Enforcement proceedings in dominance in European Union

Enforcement proceedings

Which authorities are responsible for enforcement of the dominance rules and what powers of investigation do they have?

At the EU level, the European Commission is the body with the power to investigate and sanction abuses of dominance. In parallel, national competition authorities of individual member states are competent to apply article 102 of the TFEU as long as the Commission has not opened a formal investigation on the same matter.

The Commission’s primary instrument for investigation is issuing requests for information (including through formal decisions that are subject to penalty payments if the company does not respond), as well as interviews with the company under investigation, complainants and third-party industry participants. The Commission may also conduct unannounced inspections (dawn raids) at a company’s premises, although these are relatively rare in article 102 of the TFEU cases.

What sanctions and remedies may the authorities impose? May individuals be fined or sanctioned?

The Commission can impose structural or behavioural remedies, interim measures, fines and periodic penalty payments. Alternatively, an undertaking can itself offer commitments to bring the infringement to an end, thereby avoiding a formal finding of an infringement and a fine.

Fines

For infringements of article 102 of the TFEU, the Commission can impose a fine of up to 10 per cent of a company’s total turnover of the preceding business year. The methodology used to calculate the fine is set out in detail in the Commission’s Fining Guidelines: the calculation takes it account the nature, length and scope of an infringement; the value of goods or services affected; and whether there are aggravating or mitigating circumstances. The record fine under article 102 of the TFEU is the €4.34 billion fine the Commission imposed on Google in its Android decision (currently under appeal).

Remedies

The Commission may impose both structural and behavioural remedies. Structural remedies, however, are only a means of last resort in article 102 of the TFEU cases when no behavioural remedies are appropriate; they are therefore very rare.

There are two main elements of remedies imposed under article 102 of the TFEU.

First, the remedy must be appropriate, necessary and proportionate to bring the identified infringement to an end (article 7 of Regulation 1/2003; and case T-395 Atlantic Container Line ECLI:EU:T:2002:49, paragraph 418).

Second, in cases where an infringement can be brought to end in different ways, the Commission cannot ‘impose . . . its own choice from among all the various potential courses of actions which are in conformity with the treaty’ (case T-24/90 Automec ECLI:EU:T:1992:97, paragraph 52; case T-167/08 Microsoft ECLI:EU:T:2012:323, paragraph 95). This means that the Commission can only impose a specific behavioural remedy if it is ‘the only way of bringing the infringement to an end’.

For example, in the Microsoft interoperability case, the Commission’s decision stated that Microsoft had to disclose inter-operability information at reasonable rates. But the decision did not prescribe the precise terms and conditions, and the Commission argued in court that it did not have the power to make such an order.

Individual sanctions

Individuals may not be fined or sanctioned at the EU level.

Can the competition enforcers impose sanctions directly or must they petition a court or other authority?

The Commission can impose sanctions directly. If a company appeals a Commission infringement decision and fine, the fine is not suspended pending the appeal. The company may, however, post a bank guarantee and pay the full fine (plus annual interest) if its appeal is unsuccessful.

As to remedies imposed by the Commission, companies may apply for interim suspension of the decision to the General Court pending the outcome of the substantive appeal. The Court will grant interim suspension if the company discloses a prima facie case; demonstrates urgency (which requires serious and irreparable harm if the suspension is not granted); and the balance of interest favours suspension.

What is the recent enforcement record in your jurisdiction?

The Commission is an active enforcer of abuse of dominance rules in Europe. Since 2010, the Commission has opened around 37 abuse of dominance cases. It has found nine infringements in that time (and closed 15 cases with commitments or via no action). It has roughly 15 cases ongoing.

The average length of proceedings in its closed cases is about three and a half years, although complex cases can span for considerably longer (the Google Shopping case took around seven years, for example). The sectors most commonly investigated are utilities, former regulated sectors and technology. The Commission has mainly investigated cases involving alleged exclusionary conduct (across the full spectrum of abuses), although there are some indications it would like to increase its caseload on exploitative abuses (such as its Aspen Pharma investigation).

At the Commission level, 2018 saw two notable enforcement actions: first, in January 2018, the Commission fined Qualcomm around €1 billion for granting exclusive rebates on its baseband chipsets in agreements with Apple; second, in July 2018, the Commission fined Google €4.34 billion for committing an abuse via the Android mobile operating service by, among other things, bundling Google Play with Google Search and Chrome. In addition, the Commission reached three commitment decisions with: Gazprom (concerning upstream gas supplies in Central and Eastern Europe), Greece (concerning lignite-fired electricity generation), and TenneT (concerning electricity trading between Denmark and Germany).

At the Court level, 2018 saw a number of notable developments:

• In Servier, the General Court annulled the article 102 aspect of a Commission decision, finding that the Commission erred in defining the relevant market and therefore failed to show that Servier was dominant. As noted in question 10, the Court also held that where conduct has been implemented and ongoing for some time, it would be paradoxical to permit the Commission to limit its assessment to likely future effects.
• In Slovak Telekom, the General Court confirmed the importance of the as-efficient competitor test in a margin squeeze case. This benchmark provides legal certainty and ensures that competition rules are not used to subsidise inefficient competitors.
• In MEO, the Court of Justice found that in the case of second-line price discrimination, it is necessary for the competition authority to show a restriction of competition between customers. This goes beyond a mere competitive disadvantage - the discrimination must cause a reduction in competition by excluding as-efficient competitors. Moreover, because in second-line discrimination cases, the dominant firm has no obvious interest in discriminating and restricting competition between its customers, courts and authorities must exercise ‘particular care’ before finding an infringement. They cannot merely presume the existence of anticompetitive effects.

In general, the past few years have seen both the General Court and the Court of Justice take an increasingly interventionist approach when reviewing Commission decisions, as demonstrated by the Court of Justices’ landmark Intel judgment, and the General Court annulling the abuse of dominance aspect of the Servier decision.

Where a clause in a contract involving a dominant company is inconsistent with the legislation, is the clause (or the entire contract) invalidated?

Although there is no express equivalent to article 101(2) of the TFEU for article 102 of the TFEU, a contractual provision that infringes article 102 of the TFEU will likely (by analogy with article 101(2)) be void. Provided the infringing provision can be severed from the rest of the contract, the rest of the contract will remain valid (case 56-65 Société Technique Minière ECLI:EU:C:1966:38).

To what extent is private enforcement possible? Does the legislation provide a basis for a court or other authority to order a dominant firm to grant access, supply goods or services, conclude a contract or invalidate a provision or contract?

At the EU level, all antitrust enforcement is public enforcement by the Commission. Nonetheless, the Commission aims to encourage and facilitate actions brought by private claimants before member state courts. See question 32.

Do companies harmed by abusive practices have a claim for damages? Who adjudicates claims and how are damages calculated or assessed?

Breaches of competition law are directly actionable in damages claims in member state courts.

In addition, companies can bring follow-on claims before member state courts, where a Commission decision finding an infringement acts as proof of breach. In such claims, the claimant only needs to prove causation and loss.

As to quantum, the Court of Justice established in Courage v Crehan (case C-453/99 Courage and Crehan ECLI:EU:C:2001:465) that a claimant has the right to compensatory damages for harm incurred as a result of the infringement. The Commission has published a Communication on quantifying harm in damages cases, which states that compensation should include the full value of any loss suffered, as well as loss of profit and interest from the time damage was incurred.

The Damages Directive, published on 5 December 2014, aims to ensure that victims of competition infringements can obtain full compensation for the harm they have suffered. Among other things, the Directive introduces rules on the disclosure of evidence in such cases, as well as on the standing of indirect customers, the length of limitation periods, joint and several liability of infringers, and the passing-on of damages as a possible defence.

To what court may authority decisions finding an abuse be appealed?

Commission decisions can be appealed to the General Court on points of fact and law. The General Court must establish ‘whether the evidence relied on is factually accurate, reliable and consistent . . . and contains all the information [needed] to assess a complex situation . . . [and] is capable of substantiating the conclusions drawn from it’ (Microsoft, case T-21/05 Chalkor ECLI:EU:T:2010:205, and case E-15/10 Posten Norge AS).

After the General Court appeal, the appeal is to the Court of Justice on points of law only.