Abuse of dominance in Luxembourg

Abuse of dominance

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

The abuse of a dominant position is not defined by the 2011 Law, but it does provide a non-exhaustive list of examples that mirrors the list in article 102 of the TFEU. Abuse may consist of:

• directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
• limiting production, markets or technical development to the prejudice of consumers;
• applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; and
• making the conclusion of 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 these contracts.

In its Tanklux decision 2009-FO-02, the Competition Council stated that the object and the effect of the practice in question (the introduction of provisions on the choice of the transport undertaking in storage agreements by a company in a monopolistic situation on the storage market) was to foreclose the transport market and to prevent other undertakings from entering into this market and that such a foreclosure had, at least, potential negative effects on consumers. The Competition Council then concluded that the practice was an abuse of dominant position on the basis that the anticompetitive object of the practice was characterised by the fact that such practice was of such a nature as to prevent oil companies from using other transport undertakings and to prevent other undertakings from entering into the transport market. The Competition Council seemed to apply both approaches by referring to the object of the relevant practice and to its effect.

The Competition Council stated in its Utopia decision (see question 24) that an abuse of dominance must produce anticompetitive effects that cause prejudice to the consumers.

In its decision 2014-FO-07 (Entreprise des Postes et Télécommunications, see question 15), the Competition Council also adopted an effect-based approach by analysing whether the practices in question had anticompetitive effects on the market. During the subsequent proceedings before the administrative tribunal, the Competition Council argued, however, that fidelity rebates that have effects similar to exclusive dealing agreements constitute a per se violation of article 102 of the TFEU and article 5 of the 2011 Law. In its judgment of 21 November 2016, the administrative tribunal rejected the approach based on a per se violation and ruled that there should be a concrete assessment of foreclosure effects. This analysis was confirmed by the administrative court (see question 15).

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

The concept of abuse covers exploitative practices (eg, unfair prices) and exclusionary practices (eg, refusal to supply, tying).

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?

Given that the 2011 Law mirrors article 102 of the TFEU, the assessment is the same as under EU law, so that the existence of a dominant position is a necessary condition for the application of article 5 of the 2011 Law. However, there does not need to be a causal link between the dominant position and the conduct in question. Furthermore, dominance, the abuse thereof by one or several undertakings and the effects of the abuse must not necessarily occur in the same market.

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

The 2011 Law does not provide for any defences. As article 5 of the 2011 Law mirrors article 102 of the TFEU, the Competition Council in principle follows the approach adopted in EU law.

In its 2007-FO-01 Tanklux decision relating to a refusal to grant access to heating fuel storage facilities, the Competition Council considered that the refusal by a dominant undertaking to enter into commercial relations with another undertaking may be considered as a form of abuse of dominant position in the absence of any objective justification for such refusal. In this case, the absence of additional storage capacities was accepted as a valid defence by the Competition Council.

In its Tanklux decision 2009-FO-02 on an alleged abuse of dominance on the market for transport of petroleum products, the Competition Council expressly referred to the Commission’s guidance on article 102 enforcement priorities. The Competition Council recognised that the practice in question was legitimate, produced efficiency gains (even if limited) and guaranteed and improved the national supply of oil in terms of security and reliability. The Competition Council concluded on these grounds that the behaviour of the company was justified and decided to close the file.

The question of economic efficiencies and objective justifications was also addressed by the Competition Council in the decision 2010-FO-02 Coditel (see question 15). Nevertheless, the Competition Council decided that the mitigating factors raised by the undertaking did not objectively justify the practices of tying and exploitative prices. Therefore, it considered that the undertaking abused its dominant position.

In its Utopia decision by which it decided that the acquisition of a competitor may constitute an abuse of dominance (see question 24), the Competition Council applied the ‘failing firm’ defence set out in the Commission’s guidelines on the assessment of horizontal mergers and considered that the acquisition did not have anticompetitive effects on the market. Furthermore, the Competition Council considered that the acquisition was in line with the objectives of the TFEU, by stressing in particular the fact that it helped to maintain jobs. However, this factor was only found relevant in the specific merger context.

To our knowledge, the Competition Council has not yet expressly taken a position on the question of whether it would accept defences if exclusionary intent is shown.