EU Law Abuse of a DOMINANT position- Article 102 TFEU

Article 102 TFEU. provides as follows:

"Any abuse by one or more undertakings of a dominant position within the internal marketor in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States"

There are five elements in Article 102: There must be

1) One or More Undertakings (can be just one undertaking)

2) In a dominant position

3) Within the internal market

4) Abusing the dominant position

5) In such a way as to affect trade between Member State

Test for UNDERTAKING:

An undertaking is defined as 'any entity engaged in economic activity and operated to make a profit'- Hofner v Elser (1991)

Test for dominance:

In order to establish whether an undertaking has a dominant position, it has to have a 'position of economic strength....enabling it to prevent effective competition being maintained in the market' ---> United Brands v Commission (1978)

Another factor in determining dominance is the undertaking's marketshare

Below 40% - Unlikely to be dominant

40%+ - Possibly Dominant

50% - There is a legal presumption that dominant position exists

80%+ - Position of super dominance

Other factors include:- legal barriers to entry or larger firms having easier access to funds. Collective Dominance TEST: "Two or more firms holding a collectively dominant position in the market" ---> No economic link and very vague.

If the undertaking has less than 10% share in the market, this may be substantial. The larger the market share, the more likely it is that it is dominant. In Hoffman La Roche v Commission, the company's market shares over a three year period of 75% to 87% were held to be sol large that they were, in themselves, evidence of a dominant position

Geographical MARKET:

In order to decide whether or not the dominant position is held in a substantial part of the internal market, it is necessary to look not only at the geographical extent of the market but also

a) the economic importance of the area as defined

b) the pattern and volume of the production and consumption of product

c) the habits of producers and consumers in that area.

United Brands v Commission

Once dominant, an undertaking has special responsibility not to HINDER competition. 

Test for ABUSE:

The undertaking, if dominant, will 'influence the structure of a market...as a degree of the very presence of the undertaking...degree of competition is weakened'

Specific TYPES of abuses:

- Unfair/Excessive Pricing

---> If a supplier in a monopoly position is imposing extortionate prices on consumers, this may be an abuse of a dominant position. In United Brands, the Court of Justice declared that a price is excessive if 'it has no reasonable relation to the economic value of the product supplied'.

-  Predatory Pricing

---> Pricing may also be abusive if it is intended to eliminate competition (Chemie v Commission (1991))

- Refusal to Supply

---> Refusal to supply goods may be abusive if it is intended to eliminate a competitor, divide a market etc. Commercial Solvents v Commission

BP v Commission, BP refused to sell oil to a purchaser during an oil crisis. The court of Justice held that, in sch a supply crisis, a refusal to supply was justified. There must be, however, an objective justification for a refusal.

An undertaking may affect trade between member states if it has an effect, 'direct or indirect, actual or potential, on the pattern between member states"- STM case

---> It causes an alteration in the competition structure in the EU. The legal burden of proof to establish a defence will be on the undertaking. i.e. the refusal to supply might be because the existing customer is a bad player.

Hilti AG v Commission (1991)- an infringement cannot be justified because another company also infringes.

In BA v Commission, the behavior was not economically justified. 

Article 102 is designed to protect the commercial interests of competitors against dominant undertakings.

Where an infringement is found, the European Commission can

- Impose a FINE,

- Impose PERIODIC PAYMENTS (Article 24 of 1 Reg/2003). Where the commission also finds a failure to provide information

Whistleblowing

If part of a cartel has caused harm to others, it can still be fined even as a THIRD PARTY.

Can be sent to prison for dishonesty even at a junior level.