Abuse of dominance in Portugal

Abuse of dominance

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

Article 11(1) of the Act does not give an express legal definition of abuse. It states that ‘the abusive exploitation, by one or more undertakings, of a dominant position in the national market or a substantial part of it is prohibited’. It is, therefore, an open clause, with a potentially broad scope of application.

Nonetheless, article 11(2) of the Act gives examples of abusive practices, as follows:

• directly or indirectly fixing purchase or sale prices or other unfair trading conditions (article 11(2)(a));
• limiting production, distribution or technical development to the prejudice of consumers (article 11(2)(b));
• applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage (article 11(2)(c));
• making the signing of contracts conditional on the acceptance by the other parties of supplementary obligations, which, by their nature or according to commercial usage, have no connection with the subject of such contracts (article 11(2)(d)); and
• refusing to provide, upon appropriate remuneration, access to an essential network or other essential infrastructures controlled by the dominant undertaking to any other undertaking, when without such access this latter undertaking cannot, for factual or legal reasons, compete with the dominant undertaking in the upstream or downstream markets, unless the dominant undertaking demonstrates that, for operational or other reasons, the access is reasonably impossible (article 11(2)(e)).

At the EU level, despite the criticism that used to be made that both the Commission and the EU Courts had a very formalistic approach to article 102, it is undeniable that the Commission has for some time expressly adopted an effects-based approach (see Guidance on the Commission’s enforcement priorities in applying article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings (2009)), as to which the Commission stated its ‘determination to prioritise those cases where the exclusionary conduct of a dominant undertaking is liable to have harmful effects on consumers’ (Commission Press Release IP/08/1877, 3 December 2008). The EU Courts have also increasingly adopted an effects-based approach (see, eg, decisions in cases Deutsche Telekom (C-280/08) and Telia Sonera (C-52/09), in which the European Court of Justice (ECJ) considered that potential competitive effects must be found for a margin squeeze to be punished). The more recent ECJ judgement in Intel (C-413/14P) seems to be in line with previous case-law regarding pricing strategies such as margin squeeze. The Authority, which follows as a rule, at least in theory, the positions of the Commission and the case law of the EU Courts, is in line with the evolution detected. For example, in its last decision on abuse of dominance, the Authority tried to detect effects on the market concerned in order to declare unlawful an alleged margin squeeze by the ANF Group on the market for studies based on pharmacies’ data (see question 18).

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

The examples mentioned in article 11(2) of the Act include examples of both exploitative and exclusionary practices.

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?

Under the competition regime in place prior to the former Competition Act, there was considerable debate on whether a causal link had to be established between the dominant position and the abuse. In a 1996 statement, the Competition Council (one of the former competition authorities) seemed to consider that such a test had to be met, although more recent decisions showed some dissension within the Council on that subject.

In the 1995 Multifrota case, the Competition Council decided that a company that was dominant in the tachograph equipment market was abusively taking advantage of that position in order to get better results in the market for tachograph paper, a market where it was not dominant. This type of approach has been followed by the Authority in subsequent cases.

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

In principle, defences based on objective justifications (such as objective necessity or meeting competition) or efficiencies may be discussed under the Act, which, as stated, closely follows article 102 of the TFEU. If exclusionary intent is shown it shall be more problematic to raise defences particularly because the burden of proof for such an objective justification or efficiency defence remains with the dominant company.