On 6 April 2017, Advocate General Wahl ("AG Wahl") delivered a non-binding opinion in a case concerning a request for a preliminary ruling from a Latvian court on abuse of dominance through excessive pricing. The request was issued by the Latvian court in a national case between the collecting society AKKA/LAA, which issues licenses for the public performance of musical works in commercial premises and service centers, and the Latvian Competition Council (the "LCC"). The LCC had fined AKKA/LLA, alleging that it had abused its dominant position by applying excessively high rates.
AG Wahl starts his opinion by stating that excessive prices are not problematic on a free and competitive market, but that it may be different in markets with legal barriers to entry and in particular if there is a legal monopoly (as in the present case). A two-step analysis has been identified by the Court in order to determine if a price is excessive and thus in violation of Article 102 TFEU. First, it must be determined whether there is an excess between the price actually charged and the benchmark price, i.e. the price that would have been charged had there been effective competition on the market. Second, it must be investigated whether that excess is the result of an abusive use of market power, or the consequence of other legitimate reasons.
The referred questions also concerned the method for determining the benchmark price. AG Wahl concluded that there exists no single method for doing this and that the methods available have inherent limitations. In the main proceedings of the case at hand, the LCC compared the rates applied by AKKA/LLA with those applied by similar bodies within other geographic markets. This is an appropriate method, if applied correctly (which is the responsibility of the national court to determine). It is also for the national court to verify if other methods were available and suitable (since competition authorities should strive to combine methods in order to minimize the risk for errors), but it is probable that this was not the case. The national court must further verify that the results reached by the application of the method it uses have been corroborated by additional indicators (which is necessary if a single method is applied).
As regards the question whether it is appropriate and sufficient to use the Purchasing Power Parity index (the "PPP index", an index used in cross-country comparisons that equalizes the purchasing power of different national currencies), AG Wahl concluded that the PPP index is appropriate to use when doing such cross-country comparisons as the one undertaken by the LCC. It could be sufficient to only use the PPP index, as long as other factors that may affect the final price of a product or service are also taken into account. Finally, AG Wahl concluded that a difference in price should be considered as excessive only if the price is both significantly and persistently above the benchmark price. As regards the question of whether an excess in price is the result of an abusive conduct or the result of legitimate reasons, AG Wahl recalled that according to decision practice a price may be unfair in itself (e.g. prices charged without customers receiving anything in return) or when compared to competing products and only when there is no rational economic explanation for the excessive price may it be qualified as abusive. Accordingly, the burden of proof to show that there is justification for charging the price concerned is on the dominant undertaking in question.
Source: Advocate General's Opinion in Case C-177/16 Autortiesību un komunicēšanās konsultāciju aģentūra - Latvijas Autoru apvienība 06/04/2017