EU Law: Abuse of a Dominant Position
Article 102 TFEU prohibits a company from abusing their dominant market position to enhance their position further. To breach Article 102, they must; (i) have been in a dominant position, (ii) be abusing that position, (iii) which had an effect on trade within member states.
In order to consider whether they are in a dominant position, their market share and market structure must be analysed. As discussed in the post regarding article 101 TFEU, there is no definitive market share every business has. The RPM and RGM are analysed to determine their relevant market, and therefore their market share. For definition and case law on RPM and RGM please see; EU Law: Anti-Competitive Agreements.
Furthermore, the case of Akzo found there is a presumption of a dominant position if their market share is over 50%.
The case of United brands added that their market share didn’t have to be over 50%. They had to be a leading company in their market, taking into account all other considerations.
The case of Hoffman identified that the duration of time a company has been in the market is a relevant consideration. Building up a good reputation and a strong financial background may allude to them being in a dominant position.
The case of Hugin held that the ‘market’ could also belong entirely to one company if they are extremely specific. For example, in this case, they were the only company who manufactured specialised machine parts. By definition, they will become dominant.
Abuse of that Dominant Position
The criteria of abuse is generally wide. It includes abusing their customers, suppliers or distributors, and therefore can be found at all levels of the supply chain. It is a fact-sensitive criteria, and therefore the CMA (Competition Market Authority) will consider this on a case by cases basis. They will consider such practices as; deep discounting, unfair pricing, excessive pricing, holding off goods being sent, tie-ins, bundling, refusal to supply and bans on exporting and importing.
Effect trade-in within the Internal Market
The abusing practices must have an effect on trade within the internal market. The effect is the same as Article 101 – actual or potential, direct or indirect – STM.
In Hugin, they refused to sell parts of a cash register to a company in London. This was allowed as it did not affect trade between member states. The company only operated in Belgium, and therefore it was impossible to affect trade within the internal market.
However, the case of Commercial Solvents, similar in facts, found that it was likely to affect trade because of its ‘world monopoly’. This can be distinguished from Hugin as it may be argued that there were other similar companies around the world, whereas there were no other competing companies in their market in Commercial Solvents. However, it does identify the development of competition law in more recent times, and how much globalisation may have effected the CMA and the Commissions judgement.
Consequences of the breach
The consequences of breaching Article 102 are fairly similar to those of Article 101:
- The company will be investigated by the CMA and national competition authorities. This may include raids on their business property to find incriminating evidence.
- They may be fined up to 10% of their worldwide annual turnover.
- They may be subject to third party claims from other competing businesses for revenue they may have lost due to the anti-competitive practices.
- Their reputation may also suffer due to their breach.