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(3)(i)-(iv) of the Competition Act lists examples of abusive conduct. The list essentially corresponds to that of article 102 of the TFEU and is not exhaustive.

Section 11(3) of the Competition Act lists the following non-exhaustive examples of abuse:

  • directly or indirectly imposing unfair purchase or selling prices or other unfair trading terms and conditions;
  • limiting production, sales or technical development to the detriment of consumers;
  • applying dissimilar conditions to services of equal value with trading partners, consequently placing them at a competitive disadvantage; and
  • conditioning the conclusion of a contract upon the other contracting party’s acceptance of supplementary services, which by their nature or according to customary trade practice have no connection with the services subject to the contract.

The Competition Act does not explicitly define the concept of abuse, and neither the Danish courts nor the Council or the Tribunal have provided an all-encompassing definition of the term. Instead, the preparatory works for the Competition Act refer to EU law as a guiding point in determining whether certain behaviour constitutes ‘abuse’ within the meaning of competition law. Consequently, as under EU law, ‘abuse’ is defined objectively as a concept relating to the behaviour of an undertaking in a dominant position, which, through recourse to methods differing from those that condition normal competition (ie, abnormal business conduct), affects competition negatively.

In general, the Danish competition authorities strive to have an effects-based approach in dominance cases.

As only the actual or potential harm to the structure of a given market is decisive, a dominant undertaking’s subjective intent by certain conduct is principally immaterial in determining an abuse. However, malicious intent may be taken into account by the competition authorities when assessing certain conduct.

Exploitative and exclusionary practices

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

As under EU competition law, Danish law operates with three main categories of abuse: exploitative practices, exclusionary practices and discriminatory practices.

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?

As under EU competition law, there is no requirement for a causal link between holding a dominant position on a market and abuse. The concept of abuse does not only include conduct, which can only be exercised through a dominant position, but also conduct that does not necessarily require any market power (eg, conclusion of exclusive agreements). Conduct by a dominant undertaking may thus be abusive even if the conduct has been instigated upon the initiative of a non-dominant trading partner of the dominant undertaking.

As under EU competition law, Section 11 equally applies to abusive conduct having negative effect on a market adjacent to the market in which the undertaking concerned holds a dominant position.

Defences

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

The Competition Act does not provide for any express exemptions from the prohibition against abuse of a dominant position. The common conception, however, is that conduct that is wholly insignificant to the competition on a given market should not necessarily be pursued by competition authorities as abusive under section 11, as public resources must be used as effectively as possible.

In line with this, the Danish Supreme Court stated in a judgment from 2011 regarding a public television service provider’s application of retroactive rebates that there needs to be an ‘appreciable effect’ on competition in order for an abuse to exist. However, what is specifically understood by an ‘appreciable effect’ and to what extent market coverage needs to be proven in order for a given behaviour to be considered an abuse, may be interpreted in the light of EU case law, including the European Court of Justice’s judgment from 2015 in C-23/14, Post Danmark II, and judgment from 2018 in C-525/16, MEO.

A dominant undertaking may also plead that its conduct is either a direct or necessary consequence of public regulation, objectively justifiable owing to, for example, health or safety reasons related to the nature of the product, or that the conduct creates efficiency gains that also benefit consumers.

In regard to the latter, it is - in accordance with EU case law - for the dominant undertaking to show that:

  • the efficiency gains likely to result from the conduct under consideration counteract any likely negative effects on competition and consumer welfare in the affected markets;
  • those gains have been, or are likely to be, brought about as a result of that conduct;
  • such conduct is necessary for the achievement of those gains in efficiency; and
  • the conduct does not eliminate effective competition, by removing all or most existing sources of actual or potential competition.