Unilateral conduct

Unilateral conduct by non-dominant firms

Are there any rules applying to the unilateral conduct of non-dominant firms?

Section 20 ARC

As noted above, going beyond the scope of article 102 of the TFEU, the ARC prohibits exclusionary (and discriminatory) conduct not only by undertakings that are dominant in ‘absolute’ terms, but also by undertakings on which ‘small or medium-sized companies depend’ as suppliers or purchasers of certain goods or commercial services (section 20(1) of the ARC), and by companies enjoying ‘stronger market power in comparison with their small and medium-sized competitors’ (section 20(3) of the ARC). The prohibitions laid down in section 20 of the ARC aim at protecting small and medium-sized companies against anticompetitive conduct by their larger trading partners or competitors (the German FCJ recently passed an interesting judgment regarding the characterisation of retailers as small or medium-sized companies vis-à-vis suitcase manufacturer Rimowa, see FCJ judgment Rimowa, 12 December 2017).

The prohibition of discrimination or unreasonable obstruction for ‘relatively’ dominant enterprises towards dependent companies was introduced primarily to address buyer power in the (food) retail sector. Thus, section 20(1), sentence 2 of the ARC sets forth a legal presumption of dependency if a supplier of goods frequently grants additional rebates or similar bonuses to a customer that are not also granted to other customers. The protection of small and medium-sized competitors against exclusionary conduct of competitors with ‘stronger market power’ is also principally targeted at retail markets (food, gas, etc). An example of prohibited exclusionary conduct is frequent below-cost pricing, section 20(3) of the ARC (which now includes a legal definition of which sales should be considered below-cost). In the food sector, pricing below cost (by food retailers) even in a single instance is prohibited, unless it is necessary to prevent goods from spoiling or becoming unfit for sale. Note that the ARC does not precisely define the concept of small and medium-sized companies that enjoy protection under these rules. The concept is generally understood to be turnover-related, but there are no specific turnover ‘thresholds’, and the amounts can differ from industry to industry.

Section 21 ARC

In addition to the rules laid out in sections 18 through 20, which apply only to enterprises with dominant market positions or enterprises that are dominant at least in relative terms by enjoying relative market power with respect to small or medium-sized undertakings, section 21 of the ARC stipulates a number of prohibited forms of unilateral behaviour by individual enterprises or groups of enterprises that do not require any from dominance.

Under section 21(1) of the ARC, an enterprise (or association of enterprises) may not request that other enterprises boycott a third enterprise (ie, to refuse either to supply this enterprise or to purchase from it). However, this prohibition only applies if the enterprise requesting the boycott acts with the intention to unfairly impede the third enterprise.

Under section 21(2) of the ARC, an enterprise (or association of enterprises) may not induce other enterprises, by either coercion or incentives, to engage in conduct that is prohibited under German or EU antitrust law. This (secondary) prohibition is intended to prevent enterprises from forcing other enterprises to engage into horizontal cartels, or illegal vertical agreements (for instance, it might apply to a supplier that tries to coerce retailers to apply a specific resale pricing policy; where the retailer agrees, this infringes section 1 of the ARC; where the retailer does not agree, the supplier’s conduct infringes section 21 of the ARC).

Section 21(3) of the ARC prohibits the use of coercive measures in order to induce another enterprise to engage in activities that might influence competition, but do not, in principle, infringe antitrust law (eg, to force an enterprise to merge with another enterprise).

Section 21(4) of the ARC prohibits enterprises from causing economic harm to a third person in retaliation for this person requesting the FCO to take action.