The General Court of the European Union (GC), the EU’s second highest court, confirmed on 29 March 2012 the method established by the EC for analyzing margin squeeze. Margin squeeze can arise when the price charged for an upstream input by a dominant company that is also active downstream using that input does not allow its downstream competitors sufficient scope to run a profitable business. The case concerned Spanish incumbent telecoms operator Telefónica. The court rejected an argument that the EC should have carried out a margin squeeze test based on a mix of wholesale products available to downstream competitors. This would have amounted to holding that competitors could have compensated for the losses incurred because of the margin squeeze by the income resulting from the use, in certain more profitable geographical zones, of services not subject to a margin squeeze. The court also confirmed the position that national legislation concerning telecommunications does not release dominant firms from their obligation to respect EU competition law. The case is important for dominant companies that supply competitors downstream and for these competitors when dealing with such dominant companies