Abuse of dominance

Definition of abuse of dominance

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

Section 11 of the Competition Act of 5 March 2004 No. 12 (CA) is drafted in line with article 102 of the TFEU, namely, it includes a non-exhaustive list of possible abuses that are identical to the list of possible abuses under article 102 of the TFEU and article 54 of the Agreement on the European Economic Area (EEA). In the Tine case from 2011, the Norwegian Supreme Court confirmed that the notion of abuse in section 11 of the CA mirrors that of article 54 of the EEA and 102 of the TFEU.

In the assessment of whether an activity constitutes abuse, the purpose of the CA, namely to ensure economic efficiency and consumer welfare, is of the utmost importance. Moreover, as under the EU and the EEA rules, it is clear that the concept of abuse is an objective one. No case laws from Norway establish a particular conduct as subject to a per se prohibition, but the interpretation of section 11 of the CA mirrors that of article 102 of the TFEU and article 54 of the EEA, and will follow relevant developments on this point.

Exploitative and exclusionary practices

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

Yes.

Link between dominance and abuse

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?

In relation to this question, the case law related to the application of article 102 of the TFEU and article 54 of the EEA offers important guidance. Consequently, dominance, abuse and potential economic benefit do not necessarily need to occur in the same market. Furthermore, the Agreement on the European Economic Area (EEA) in its guidelines holds that showing a link between dominance and abuse is no requirement (eg, a dominant undertaking if entering into an exclusive purchasing agreement could abuse its position even though its dominant position in itself was irrelevant for closing that agreement).

Defences

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

It is possible to invoke efficiency gains. Moreover, although not expressed in section 11 of the CA (as article 102 of the TFEU), it is possible to defend an allegedly abusive practice on the basis that the conduct in question is necessary to protect legitimate interests (objective justification and proportionality). If exclusionary object is shown, it appears that such defences cannot be relied upon, see the NCA’s decision V2007-2, Tine v NCA, pages 81 and 82.

Specific forms of abuse

Types of conduct

Rebate schemes

Rebate schemes could be considered as abusive pursuant to section 11 of the Competition Act of 5 March 2004 No. 12 (CA); namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the Agreement on the European Economic Area (EEA). One of the few cases investigated under section 11 of the CA concerned a rebate scheme operated by a dominant bus company. The Authority first condemned the scheme as abusive in decision V2004-29 but then quashed its own decision after the bus company had filed an appeal (decision V2004-34). The Norwegian Competition Authority (NCA) generally holds that incremental rebates that encourage consumer loyalty may be prohibited if competitors are driven, entirely or in part, out of the market and such rebates cannot be objectively justified by the dominant undertaking. Retroactive rebates are mentioned by the NCA as an example of such abuse.

Tying and bundling

Tying and bundling could be considered as abuses pursuant to section 11 of the CA; namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA.

Exclusive dealing

Exclusive dealing, etc, could be considered as abuse pursuant to section 11 of the CA; namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA.

Predatory pricing

Predatory pricing could be considered as an abuse pursuant to section 11 of the CA; namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA. One of the NCA’s landmark cases under section 11 CA – the SAS case of 2005 – was a predatory pricing case related to certain domestic air travel routes in Norway where the NCA’s decision was quashed by the courts. In the SAS case, the NCA applied the test from AKZO v Commission as a cost benchmark. There is no Norwegian case law that clarifies whether recoupment is a necessary element in the assessment of predatory pricing, but the NCA will follow the case law on the interpretation of article 102 of the TFEU and article 54 of the EEA. The possibilities of recoupment would presumably form part of the NCA’s assessment on predatory pricing, although it appears unsettled on the basis of the SAS case whether this is a separate requirement.

Price or margin squeezes

Price or margin squeezes could be considered as an abuse pursuant to section 11 of the CA, namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA. On 29 June 2020, the EFTA Surveillance Authority (ESA) fined Telenor ASA €112 million for margin squeeze of competitors in respect of the provision of retail mobile telephony services. According to ESA the abuse was conducted by Telenor in relation to stand-alone mobile broadband to residential customers in the period from 2008 tilll 2012. Telenor has appealed the decision, which is currently pending before the EFTA Court. The date of the oral hearing has not yet been scheduled, but is likely to take place in 2021. 

Refusals to deal and denied access to essential facilities

Refusal to deal could be considered as an abuse pursuant to section 11 of the CA; namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA. There are no such cases from the NCA. However, the ESA has dealt with several cases related to exclusivity. In 2010, the company Posten Norge AS was fined approximately €13 million for exclusive arrangements excluding competitors in the domestic parcel delivery market. The decision was upheld on substance by the EFTA Court. In 2011, the ESA fined Color Line AS and Color Group AS approximately €19 million related to an abuse in the form of maintaining long-term exclusive rights to access the harbour in Strömstad, Sweden. In 2018, ESA issued a statement of objections against airline Widerøe’s Flyveselskap AS concerning a possible abuse of refusing to supply potential competitors with receivers necessary to compete for public service obligation routes in Norway. The investigation was however discontinued in June 2020, concluding that the evidence so far collected is not sufficient for it to prioritise any further investigation. 

 

Predatory product design or a failure to disclose new technology

Predatory product design or a failure to disclose new technology could be considered as abuses pursuant to section 11 of the CA; namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA. There are no cases regarding this from the NCA.

Price discrimination

Price discrimination could be considered as an abuse pursuant to section 11 of the CA; namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA.

Exploitative prices or terms of supply

Exploitative prices could be considered as an abuse pursuant to section 11 of the CA; namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA. Pursuant to section 2 of the Act Relating to the Price Policy (Price Policy Act), it is forbidden to receive, demand or agree upon prices that are unfair for the purchasing party. In practice, allegations of unfair pricing based on the Pricing Policy Act have rarely been successful in the courts. Contrary to section 11 of the CA, however, section 2 of the Pricing Policy Act does not require that an undertaking holds a dominant position.

Abuse of administrative or government process

Abuse of government processes could be considered as an abuse pursuant to section 11 of the CA; namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA.

Mergers and acquisitions as exclusionary practices

Mergers and acquisitions are covered by the CA’s provisions on merger control, and generally not considered as an abuse pursuant to section 11 of the CA. In principle, however, mergers and acquisitions could be considered as an abuse pursuant to section 11 of the CA, namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA.

Other abuses

Other types of abuse pursuant to section 11 of the CA would follow the abuse concept as enshrined in article 102 of the TFEU and article 54 of the EEA.

In 2018, the NCA fined Telenor ASA for abuse of dominance in the market of retail mobile services. In 2007, competing mobile company, Network Norway began the construction of a third mobile network in Norway and during the rollout of this network, it purchased access to Telenors’ network in areas uncovered by its own network. The NCA found that Telenor abused its dominant position when amending the price clause in the network access agreement. The new price structure could potentially limit further investment incentives in the third network, hence creating barriers for the development of the third mobile network. The decision was appealed to the Competition Complaints Board, where the majority of the Board upheld the NCA’s decision (decision 2019/34). The minority dissented, finding that the NCA had not proved that the incentives to invest in the third network were limited because of the new price clause specifically. Telenor has appealed the Competition Complaint Board’s decision to the Gulating Court of Appeal. The oral hearing takes place in January and February 2021. 

Law stated date

Correct as of

Give the date on which the information above is accurate.

January 2021.