Europees Recht/European Law
Article 102 TFEU: The Prohibition of an Abuse of a
Dominant Position
Step-by-step plan Article 102 TFEU
1. Undertaking?
2. Dominant Position?
o Relevant market:
a. Product dimension
b. Geographic dimension
o Dominance factors that influence the position of an
undertaking of the relevant market
3. Abuse of dominance?
A. Exclusionary
B. Exploitative
4. Effect on trade between Member States?
5. Obstructive justification?
A. Objectively necessary due to special circumstances (of the
market situation)
B. Efficiency
(Economic) undertaking:
- Regardless of its legal status and the way it is financed
- Offering of goods or services
- Make profit
- Same definitions and exceptions for 101 TFEU apply
Collective dominance:
- When more undertakings act (1) as independent economic
entities being united by (2) economic links that are on a specific
market so strong that they can be considered to hold together a
dominant position.
Dominance:
- A position of economic strength that allows a company to dictate
rules in the market and behave independently of its competitors,
its customers and its consumers. Establishing dominance
consists of identifying what the relevant market is.
- Dominant position on the relevant market
Defining the relevant market:
- = Product market + Geographic market
, - Product market:
o What goods and services compete with each other?
o To look at the interchangeability or substitutability
o The characteristics, price, intended use
o Interchangeability: Small but Significant Non-Transitory
Increase in Price (SNIPP test)
o Demand substitution: perspective of the consumer
o Demand substitution: the perspective of the suppliers
- The Relevant Market Notice: A relevant product market
comprises all those products and/or services which are
regarded as interchangeable or substitutable by the consumer,
by reason of the products characteristics, their price and their
intended use.
- Geographic market:
o Demand substitution: perspective of the consumer
o Demand substitution: the perspective of the suppliers
- The Relevant Geographic Market: The relevant geographic
market comprises the area in which the undertakings,
concerned are involved in the supply and demand of products or
services, in which the conditions of competition are sufficiently
homogenous and which can be distinguished from neighbouring
areas because the conditions of competition are appreciably
different in those area.
- The geographic market for a product must represent at least a
substantial part of the internal market
- We apply the same criteria with the relevant geographic market
as with the product market
1. Perspective of the consumers (Product market + Geographic
market)
- SNIPP test (small but significant non-transitory increase in
price): Would a small (5-10%) but permanent increase in price
of the product make consumers switch to another product? (or
to another geographical market?).
- Example: Animal milk to plan based substitute (cow milk to soy
milk)
- IF YES: then these products are on the same market
,2. Perspective of the suppliers (Product market + Geographic market)
- SNIPP test (small but significant non-transitory increase in
price): Would a small (5-10%) but permanent increase in price
of the product make suppliers switch to another product? (or to
another geographical market?).
- Example: Price of paper increases by 5%, producer of high
quality flyers switches to producing printing papers for office
industry to save cost
- IF YES: then these products are on the same market
The Höfner and Elser-case 85/76
United Brands Case 27/76
Dominance factors:
- Help to access whether an undertaking has a dominant position
on the relevant market
1. Looking at the market shares
o <25% unlikely
o 25-50% possible but other contributing factors can prove
otherwise
o Above 50% the undertaking is suspected of having a
dominant position but is able to prove otherwise
o Above 75% the undertaking will almost always have a
dominant position
o And above 90% the undertaking is ‘’super dominant’’
2. Looking at other factors that could influence the position on
the market
o The market share of the next largest competitors
o The distance in market shares between the leading
competitor and the next competitors
o The undertakings financial reserves
o The structure of the undertaking
o The level of expertise within the undertaking
o The structure and dynamics of the market
o The extent to which products are differentiated
o How easy the market access is for other undertakings
Hofmann-La Roche Case
Abuse of a dominant position
1. Exploitative abuse: aimed at exploiting a dominant position at
the expense of suppliers and consumers
, o Example: Unfair prices (incl. predatory pricing, AKZO
Case)
o Example 2: Refusal to apply (Bronner Case)
2. Exclusionary abuse: aimed at eliminate remaining competitors
o Example: Abusive rebates (Michelin II Case)
Effect on trade between Member States
- The measure in question is capable of indirectly or potentially
hindering intra-EU trade
- The same rules apply as for Article 101 TFEU
- NAAT Guideline: market shares and turnover
Consten & Grundig-Case
Effect on finding violation:
- When all conditions of 102 TFEU are met, then we do not speak
of an act that is null and void, but of a prohibited act.
- Unless it can be justified
o Is there an objective justification for the abuse of
dominance?
Two types of justification:
1. Ensuring smooth running of the event (Commission Decision
Case IV/36.888 1998 Football World Cup)
2. Efficiency without resulting in unfair prices
Enforcement of Articles 101 TFEU and 102 TFEU
- Enforced by the European Commission and national competition
authorities (NCAs)
- Regulation 1/2003 (powers of the Commission)
o Chapter V investigations
o Chapter VI penalties
- Commission’s Decision
o Subject to Action for annulment Article 263 TFEU before
the General Court
- The role of national courts
Article 102 TFEU: The Prohibition of an Abuse of a
Dominant Position
Step-by-step plan Article 102 TFEU
1. Undertaking?
2. Dominant Position?
o Relevant market:
a. Product dimension
b. Geographic dimension
o Dominance factors that influence the position of an
undertaking of the relevant market
3. Abuse of dominance?
A. Exclusionary
B. Exploitative
4. Effect on trade between Member States?
5. Obstructive justification?
A. Objectively necessary due to special circumstances (of the
market situation)
B. Efficiency
(Economic) undertaking:
- Regardless of its legal status and the way it is financed
- Offering of goods or services
- Make profit
- Same definitions and exceptions for 101 TFEU apply
Collective dominance:
- When more undertakings act (1) as independent economic
entities being united by (2) economic links that are on a specific
market so strong that they can be considered to hold together a
dominant position.
Dominance:
- A position of economic strength that allows a company to dictate
rules in the market and behave independently of its competitors,
its customers and its consumers. Establishing dominance
consists of identifying what the relevant market is.
- Dominant position on the relevant market
Defining the relevant market:
- = Product market + Geographic market
, - Product market:
o What goods and services compete with each other?
o To look at the interchangeability or substitutability
o The characteristics, price, intended use
o Interchangeability: Small but Significant Non-Transitory
Increase in Price (SNIPP test)
o Demand substitution: perspective of the consumer
o Demand substitution: the perspective of the suppliers
- The Relevant Market Notice: A relevant product market
comprises all those products and/or services which are
regarded as interchangeable or substitutable by the consumer,
by reason of the products characteristics, their price and their
intended use.
- Geographic market:
o Demand substitution: perspective of the consumer
o Demand substitution: the perspective of the suppliers
- The Relevant Geographic Market: The relevant geographic
market comprises the area in which the undertakings,
concerned are involved in the supply and demand of products or
services, in which the conditions of competition are sufficiently
homogenous and which can be distinguished from neighbouring
areas because the conditions of competition are appreciably
different in those area.
- The geographic market for a product must represent at least a
substantial part of the internal market
- We apply the same criteria with the relevant geographic market
as with the product market
1. Perspective of the consumers (Product market + Geographic
market)
- SNIPP test (small but significant non-transitory increase in
price): Would a small (5-10%) but permanent increase in price
of the product make consumers switch to another product? (or
to another geographical market?).
- Example: Animal milk to plan based substitute (cow milk to soy
milk)
- IF YES: then these products are on the same market
,2. Perspective of the suppliers (Product market + Geographic market)
- SNIPP test (small but significant non-transitory increase in
price): Would a small (5-10%) but permanent increase in price
of the product make suppliers switch to another product? (or to
another geographical market?).
- Example: Price of paper increases by 5%, producer of high
quality flyers switches to producing printing papers for office
industry to save cost
- IF YES: then these products are on the same market
The Höfner and Elser-case 85/76
United Brands Case 27/76
Dominance factors:
- Help to access whether an undertaking has a dominant position
on the relevant market
1. Looking at the market shares
o <25% unlikely
o 25-50% possible but other contributing factors can prove
otherwise
o Above 50% the undertaking is suspected of having a
dominant position but is able to prove otherwise
o Above 75% the undertaking will almost always have a
dominant position
o And above 90% the undertaking is ‘’super dominant’’
2. Looking at other factors that could influence the position on
the market
o The market share of the next largest competitors
o The distance in market shares between the leading
competitor and the next competitors
o The undertakings financial reserves
o The structure of the undertaking
o The level of expertise within the undertaking
o The structure and dynamics of the market
o The extent to which products are differentiated
o How easy the market access is for other undertakings
Hofmann-La Roche Case
Abuse of a dominant position
1. Exploitative abuse: aimed at exploiting a dominant position at
the expense of suppliers and consumers
, o Example: Unfair prices (incl. predatory pricing, AKZO
Case)
o Example 2: Refusal to apply (Bronner Case)
2. Exclusionary abuse: aimed at eliminate remaining competitors
o Example: Abusive rebates (Michelin II Case)
Effect on trade between Member States
- The measure in question is capable of indirectly or potentially
hindering intra-EU trade
- The same rules apply as for Article 101 TFEU
- NAAT Guideline: market shares and turnover
Consten & Grundig-Case
Effect on finding violation:
- When all conditions of 102 TFEU are met, then we do not speak
of an act that is null and void, but of a prohibited act.
- Unless it can be justified
o Is there an objective justification for the abuse of
dominance?
Two types of justification:
1. Ensuring smooth running of the event (Commission Decision
Case IV/36.888 1998 Football World Cup)
2. Efficiency without resulting in unfair prices
Enforcement of Articles 101 TFEU and 102 TFEU
- Enforced by the European Commission and national competition
authorities (NCAs)
- Regulation 1/2003 (powers of the Commission)
o Chapter V investigations
o Chapter VI penalties
- Commission’s Decision
o Subject to Action for annulment Article 263 TFEU before
the General Court
- The role of national courts
