During the past year, the European Commission initiated several investigations into abuse of dominance. There will be more clarity concerning the outcome thereof in 2016. The Commission's investigations focus to a large extent on high tech companies (Google, Qualcomm) and utility companies (Gazprom, Bulgarian Energy Holding). As for now, the substantive focus of the Commission’s investigations is on pricing policy conducted by dominant companies. The activity of the Commission is in stark contrast to the activity of the Netherlands Authority for Consumers and Markets (“ACM”) where it concerns enforcement of the ban on abusing a dominant position. Will this change in 2016?
As discussed in the summer blog, the Court of Justice rendered a ruling in the Huawei/ZTE case on 6 July 2015. The ruling explained under which conditions initiating legal proceedings against a user without a licence by a holder of a standard-essential patent can be considered to be abuse of a dominant position. The Court considers that Article 102 TFEU does not apply if the patent holder, before initiating proceedings, notifies the third party of its infringement of the patent. The patent holder should then make a concrete licence proposal on the basis of fair, reasonable and non-discriminatory (FRAND) conditions. Article 102 TFEU does not apply in the event that the third party nevertheless continues the infringement and fails within reason to respond to the proposal. On the other hand, the infringing party is only free to initiate proceedings against a patent holder if it has responded to the proposal on time and in writing by means of a reasonable counter-offer. The Huawei ruling is very important for the relationships between licensors and licensees in the area of essential patents. It is presumed that the exact consequences of the Huawei ruling will be debated several times in 2016 in new proceedings in the area of standard-essential patents.
2016 will also be the year in which there will be more clarity concerning the European Commission's investigations into Google. For example, the Commission sent Google its Statement of Objections following a long investigation and previous rejected commitments in 2015. In this Statement the Commission argues that Google is abusing its dominant position on the online search engine market by structurally promoting its own online shopping comparison services (Google Shopping) when compared to other comparison sites (click here for more details). In addition, the Commission will continue its investigation into the Google Android service. This investigation focuses on whether Google is obstructing the development and market access of competing mobile operating services. The Commission will assess, among other things, whether Google is abusing its dominant position by linking frequent use of Android to the use of other Google products such as mobile apps. Click here for more information about these investigations.
Abusive rates: anticompetitive discounts
On 6 October 2015, the European Court of Justice rendered an important judgment in the Post Danmark II case. In this case, the Court considered the application of the "as efficient" criterion not necessary for qualifying a discount scheme as abuse of a dominant position. In addition, the Court held in a more general sense that when determining abuse, the likely consequences are decisive, in addition to the conduct itself. In that connection it is sufficient that the conduct can have anticompetitive effects. This judgment constitutes an interesting addition to a series of case law rulings concerning the (lack of) need for an effects-based approach to Article 102 TFEU, as the Court held in 2014 that the European Commission was not obliged to take the consequences of the conduct into account (Intel, see Trends 2015). The debate is likely to continue during the coming year when the Court is to render a judgment concerning the appeal against the Intel-ruling rendered by the General Court.
Also in 2016, the European Commission will have to devote attention again to the competition-law assessment of the rates applied by a dominant company, as in the case of Qualcomm, which is the world leader in 3G and 4G baseband chipsets. According to the preliminary conclusions of the Commission, Qualcomm firstly applied predatory prices between 2009 and 2011 with the aim of pushing its competitor Icera out of the market. Secondly, the Commission considers the discount provided by Qualcomm from 2011 onwards, in exchange for exclusive purchasing, to be a form of abuse of a dominant position as well.
In addition, the European Commission made public in April 2015 that it had initiated an investigation into the possible abuse of a dominant market position by Gazprom in the Central and Eastern European gas market. The Commission considers that Gazprom attempted, by means of an overall strategy including the obstruction of the resale of gas, to split up the gas market into several territories and apply unfair or excessive prices.
In March 2015, Bulgarian Energy Holding (“BEH”) received a Statement of Objections in which the Commission argues that BEH and its subsidiaries were obstructing competitors to get access to the gas network. The Commission had also expressed concerns during the previous year concerning the alleged abuse of dominance on the part of BEH in the wholesale electricity market, but these have since been removed by means of commitments on the part of BEH.
And finally, the European Commission recently initiated two new competition-law investigations that are based inter alia on Article 102 TFEU. The Commission firstly suspects that Amazon, as a distributor of e-books, arranges via its contracts with publishers that it will receive from them the same (advantageous) conditions as its competitors. This means that other e-book suppliers are allegedly unable to compete effectively with Amazon. Secondly, the Commission is investigating whether the rules of the International Skater’s Union (ISU), on the basis of which skaters are permanently denied participation in Winter Games and the European and World Championships Skating if they participate in races that are not approved by ISU, prevent other skating organisations from competing with ISU.
The Netherlands: enforcement gap regarding abuse of a dominant position continues to exist
The Netherlands does not have a good track record where it concerns both civil and administrative enforcement of the ban on the abuse of a dominant position. Last year was no exception, and it does not look much better for 2016. It is remarkable that several civil proceedings concerning abuse of dominance in 2015 were conducted in connection with excessive price behaviour. None of the claims in these cases succeeded in court. This was either because the prices were allegedly high but not excessive (UPC/T-Mobile and KPN); or because the obligation to furnish facts was not complied with (SDU Uitgevers) or because the amount of the rates should have been submitted to the disputes committee first (NVZ/Videma).
The VBO/Funda case is another civil case in which the ban on abuse of dominant position was invoked. VBO complained in this case that VBO estate agents had to a pay a higher rate than NVM estate agents and were also ranked less favourably on the Funda housing supply website. The case was deferred and may be continued in 2016 because the court considered it important to obtain a more solid demarcation of the relevant market to determine Funda's position in this market.
In 2015, ACM again did not implement any sanction decisions within the context of the abuse of a dominant economic position (click here for more background information). It is evident, from the transfer of the priority of complaints and an evaluation report on ACM’s priority policy, that fewer abuse investigations were conducted in recent years, in comparison to the situation before the merger of NMa, OPTA and the Consumer Authority into ACM. An external investigation into NS was completed in 2016, which found indications of an economic dominant position in the market for passenger transport. ACM could use this report for its ongoing investigation into abuse of a dominant position by NS. In 2014, ACM initiated an investigation into the abuse of a dominant position by ECT. The outcome of these investigations is expected in 2016.