Competition Law: Article 102

Article 102 TFEU prohibits the abuse of a dominant position within the EU. For a business to breach Article 102, they must have been in a dominant position, be abusing that position, which has an effect on member states.

Dominant position

In order to consider whether they are in a dominant position, we must look at their market share and market structure. There is definitive way of saying that a company is a dominant position as there may be many things to take into consideration. For example, in Hilti, it was the Market share that was used to decide their dominant position. However, in the case of United Brands, the market structure was used to decide this.

As previously looked at, RPM and RGM are good indicators to define the market and see whether a business is dominant in that position.

The case of Akzo stated that there is a presumption that if their market share is over 50% then they will be in a dominant position.

United brands also said that their market share didn’t have to be over 50 %, theirs was 45%, but if they are the leading company in the market share or one of the leading companies, they could also be seen to be dominant

The case of Hoffman identified that if there is a company who has been in the market for a long time, they will be in more of a dominant position compared to a relatively new company with a similar market share because they are more likely to be more well-known and have a better reputation.

The case of Hugin stated 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 specialized on making spare parts for their relevant geographic area.

 

Abuse of that Dominant Position

Abusing that position can be seen to either be abusing their target customers, their suppliers or distributors or towards other competitors. This is relatively subjective, but includes things such as discounting, unfair pricing, excessive pricing, holding off goods being sent, tie-ins, bundling, refusal to supply and bans on extorting and importing. The following cases reflect some of these:

  • United Brands- Unfair pricing/discriminatory pricing
  • Deep discounting- Hoffman
  • Tie-ins- Hilti
  • Bundling- Microsoft
  • Refusal to Supply- Hugin/United Brands
  • Import and Export Bans- Hilti.

 

Effect trade in within the Internal Market

This has the same effect at for Article 101- actual or potential, direct or indirect (STM).

In the Case of 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 couldn’t be seen to be affecting trade because its RGM was so small.

However, the case of Commercial Solvents has developed the case law. It was a similar case and it was held that it was likely to affect trade because of its ‘world monopoly’ that it had. This can be distinguished from Hugin as it may be argued that there were other similar companies around the world, whereas there weren’t in Commercial Solvents. However, what it does show is the development of Competition law over time as it has become more common and easier to trade with countries around the world.

 

Consequences of the breach

The consequences of breaching 102 are fairly similar to those of 101.

The company will be investigated by the commission and national competition authority. This may include Dawn raids on their business property to find incriminating evidence.

They may be fined up to 10% of their world-wide annual turnover.

They may be subject to private claims brought against them in the national courts for other companies and anyone else that has suffered a loss because of their abuse of the dominant position they had. As well as the loss of reputation they had.

 

By Woodrow Cox

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