An extract from The Dominance and Monopolies Review - 7th edition

Abuse

i Overview

Similar to EU competition law, abuse of a dominant position, as such, is not defined by the PRCA. The PRCA generally prohibits the abuse of a dominant position, and lists four typical examples of abusive behaviour:

  1. directly or indirectly imposing unfair purchase or selling prices, or other unfair trading conditions;
  2. limiting production, markets or technical development to the prejudice of consumers;
  3. applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; and
  4. making the conclusion of contracts subject to acceptance of supplementary obligations that, by their nature or according to commercial usage, have no connection with the subject of their contracts.

The CPA's case law is generally aligned with that of the EU, and it shows that abuse is still defined more in terms of the form of conduct, rather than in relation to the effects of specific conduct in the market and on consumers. It follows from the above list that the concept of abuse covers exploitative as well as exclusionary practices. An example of exploitative abuse of dominant position as set out by the PRCA is unfair pricing or trading conditions. Examples of exclusionary abuse of dominant position as set out by the PRCA include predatory pricing, discrimination, refusal to deal and tying. It must be noted that the list of forms of abuse in Article 9 is not exhaustive, so the CPA is not excluded from dealing with other types of abusive practices.

Similar to the EU competition law, there is no direct causality between the creation of a dominant position and its abuse under Slovenian competition law. To apply Article 9, the existence of a dominant position must first be established, but simply having a dominant position is not per se illegal. Although in most cases a causal link between dominance and abuse is obvious, an abuse may exist even if there is no causal link between the dominant position and the inspected conduct. Further, it is also possible that abusive conduct can take place in a market other than the market where the dominant position is established.

If abuse of a dominant position is established, it must be prohibited with no explicit exemptions. The PRCA does not provide an efficiency defence. Nevertheless, while the existence of the efficiency defence under Slovenian law has never been confirmed by the CPA, it is expected that its future case law will follow that of the EU. So far, the most common defence used by dominant undertakings has been that their conduct has been justified on objective grounds. In such cases, the CPA must assess whether the dominant undertaking has provided all necessary evidence to show that the conduct is indispensable and proportionate to the goal pursued by the undertaking.

ii Exclusionary abusesExclusionary pricing

In 2012, the CPA issued its decision in Mobitel/Telekom Slovenije (Itak Džabest), finding that Telekom Slovenije (previously Mobitel) had been abusing its dominant position in the retail mobile telecommunications service market by offering the 'Itak Džabest' retail package to mobile phone users at unfair prices. The CPA established that Telekom Slovenije acted in a predatory manner by imposing its 'Itak Džabest' package at below-cost prices (lower than the costs incurred). With such prices, Telekom Slovenije gained new users and made it more difficult for other equally efficient competitors to gain new users and not suffer losses by doing so. The Supreme Court did not confirm the CPA's decision, and returned the case to the CPA, which has reopened the administrative proceedings. The Court considered, inter alia, that the CPA failed to give reasons for the method that was used to calculate the incremental costs, and explicitly stated that a transparent calculation of negative margin per subscriber is crucial in cases such as this one where there is no clear and direct evidence of a 'predation strategy'.

While accepting that the cost-price analysis is an element in deciding whether a price is predatory, the Supreme Court noted that also relevant is the effect of the introduction and sale of the contested package, which was likely to be the elimination of competitors, which (in the long run) harms consumers.

Price squeezes are not specifically mentioned in Article 9(4) of the PRCA. In principle, the CPA tends to follow the practice as developed under the Article 102 of the TFEU. The CPA dealt with an alleged abuse of dominant position by price squeeze in Mobitel/Telekom Slovenije (Itak Džabest) (2012) and Telekom Slovenije (2015). In both cases, the CPA ultimately decided to drop the price-squeeze part of the complaint, and ended the proceedings against Telekom Slovenije at the part regarding the possibility of creating margin-squeeze policy.

Exclusive dealing

Generally, rebates and discounts of dominant undertakings in exchange for ensuring business with customers are considered abuses of a dominant position. The CPA dealt with loyalty rebates in Pro Plus (2013). It established that a leading broadcasting and internet media company in Slovenia that is part of the multinational enterprise CME had abused its dominant position in the market for television advertising airtime by concluding exclusive dealing arrangements with advertisers, granting conditional rebates with loyalty-inducing effects and, in particular, granting high levels of discount as a reward for exclusivity. Concluding exclusive dealing arrangements with advertisers was also considered an abusive behaviour in Pro Plus. In particular, the CPA concluded that Pro Plus abused its dominant position by requiring individual advertisers to devote their advertising budgets exclusively to Pro Plus in return for granting rebates.

In the Gasilska oprema case (2010), the CPA established that Gasilska oprema, a wholesale company for fire extinguishers and related equipment, had a dominant position in the upstream market for the sale of new fire extinguishers. Although Gasilska oprema was not directly involved in after-sales services and maintenance of the fire extinguishers, the CPA held that it was indirectly present in the downstream market through its right to conclude contracts for after-sales services and maintenance of fire extinguishers with the trademark Pastor. The CPA decided that Gasilska oprema abused its dominant position by terminating the contract for after-sale services of Pastor-branded fire extinguishers concluded between the complainant and Gasilska oprema when the complainant obtained an authorisation to maintain a competitor's fire extinguishers, as well as maintaining the contracts in force for the maintenance of the Pastor fire extinguishers, which were subject to abstention from selling competitors' fire extinguishers and maintaining competing brands.

Leveraging

Article 9 of the PRCA prohibits 'making the conclusion of contracts subject to acceptance of supplementary obligations that, by their nature or according to commercial usage, have no connection with the subject of their contracts'. In a renewed case, Telekom Slovenije (ADSL/ISDN) (2013), establishing potential abuse of a dominant position regarding ISDN and ADSL tying, the CPA concluded that Telekom Slovenije had abused its dominant position on the interoperator broadband access market with bitstreaming via the copper-based network in Slovenia by making ADSL connections for internet providers conditional on the prior leasing of ISDN connections by end-users, although an ISDN connection was not needed or technically necessary.

In Geoplin (2015), the CPA held that Geoplin abused its dominant position in the market of gas supply to large industrial customers through prohibited contractual clauses that caused industrial customers connected to the transmission network to be entirely tied to Geoplin. Following the re-examination of the case in the resumed procedure, the CPA finally accepted the proposed commitments in 2017.

Refusal to deal

An example of refusal to deal by a dominant undertaking without objectively justified reasons is Luka Koper (2009). An operator of the seaport of Koper refused, without justification, to allow its competitor access to the port, making it impossible for the competitor to perform towing and mooring activities. The CPA concluded that Luka Koper abused its dominant position by refusing such access, and doing so had the effect of excluding all competition on the markets for towing and mooring services in the port of Koper.

In the past, the CPA has dealt with cases of refusal to deal, and refusal of access to essential facilities as a similar form of abuse as refusal to deal, mainly in the telecommunications sector. In the case of abuse of a dominant position by Telekom Slovenije (2015), the CPA held that, on the market for access to the physical network infrastructure, Telekom refused alternative operators access to key infrastructure necessary for the equivalent operation in the retail market for fixed broadband services. It refused access to the optical local loop even in locations where copper loops were not available and it did not allow alternative operators to offer broadband bitstream access services to third-party operators on its unbundled local loops.

iii Discrimination

Both price and non-price discrimination are included in the exemplary list of Article 9(4), and are described as 'applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage'. So far, the most frequently investigated types of abuse have been price and non-price discrimination.

For example, in SAZAS (2011), the CPA established that SAZAS, a Slovenian collective authors' society, had established a non-transparent system that favoured certain authors, especially those who were included in the decision-making process concerning distribution of collected royalties, which led to discrimination among authors.

In SODO (2012), the CPA found that SODO, the electricity distribution system operator in Slovenia, had abused its dominant position in the market for the management of the electric energy distribution network by charging only some electric power producers for excessive electric energy received, thus applying discriminative conditions on undertakings.

In a case of abuse of dominant position by Telekom Slovenije (2015), the CPA also concluded that, as regards bitstream access, Telekom abused its dominance by not providing the wholesale 'naked xDSL' service to alternative operators, thereby preventing them from providing the xDSL service without the underlying telephone subscription to final customers. The CPA held that Telekom Slovenije, in the case of the provision of services to operators, applied dissimilar conditions to equivalent transactions, and placed alternative operators at a competitive disadvantage compared to Telekom's retail division.

iv Exploitative abuses

Exploitative prices or terms of supply are included in the list of Article 9(4) as examples of 'directly or indirectly imposing unfair purchase or selling prices, or other unfair trading conditions'. The CPA has not yet decided on any relevant excessive pricing case in practice.

In the recent court judgment in Telekom Slovenije (2015), the Administrative Court held that certain allegations in the CPA's decision amounted to exploitative abuse. These allegations concerned, in particular, the CPA's claim that Telekom Slovenije:

  1. made the provision of certain services conditional on use of its telephone connection, even though final users did not need it and it was not technically necessary, which, in the view of the CPA, represented a limitation on technical development to the prejudice of consumers; and
  2. made the conclusion of contracts subject to the acceptance of supplementary obligations that, by their nature or according to commercial usage, have no connection with the subject of their contracts.

The Administrative Court considered that, when assessing the existence of consumer harm in the context of exploitative abuse, it is necessary to determine what may constitute consumer harm, and that the CPA failed to demonstrate this. However, this does not apply to cases of exclusionary abuses where, according to the Administrative Court, the CPA is not obliged to determine specific consumer harm, to quantify the harm, or both.