Abuse of dominance in Germany

Abuse of dominance

How is abuse of dominance defined and identified? What conduct is subject to a per se prohibition?

Section 19(1) of the ARC prohibits the ‘abuse of a dominant position.’ This general prohibition does not include a precise legal definition of the term ‘abuse’. Instead, section 19(2) of the ARC provides for five non-exhaustive examples of prohibited abusive behaviour (exclusionary conduct, discriminatory behaviour, exploitative abuse, structural abuse and refusal of access). Section 20 of the ARC extends the prohibition to exclusionary and discriminatory behaviour by enterprises that are dominant only in ‘relative terms’ by enjoying relative market power with respect to small or medium-sized undertakings (see questions 1, 6, 8 and 34).

At least in theory, there are no per se abuses of dominance. While all relevant unilateral conduct may - theoretically - be justified, the FCO, as a practical matter, will not generally conduct an in-depth economic effects analysis in order to establish a prima facie abuse, but only determine whether the conduct at issue may be categorised in broad terms as abusive. It is then up to the companies concerned to provide an objective justification for their conduct, eg, cost efficiencies as justification for rebates.

Does the concept of abuse cover both exploitative and exclusionary practices?

Yes. German antitrust law prohibits exclusionary conduct (section 19(2), No. 1 of the ARC), notably including predatory pricing and offers below cost, as well as exploitative abuses (section 19(2), No. 2 of the ARC), notably ‘imposing prices or other trading conditions that differ from those likely to exist on a market with effective competition’.

What link must be shown between dominance and abuse? May conduct by a dominant company also be abusive if it occurs on an adjacent market to the dominated market?

The FCO does not need to prove that an enterprise’s dominant market position actually enabled it to conduct its abusive behaviour to establish an infringement under sections 19 and 20 of the ARC (ie, no strict causal link between the existence of the dominant position and the abusive measure is necessary). But a dominant position in a specific market must be the position that is being abused. Moreover, the abusive conduct needs to occur at a time when the company holds a dominant position. For instance, it is not sufficient if a contract that includes terms that may be considered abusive for a dominant company and is concluded between non-dominant parties, even if one of the parties subsequently becomes dominant and then asserts its contractual rights (see Düsseldorf Court of Appeal in Kabelschachtanlagen, 14 March 2018).

With respect to adjacent markets, abusing a dominant position in one market by leveraging it into another market (eg, through anticompetitive tying or bundling) is prohibited. The German legislator explicitly intended to extend the prohibition of abusive behaviour under section 19 of the ARC to the prohibition of leveraging a dominant position into another adjacent market to also cover abusive behaviour on non-dominated markets, as long as there is a sufficient link between the dominant position on one market and the abuse or anticompetitive effects on the adjacent, non-dominated market (for further details and case law see question 15).

What defences may be raised to allegations of abuse of dominance? When exclusionary intent is shown, are defences an option?

As per question 10, unilateral behaviour may in principle always be objectively justified by means of a comprehensive analysis of all relevant circumstances and a balancing of the conflicting interests. However, the burden of proof with respect to an objective justification lies with the dominant company (ie, it must show that its behaviour was justified by an overriding interest outweighing the interest of companies affected by the conduct (see section 20(4) of the ARC)).