
Commission, not yet decided and Case T-827/14 Deutsche Telekom v Commission,
not yet decided.
669) Cases 40/73, etc, Suiker Unie v Commission [1975] ECR 1663, EU:C:1975:174, paras 396
et seq; cf Sot Lélos kai Sia v GlaxoSmithKline (n 661, above). See also Hachette,
VIIIth Report on Competition Policy (1978), points 114–115. But the exercise of a
trade mark right by a dominant firm to restrain importation is not itself an abuse
provided the exercise of the right is lawful under the TFEU's free movement
provisions and is not intended to partition markets or distort normal conditions of
competition: Case 102/77 Hoffmann-La Roche v Centrafarm [1978] ECR 1139,
EU:C:1978:108. For the exercise of trade mark rights, see generally Chap 9, above.
670) United Brands v Commission (n 616, above) paras 130–162 (the green banana
clause); see also Case AT.39767 BEH Electricity, commitment decn of 10 December
2015, paras 54–55 (territorial restrictions on the resale of electricity from Bulgaria).
671) An agreement between Microsoft and AT&T required any relevant developments by
AT&T to be compatible with Microsoft's original software: XXVIIth Report on
Competition Policy (1997), point 79. The Commission regarded as anti-competitive
Sega and Nintendo's reservation of the right to vet games developed by
independent producers for their consoles: XXVIIth Report on Competition Policy
(1997), point 80.
672) Novo Nordisk, XXVIth Report on Competition Policy (1996), point 62 and p 142
(refusal to honour guarantees for its 'insulin pens' when used in conjunction with
other manufacturers' components). In CNIM v Electricité de France [2008] ECC 208
the French Cour de Cassation (Commercial Chamber) held that a clause limiting
the electricity supplier's liability for damage caused by unexpected power cuts
was not an abuse even though the supplier had a legal monopoly of supply.
673) See, eg paras 9.077 and 9.095, above.
674) Tetra Pak II, OJ 1992 L72/1, para 106, upheld on appeal, Case T-83/91 Tetra Pak v
Commission [1994] ECR II-755, EU:T:1994:246, paras 212–214 (further appeal
dismissed, Case C-333/94P Tetra Pak v Commission ('Tetra Pak II') [1996] ECR I-5951,
EU:C:1996:436. The Commission did not examine the extent to which these clauses
were invoked or enforced by Tetra Pak in practice. See also the terms imposed by
Michelin on its dealers through the 'Michelin Friends Club', condemned in Michelin
II: paras 10.107 et seq, above.
675) The Commission in addition condemned a number of clauses allowing Tetra Pak to
inspect the customers' premises or audit the customers' company documents or
impose penalties for breach of any of the terms at its discretion since these were
aimed at ensuring compliance with the other abusive conditions.
676) The Commission held that these clauses were clearly abusive in cases where Tetra
Pak sold the machine to the customer. With regard to leases of the machines, the
Commission stated (at para 131) that 'clauses intended to ensure respect for the
machine's integrity form part of the attributes of ownership and do not therefore in
themselves constitute abuses … when they are imposed on a leaseholder by an
undertaking in a dominant position'. However, because the payment terms
imposed by Tetra Pak for rental of machines made leasing 'equivalent in economic
terms to sale' these conditions were abusive even in the rental contracts.
677) The clause unduly limited the right of the purchaser of the machine to dispose of
his asset as he wished and also prevented a market in second-hand machines from
developing, thus supporting the compartmentalisation of national markets.
678) The Commission held that a lease term which equals or exceeds the technological,
if not physical, life of the machines was abusive; even a lease of three years unduly
bound the customer to Tetra Pak in a market where there was rapid technological
development.
679) TACA, OJ 1999 L95/1, paras 553–557.
680) A service contract involves a commitment by the shipper to provide a minimum
quantity of cargo over a particular period and by the carrier to a specified rate
(usually lower than the normal rate because of the shipper's volume commitment)
and defined level of service.
86
681) A contingency clause is where the service contract provides that if the tariff rate
(for ad hoc shipments) drops below the shipper's service contract rate, or if the
conference enters into another service contract with a smaller volume
commitment and a lower rate, the shipper which signed the first contract is
automatically entitled to the lower rate.
EU:T:2003:245, paras 1105–1191. Other findings of abuse were annulled by the GC for
lack of evidence.
683) TACA, above, paras 1124–1125. In Buma/Stemra the Netherlands NCA accepted
commitments from the Dutch copyright collecting society to undertake to allow
composers and songwriters more choice as to the rights they transfer to the
society, after commencing an investigation into whether the society had abused a
dominant position by requiring all rights be transferred to it, if a copyright holder
wished to join the society, including the right to collect royalties for performances
on the internet where the copyright holders would have the technical means to
collect the royalties themselves, if they wished; see ECN Brief 03/2014, p 2.
684) Case AT.40153 E-book MFNs and related matters (Amazon), commitment decn of 4
May 2017; see Press Release IP/17/1223 (4 May 2017).
685) Amazon, above, paras 115–135.
686) Amazon (n 684, above) paras 74–90.
687) Case AT.40411 Google Search (AdSense): Press Release IP/16/2532 (14 July 2016).
688) The impugned contracts also require third parties to obtain Google's approval
before making any change to the display of competing search ads.
689) The Commission noted that Google had decided to change the conditions in its
AdSense contracts with counterparties to give them more freedom to display
competing search ads: Press Release IP/16/2532 (14 July 2016).
690) Other examples of practices that limit the access of entrants to new markets or of
access generally by competitors are found in national decisions. Hence, the
requirement by the Hungarian State Railway of bank guarantees from private rail
companies as a condition of securing network use agreements at the time of
liberalisation of the rail network was held to be part of a strategy to hinder access
to the market by new entrants and thus among the practices condemned under
both Art 102 TFEU and its domestic Hungarian equivalent: Magyar Államvasutak
('MÁV'), case 2.Kf.27.165/2008/14, judgment of the Budapest Court of Appeal of 18
February 2009; on appeal to the Supreme Court. In Italy in the case of O.N.I. —
Cantieri del Mediterraneo, Case No. 7589, judgment of 3 April 2009, the Council of
State condemned the inadequate information provided by the dominant operator
of dry docks in Naples harbour regarding the times when its docks would be
available to third party ship refitters since this meant that only the operator had
full information as to when the docks would be available and secured the
overwhelming majority of refitting work. The Italian NCA has also accepted
commitments in two cases in order to resolve concerns regarding apparent
abusive conduct to limit access to competitors: first, capacity withholding in the
Sicilian electricity wholesale markets: ECN Brief 01/2011, p 2; and, secondly, refusal
by an online betting company of access for competitors to a connection protocol:
ECN Brief 03/2011, p 2. In Numeropalvelu 17/5/2005, Case MAO:178-179/09; judgment
of 6 April 2009, the Finnish Market Court held it was an abuse for an undertaking
providing directory enquiry services and access to related databases on a
nationwide basis to stop making certain subscriber information available to
another undertaking that required the information for the provision of an internet-
based service free of charge.
691) Cases 40/73, etc, Suiker Unie v Commission [1975] ECR 1663, EU:C:1975:174. See also
COMP/39388&39389 E.ON German electricity markets, commitment decn of 26
November 2008 (E.ON suspected of having limited its own production of electricity
in order to raise prices in the wholesale market); British Telecommunications, OJ
1982 L360/36 (prohibiting message-forwarding agencies in the UK from
retransmitting telex messages originating in and destined for locations abroad
limited the development of a new market and new technology; upheld in Case
41/83 Italy v Commission [1985] ECR 873, EU:C:1985:120).
692) Cases C-241&C-242/91P RTE and ITP v Commission ('Magill?') [1995] ECR I-I-743,
EU:C:1995:98.
87
693) In Spain, the monopoly supplier and distributor of electricity in Majorca was held
to have infringed Art 102 by using the information that a new client was requesting
connection to the network to make an immediate offer to carry out the related
installation works, and thus obtain a competitive advantage over independent
electrical installers: ASINEM-ENDESA, Case 606/05, decn of the Spanish Court for
the Defence of Competition of 14 December 2006. In Italy, there have been two
investigations involving dominant companies exploiting an informational
advantage to the detriment of prospective competitors: La Nuova Meccanica
Navale v Cantieri del Mediterraneo, Italian Competition Authority, Case A 405; Bull
No 44/2009; 28 October 2009; and Enel SpA, in which, on 10 December 2009, the
NCA accepted binding commitments to remove concerns that Enel was hindering
new entry into the retail electricity market by providing prospective entrants with
inaccurate billing and other data regarding customers who were seeking to switch
from Enel to the new electricity provider: see ECN Brief 02/2010, p2. To similar
effect, see the Spanish NCA's finding of abuse against Gas Natural for hindering
access to the gas supply market by refusing to process applications to change
supplier made through voice recordings: see ECN Brief 04/2011, p2. See also, in
France, NCA decn of 22 December 2010 in which abusive conduct included applying
an opaque accreditation system: ECN Brief 01/2011, p2.
694) See Case 6/72 Europemballage and Continental Can v Commission [1973] ECR 215,
EU:C:1973:22. On the facts, the CJ annulled the decn because the Commission had
failed properly to define the relevant product market.
695) Cases T-191/98, etc, Atlantic Container Line ('TACA') (n 682, above).
696) TACA (n 682, above) paras 1338 and 1339. Where local authorities adopted
regulations which purported to exclude private undertakings from competing with
them in the supply of refuse collection services, this was an abusive alteration of
the structure of the market by foreclosing competition and strengthening the
market position of the local authorities themselves: Nurendale (trading as Panda
Waste Services) v Dublin City Council [2009] IEHC 588, [2010] ECC 21, para 140.
697) Case C-179/90 Merci Convenzionalli Porto di Genova [1991] ECR I-5889, EU:C:1991:464;
the English High Court considered Merci in Humber Oil Terminals Trustee v
Associated British Ports [2011] EWHC 352, paras 43 and 48 (appeal dismissed, [2012]
EWCA Civ 36).
698) Merci Convenzionalli Porto di Genova, above, para 19. See also P&I Clubs, IGA, OJ
1999 L125/12, paras 128–133 (offer of a single insurance product left a very
substantial share of demand unsatisfied and may be abusive).
699) Case C-41/90 Höfner and Elser [1991] ECR I-1979, EU:C:1991:161.
700) See also Case C-55/96 Job Centre [1997] ECR I-7119, EU:C:1997:603; and AG Tesauro's
Opinion in Case C-250/92 Gøttrup-Klim v Dansk Landbrugs Grovvareselskab [1994]
ECR I-5641, EU:C:1994:249, para 24.
701) London European/Sabena, OJ 1988 L317/47. See also Cases 110/88, etc, Lucazeau v
SACEM [1989] ECR 2811, EU:C:1989:326, para 29 (high costs resulting from lack of
competition not necessarily a defence to abuse).
702) See, to that effect, Streetmap v Google [2016] EWHC 253 (Ch), para 60.
703) Case AT.39740 Google Search (Shopping), decn of 27 June 2017; see Press Release
IP/17/1784 (27 June 2017); see also Fact Sheet, MEMO/17/1785 (27 June 2017). Google
has appealed to the GC, Case T-612/17 Google and Alphabet v Commission, not yet
decided.
704) Google Search (Shopping), decn of 27 June 2017, sections 7.2–7.3: Google Shopping
increased its traffic 45-fold in the UK, 35-fold in Germany, 19-fold in France, 29-fold
in the Netherlands, 17-fold in Spain and 14-fold in Italy, whereas traffic to
competing comparison shopping services dropped significantly, eg sudden drops
of traffic to certain rival websites of 85 per cent in the United Kingdom, up to 92
per cent in Germany and 80 per cent in France.
705) The UK courts have considered this issue on a number of occasions in the context
of intellectual property litigation: see paras 16.154 et seq, below, and the judgment
of Megarry VC in ICI v Berk Pharmaceuticals [1981] 2 CMLR 91. In general, they have
been unsympathetic to the idea that it might be an abuse to enforce legal rights in
the courts.
88
706) Case T-111/96 ITT Promedia v Commission [1998] ECR II-2937, EU:T:1998:183, para 30.
See also Case T-119/09 Protégé International v Commission, EU:T:2012:421, where
the GC, interpreting the two conditions set out in ITT Promedia, upheld the
Commission's rejection of a complaint that legal proceedings brought against
Protégé by Pernod Ricard were not intended to protect Pernod Ricard's trade mark
'Wild Turkey' applied to American whiskey, since no risk of confusion existed
between that mark and Protégé's 'Wild Geese' mark applied to Irish whiskey. The
GC held that the fact that consumers in Ireland might easily distinguish Irish
whiskey from American did not rule out the risk of confusion in other countries.
Further, the fact that most national trade mark authorities had held there was no
risk of confusion did not mean that the litigation was abusive (paras 55 and 57). The
GC emphasised that the relevant question was not whether the rights sought to be
enforced by Pernod actually existed but whether Pernod reasonably thought they
did, at the moment it brought its legal action (para 56). See also, more recently,
Case T-480/15 Agria Polska v Commission EU:T:2017:339, paras 65–72, on further
appeal to the CJ, Case C-373/17P Agria Polska v Commission, not yet decided.
707) COMP/37507 AstraZeneca, decn of 15 June 2005, paras 736–739 (appeals dismissed,
Case T-321/05 AstraZeneca [2010] ECR II-2805, EU:T:2010:266 and Case C-457/10P,
EU:C:2012:770). For discussion of this important case in the context of intellectual
property rights, see para 9.065, above. At the national level, see also the Italian
NCA decn of 11 January 2012 fining Pfizer €10m for misuse of the patent system,
which extends further the principles applied by the GC in AstraZeneca; Italian NCA
decn of 28 June 2011 fining Bayer Cropscience for refusing to supply studies
essential for renewal of marketing authorisations: see ECN Brief 04/2011, p 2;
Reckitt Benckiser, UK OFT settlement decn of 12 April 2011 (withdrawal and de-
listing of branded medicine motivated by a desire to hinder development of full
generic competition found to be an abuse); and Koninklijke Philips Electronics BV v
SK Kassetten & Co KG ('the Orange Book Standard') Case KVR 39/06; WuW/E DE-R
2613, judgment of German Federal Supreme Court of 6 May 2009. See also Case
AT.39612 Perindopril (Servier), decn of 9 July 2014, in which the Commission found
that Servier had infringed Art 102 by entering into agreements with five generics
companies in the settlement of litigation, which included 'reverse payments' by
Servier to those companies, together with an agreement to purchase the most
advanced non-protected technology; on appeal, Case T-691/14, not yet decided;
see also Paroxetine, UK CMA decn of 12 February 2016, section 8, on appeal the UK
CAT decided that it was necessary to refer questions on Arts 101 and 102 to the CJ:
GlaxoSmithKline v CMA [2018] CAT 4 and order of 27 March 2018.
708) Case C-170/13 Huawei v ZTE EU:C:2015:477.
709) Huawei, above, para 71. For a consideration and application of the CJ's judgment at
domestic level, see Unwired Planet v Huawei [2017] EWHC 711 (Pat), paras 713 et seq,
esp para 744; note the final public version of the judgment is [2017] EWHC 2988
(Pat) (Rev 2). The judge granted permission to appeal on, among other issues, his
interpretation and application of Huawei v ZTE: [2017] EWHC 1304 (Pat), paras 65–
66. See also COMP/39985 Motorola — enforcement of ETSI standards essential
patents, infringement decn of 29 April 2014 and COMP/39939 Samsung —
enforcement of ETSI standards essential patents, commitment decn of 29 April 2014.
710) For an eg at the national level of discriminatory non-pricing conduct not based on
grounds of nationality, see Luftfartsverket v Konkurrensverket, MD 2010:5, Swedish
Market Court judgment of 5 February 2010 (taxi queue system favouring larger more
environmentally friendly taxis abusive where no objective justification).
711) See, eg Case 7/82 GVL v Commission [1983] ECR 483, EU:C:1983:52, paras 55–56
(discrimination by the only German music copyright collecting association against
artists not resident in Germany); similarly GEMA, OJ 1971 L134/15. cf Case 402/85
Basset v SACEM [1987] ECR 1747, EU:C:1987:197. See also COMP/39388&39389 E.ON
German electricity markets, commitment decn of 26 November 2008, where the
Commission accepted commitments in respect of alleged discrimination by E.ON
in favour of acquiring domestic supplies of energy for balancing and against
importing supplies: para 54.
712) eg Case C-266/96 Corsica Ferries France v Gruppo Antichi Ormeggiatori del Porto di
Genova [1998] ECR I-3949, EU:C:1998:306 (prices for port services could not
discriminate between vessels trading between national ports only and those
trading between Member States); Finnish Airports , Portuguese Airports and Spanish
Airports (n 353, above) (airport landing charges could not vary according to the
origin of flights); Case T-229/94 Deutsche Bahn v Commission [1997] ECR II-1689,
EU:T:1997:155, appeal dismissed, Case C-436/97P [1999] ECR I-2387, EU:C:1999:205
(German national railway favoured carriage by rail passing through the northern
German ports).
713) Case 26/75 General Motors Continental v Commission [1975] ECR 1367, EU:C:1975:150,
para 12; Case 226/84 British Leyland v Commission [1986] ECR 3263, EU:C:1986:421,
para 24; Case C-373/90 Criminal proceedings against X [1992] ECR I-131, EU:C:1992:17,
para 12.
89
714) See, eg United Brands (n 616, above) paras 130–162 (green banana clause); Cases C-
468/06, etc, Sot Lélos kai Sia v GlaxoSmithKline [2008] ECR I-7139, EU:C:2008:504,
paras 39–77 (abusive to refuse to meet ordinary orders from wholesalers in order to
put a stop to parallel exports carried out by those wholesalers from one Member
State to other Member States, but dominant supplier entitled 'to protect its own
commercial interests if it is confronted with orders that are out of the ordinary in
terms of quantity': para 76).
715) See, eg Case AT.40208 International Skating Union, decn of 8 December 2017 (ISU
eligibility rules imposed severe penalties on speed skaters participating in
competitions that were not authorised by the ISU and infringed Art 101 by object
and by effect), on appeal, Case T-93/18 ISU v Commission, not yet decided; see
further para 6.136 et seq, above.
716) See Case T-193/02 Piau v Commission [2005] ECR II-217, EU:T:2005:22, paras 108–116
for the potential application of Art 102 to the collective rules of FIFA; see also Case
C-49/07 Motosykletistiki Omospondia Ellados NPID (MOTOE) v Elliniko Dimosio [2008]
ECR I-4863, EU:C:2008:376. For collective dominance on the part of sporting bodies,
see para 10.155, above.
717) 'EU and Sport: Background and Context', SEC(2007) 935 Annex I, available under the
policy section of the Sports section of DG Comp's website. The Working Document is
SEC(2007) 935. The Commission has also issued a Communication on Sport
COM(2011) 12 final (18 January 2011). All three documents can be accessed via links
in Press Release IP/11/43 (18 January 2011).
718) See, eg COMP/36851 C.U. de Lille/UEFA (Mouscron), Press Release IP/99/965 (9
December 1999): rejection of complaint that the UEFA 'home and away' rule to the
effect that each club must play its home match at its own ground prevented a
particular match being played in Lille. The decn was taken before Meca-Medina
confirmed that such sporting rules were covered by Art 102 but the Annex indicates
that the rule was unlikely to infringe Art 102 since it pursues a legitimate objective
(equality of chances in club competitions), possible restrictions caused by the rule
are inherent in the organisation of club competitions and the rule is not
disproportionate.
719) 1998 Football World Cup, OJ 2000 L5/55. Although only a nominal fine was imposed
on the basis that the practice was similar to those adopted for previous
competitions, the Commission regards the decision as sending 'a clear signal' that
future tournament organisers must fully comply with the competition rules: XXIXth
Report on Competition Policy (1999), point 62. See subsequently the arrangements
made for the 2006 World Cup to prevent discrimination against purchasers outside
the Eurozone: COMP/39177 2006 World Cup/Which?/DFB, Press Release IP/05/519 (2
May 2005).
Kluwer Competition Law is made available for personal use only. All content is protected by copyright and other intellectual
property laws. No part of this service or the information contained herein may be reproduced or transmitted in any form or by any
means, or used for advertising or promotional purposes, general distribution, creating new collective works, or for resale, without
prior written permission of the publisher.
If you would like to know more about this service, visit www.kluwercompetitionlaw.com or contact our Sales staff at lrs-
sales@wolterskluwer.com or call +31 (0)172 64 1562.
KluwerCompetitionLaw
90

102 Bellamy Child

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

102 Bellamy Child

Uploaded by

Copyright:

Available Formats

KluwerCompetitionLaw

Document information 10. Article 102

(b) Relationship between Article 102 and other competition rules

(iii) The Merger Regulation

(c) Barriers to entry and expansion

(d) Countervailing power

(e) Appraisal of market power in more complex cases

(f) Collective or joint dominance

3. Abuse of a Dominant Position

(b) Some basic concepts

(c) Own market abuses

(d) Related market abuses

(e) Other forms of abuse

You might also like