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EU COMPETITION LAW - Article 102: Abuse of A Dominant Position

Q: What is the role of Article 102 TFEU?

Article 102 TFEU seeks to regulate the unilateral behaviour of undertakings (monopolist) with significant market power.

Q: Article 102 TFEU: The Prohibition

'Any abuse by one or more undertakings of a dominant position within the internal market or 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 State '

Q: What are the essential ingredients contained in Article 102?

An undertaking Dominance 'Internal market or substantial part of it' Abuse 'Affect trade between MS' Defences Consequences

Q: What are the criticisms of Commission and Courts' application of Article 102 TFEU?

Controversy over findings of dominance Adoption of a formalistic approach rather than an effects based approach Unclear and inconsistent policy objectives (Should Article 102 TFEU be used to protect consumers, competitors or both?)

Q: What does the Guidance confirm of Article 102 TFEU?

The Guidance confirms that Article 102 TFEU is to protect consumers rather than competitors but this involves protecting the competitive process from foreclosure.

Q: Does it include joint or collective dominance by one of more independent undertakings in an oligopolistic market?

Case 85/76 Hoffman-La Roche : No T-68, 77-78/89 Re Italian Flat Glass : Yes. Three Italian producers of flat glass, who held between 79% to 95% of the Italian market between them, had a collective dominant position in the market and had abused that position.

12 important questions on EU COMPETITION LAW - Article 102: Abuse of A Dominant Position

What is the role of Article 102 TFEU?

Article 102 TFEU seeks to regulate the unilateral behaviour of undertakings (monopolist) with significant market power.

What are the characteristics of monopoly?

Monopoly involves one firm which controls the market for a particular product which has no close substitutes.
Monopoly requires long term barriers to entry.
Monopolists can raise price and limit supply.
Monopolists normally do not have incentive to innovate
Monopoly's profits can cause economically inefficiency
However, pure monopoly is rare.

Article 102 TFEU: The Prohibition

"Any abuse by one or more undertakings of a dominant position within the internal market or 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 State"

What are the essential ingredients contained in Article 102?

An undertaking
Dominance
"Internal market or substantial part of it"
Abuse
"Affect trade between MS"

Defences
Consequences

What is the scope of Article 102 TFEU?

A dominant position is not unlawful in itself. It is the abuse of this position which is prohibited.
Abuse has been construed widely by the Commission and Union courts to include:

exploitative abuse (Exploits customers or consumers)
exclusionary (anti-competitive) abuse (Excludes competitors from market)
single market abuse.

What are the criticisms of Commission and Courts' application of Article 102 TFEU?

Controversy over findings of dominance
Adoption of a formalistic approach rather than an effects based approach
Unclear and inconsistent policy objectives (Should Article 102 TFEU be used to protect consumers, competitors or both?)

What does the Guidance confirm of Article 102 TFEU?

The Guidance confirms that Article 102 TFEU is to protect consumers rather than competitors but this involves protecting the competitive process from foreclosure.

Does it include joint or collective dominance by one of more independent undertakings in an oligopolistic market?

Case 85/76 Hoffman-La Roche: No
T-68, 77-78/89 Re Italian Flat Glass: Yes. Three Italian producers of flat glass, who held between 79% to 95% of the Italian market between them, had a collective dominant position in the market and had abused that position.

Examples of abuse are provided by Article 102(a)-(d)

(a) - Directly or indirectly imposing unfair purchase or selling prices or unfair trading conditions
(b) - Limiting production, markets, or technical development to the prejudice of consumers
(c) - Applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage
(d) - Making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or commercial usage, have no connection with the subject of such contracts.

Cases 6 & 7/73 Commercial Solvents

Satisfied where conduct brings about an alteration to the structure of competition in the internal market.

C-468/06 Sot. Lelos

There is no equivalent provision of Article 101(3) TFEU for Article 102. But, the behaviour may be objectively justified if proportionate.

Private enforcement (more encouraged)

Article 102 TFEU has horizontal direct effect and private litigants can sue for damages.

The question on the page originate from the summary of the following study material:

Steiner and Woods EU Law | 9780199685677 | Lorna Woods, et al

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