Abuse of dominanceDefinition of abuse of dominance
How is abuse of dominance defined and identified? What conduct is subject to a per se prohibition?
Article 3 of the Law does not define the concept of abuse of dominance but only lists examples of abusive behaviours that relate to both exploitative and exclusionary practices.
In particular, article 3 provides a non-exhaustive list of some examples of abuse, stating that it is prohibited:
- to directly or indirectly impose unfair purchase or selling prices or other unfair contractual conditions;
- to limit or restrict production, market outlets or market access, investment, technical development or technological progress;
- to apply to other trading partners objectively dissimilar conditions for equivalent transactions, thereby placing them at an unjustifiable competitive disadvantage; or
- to conclude contracts subject to acceptance by the other parties of supplementary obligations that, by their nature or according to commercial usage, have no connection with the subject of such contracts.
Abuse of dominance occurs when an undertaking in a dominant position engages in practices that influence the structure of a relevant market by reducing, hampering or eliminating the competition. The simple dominant position on a relevant market does not constitute abuse, but the dominant firm holds a ‘special responsibility’ not to allow distorting effects on the competitive structure of the market.
Abuse of dominance is defined more in terms of the effects of conduct on the market rather than in relation to the form or type of conduct. The European Commission thus defines abuse as conduct that has the ability, by its nature, to foreclose actual or potential competitors from the market, and thus has the likely effect that ultimately prices will increase or remain at a supra-competitive level. If conduct has exclusionary effects and it does not create any efficiencies, such conduct is presumed to be an abuse.Exploitative and exclusionary practices
Does the concept of abuse cover both exploitative and exclusionary practices?
Both exploitative and exclusionary practices may constitute an abuse of a dominant position pursuant to article 3 of the Law (see question 10). It should be noted that the majority of the proceedings conducted by the IAA so far consisted of exclusionary 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?
Between dominance and abuse there must be a causal link, but the IAA considers conducts as abusive in the meaning of the Law, even when there is no intention of the dominant company to abuse its dominant position.
When a company is in a dominant position, its abuse generally affects the market in which it is dominant, but it could also be possible that said abuse has its effect on a downstream, upstream or neighbouring market, and not necessarily on the one in which the company holds a dominant position. In any case, there must be a link between the dominant position and the alleged anticompetitive behaviour.Defences
What defences may be raised to allegations of abuse of dominance? When exclusionary intent is shown, are defences an option?
Following the EU principles, the IAA could consider, as justification, efficiencies that are sufficient to guarantee that no real harm to consumers is likely to arise. In this context, the dominant undertaking shall demonstrate that:
- the efficiencies have been, or are likely to be realised as a result of the conduct (for example, they may include technical improvements in the quality of goods, or a reduction in the cost of production or distribution);
- the conduct is indispensable to the realisation of those efficiencies: there must be no less anticompetitive alternatives to the conduct that are capable of producing the same efficiencies;
- the likely efficiencies brought about by the conduct outweigh any likely negative effects on competition and consumer welfare in the affected markets; and
- the conduct does not eliminate effective competition, by removing all or most existing sources of actual or potential competition.
When exclusionary intent is shown, efficiencies could not be used as a defence.