On March 27, 2023, the European Commission announced the launch of a process for the adoption of a set of guidelines in the area of abuse of dominant position. This is the first time since 2008 that the Commission has taken the initiative to clarify the rules in this area.
Since 2008, the EU courts have delivered 32 judgments on the prohibition of exclusionary abuse of a dominant position (TFEU Article 102). This case law, which has evolved over time, forms the basis for the European Commission's enforcement of abuse cases.
However, exclusionary abuse of a dominant position is one of the very few areas where the Commission has not yet issued guidelines clarifying the scope of the rule. As a result, the framework for undertakings with significant market power is often unclear and subject to a high degree of unpredictability. An undertaking with significant market power often risks facing a dilemma where it must choose between either acting in the market on the basis of a precautionary principle or accepting that a given market behaviour is associated with a certain risk of infringement of the Danish Competition Act.
Guidelines on the scope of the rule have long been requested. But so far, the Commission has only issued an enforcement guide (published in 2008 and finally adopted in 2009, the "Enforcement Guidance"), which indicates which abuse cases the Commission prioritises to pursue, but without a proper interpretation of the content of the rule.
New guidelines and amendment to the Enforcement Guidance
For the first time since 2008, the Commission has taken the initiative to clarify the area of abuse of a dominant position. Thus, on 27 March 2023, the Commission announced the launch of a process for the adoption of a set of guidelines. In the same vein, the Commission announced that the Enforcement Guidance is being amended with immediate effect. The new guidelines are expected to be finally adopted in 2025, after which the Enforcement Guidance from 2008 will be repealed.
The initiative aims, inter alia, at improving legal certainty for the benefit of businesses and national competition authorities and courts, and at contributing to a more consistent enforcement policy in the EU, including at the level of the Commission and national competition authorities and national courts, which all apply the rules in parallel.
Main changes
The main changes to the Enforcement Guidance include:
- The Commission extends the concept of "anticompetitive foreclosure" to cover not only situations which may lead to the total foreclosure or marginalisation of actual and potential competitors on a market, but also situations which may lead to a weakening of competition, thereby impeding the effective structure of competition on the market and affecting the parameters of competition to the advantage of the dominant undertaking and to the detriment of consumers.(Point 1.)
- The Commission no longer commits itself to examining economic data. The Commission thus states that it "may" examine economic data in the future when examining whether an equally effective competitor is likely to be excluded as a result of the dominant undertaking's behaviour. (Point 3)
- The Commission will also in future give priority to cases where a dominant undertaking imposes unfair delivery conditions on its customers (implicit refusal to supply) even though the input is not indispensable.(Point 4)
- The Commission states that margin squeeze may be an autonomous form of abuse subject to different assessment criteria and that the Commission's prioritisation of such cases is not conditional on the existence of a product or service which is objectively necessary.(Point 5)
- The Commission underlines that in cases of price-based exclusionary abuse, the Commission will in future also give priority to cases where the dominant undertaking's conduct may exclude competitors who are not (yet) as efficient as the dominant undertaking in relation to their cost structure, recognising that such competitors can also exert competitive pressure on a dominant undertaking, as established by the Court of Justice in case C-23/14, Post Danmark II. (Point 2)
Bech-Bruun's comments
With the adoption of the Enforcement Guidance, the Commission introduced an effects-based approach to the prohibition of exclusionary abuses of dominant positions by dominant undertakings, which was controversial at the time and differed from a more legal-based approach that had hitherto been applied in practice. The effects-based approach for assessing exclusionary behaviour by a dominant undertaking has subsequently been upheld by the Court of Justice, notably in case C-413/14 P, Intel, incase C-377-20, Servizio Elettrico Nazionale and in Case C-680/20, Unilever Italia.
While the amendments to the Enforcement Guidance can be read as cementing the effect-based approach for assessing exclusionary behaviour by dominant undertakings, the changes may also indicate that the Commission is trying to reduce the effect-based approach and the requirements for economic analysis and economic data in certain cases. In particular, the changes indicate that the Commission will downgrade the need for the use of an as-efficient-competitor (AEC) test. It will be interesting to see to what extent the Commission will seek to make use of this and, if so, to what extent the Court of Justice will accept this, especially in the light of the above judgments.
The amendments to the Enforcement Guidance may provide more flexibility for the Commission, NCAs and courts in enforcing competition rules, in particular in relation to economic analysis requirements and the importance of economic data. It is therefore questionable to what extent the changes to the Enforcement Guidance (and the issuance of the new Guidelines) will actually improve legal certainty and provide greater predictability for dominant undertakings and the framework for their actions in the market, as envisaged by the Commission.
The Commission has opened proceedings for alleged abuse of a dominant position
At the end of April 2023, the Commission announced that it has opened an investigation into whether the Spanish railway company Renfe may have abused its dominant position by refusing to provide data on departure slots etc. to competing ticketing platforms. Renfe itself offers real-time data on its own platforms, including websites and apps. The competing third-party platforms display offers from different railway undertakings and provide, inter alia, customers with access to price and flight comparisons. Access to Renfe's real-time data is necessary for platforms to adapt their offerings to customer needs.
The Commission is therefore concerned that Renfe's alleged refusal to supply may prevent platforms from competing with Renfe's own digital channels, which could be detrimental to consumers and potentially constitute exclusionary abuses in breach of Article 102 TFEU.
It will therefore be particularly interesting to see how the Commission chooses to approach the matter following the recently adopted amendments to the Enforcement Guidance, in particular with regard to the level of economic analysis of potential foreclosure that the Commission will adopt.
What is also interesting about the case is that in connection with the Renfe case, Competition Commissioner Margrethe Vestager has stated that competition in the market for online train ticket sales is, among other things, crucial to ensure customers' access to environmentally friendly means of transport. The study is, thus, justified on both consumer and environmental grounds, which has not previously been seen in Article 102 TFEU cases, and it will therefore be interesting to see what importance environmental considerations will be given by the Commission in Article 102 TFEU cases in the future, and to what extent environmental considerations will be given value by the Court of Justice in a possible subsequent review of a Commission decision.
Originally published 23 June 2023
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