In brief: abuse of dominance in Slovenia

Abuse of dominance

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

Article 9 of the Competition Act prohibits the abuse of dominance and lists four particular examples of abuse:

• the direct or indirect determination of unfair sales or purchase prices or other unfair business conditions;
• limiting production, markets or technical progress to the detriment of consumers;
• the use of unequal conditions for comparable transactions with other contractors if this places the contractor in a competitive disadvantage; and
• the requirement to accept additional obligations, which by their nature or according to commercial practices are not related to the subject matter of these contracts.

In principle, the Agency follows the trends of EU competition law, including the effects-based approach; however, the case law suggests that abuse is still often determined by the type of conduct and not by the effects on the market.

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

The concept of abuse covers both exploitative practices, such as unfair prices and trading conditions, as well as exclusionary practices, such as predatory pricing, discrimination, refusal to deal and 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?

While, in most cases, a causal link between dominance and abuse is established, an abuse may exist even in the absence of the causal link between the dominant position and the inspected conduct. The conduct of a company may also be considered abusive on a market where the company does not have a dominant position.

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

The Competition Act prohibits the abuse of a dominant position without exceptions and does not explicitly lay down the basis for efficiency defence. Nevertheless, dominant companies defend themselves by relying on EU case law and stating that their actions were objectively justified. In such cases, the Agency assesses whether the companies proved their actions were justified and proportionate to the pursued goal.

Specific forms of abuse

Rebate schemes

While there is no explicit reference to rebates and discounts in the Competition Act, the Agency has in the past found loyalty-inducing rebates to constitute an abuse of dominance. In a case concerning the market of television advertising, the Agency found the granting of rebates by a dominant media company abusive as they were conditional upon the shares of advertising purchased to such an extent that they had a loyalty-inducing effect. According to the Agency, the rebate scheme had provided a strong incentive for advertisers to spend their entire TV advertising budget for advertising on TV channels of the dominant undertaking.

Tying and bundling

Article 9 of the Competition Act prohibits making the conclusion of contracts subject to acceptance of additional obligations, which by their nature or according to commercial practices are not related to the subject matter of these contracts, and thus also covers tying and bundling.

In 2013, the Agency issued a decision against a telecommunications operator and concluded that it had abused its dominant position on the market of inter-operator broadband access with bitstreaming via the copper-based network in the Republic of Slovenia by making ADSL connections for internet providers conditional on the prior leasing of ISDN connections by end users, although an ISDN connection was not needed or technically necessary.

Exclusive dealing

In the past, various contractual obligations that required customers to purchase goods or services exclusively from a dominant undertaking were deemed abusive by the Competition Protection Agency.

In 2013, the Agency issued a decision finding an abuse of dominance on the market of television advertising airtime by way of exclusive dealing arrangements, such as requiring individual advertisers to devote their entire advertising budget exclusively to the dominant media company.

In 2015, the Agency concluded that an incumbent gas importer and supplier abused its dominant position on the market of gas supply to large industrial customers by concluding long-term contracts and imposing an obligation to purchase minimum quantities. The Agency concluded that as a result of these contractual provisions the customers were effectively forced to exclusively deal with the dominant undertaking.

Predatory pricing

In 2012, the Agency issued a decision concerning alleged predatory pricing by a mobile telephony operator in the retail mobile telecommunications service market. The operator was deemed to have abused its dominant position by offering a package deal to mobile phone users at unfair retail prices. The decision of the Agency was later annulled by the Supreme Court, owing to the fact that, inter alia, the Agency failed to state sufficient reasons with respect to the methods used to calculate the incremental costs. The judgment of the Supreme Court also stated that in order to find predatory pricing it is essential for the Agency to establish intentional sales of goods and services at a price below the costs, as the basic purpose of the predator is to eliminate competitors from the market while possessing a long-term ability to recover these short-term losses. According to the Supreme Court, it is, therefore, essential to distinguish between the prices that are set (too) low because of the predatory intent and the prices that are set very low because of the tendency to compete and increase the efficiency of the competitive process.

Price or margin squeezes

The Competition Protection Agency has on several occasions examined an abuse of dominance by way of margin squeeze in the telecommunications sector. From 2008 to 2015, the Agency carried out an investigation of an alleged abuse of dominance by the incumbent operator in the wholesale markets for broadband bitstream access and for access to physical network infrastructure concerning, inter alia, allegations of margin squeeze. However, the allegations of margin squeeze were dropped by the Agency in the 2015 decision on this matter. The allegations of margin squeeze were also investigated by the Agency between 2009 and 2012 in the case concerning abuse of dominance on the market of mobile services. Similarly, the margin squeeze allegations were dropped in the final decision where the Agency focused on proving the abuse of dominance by way of predatory pricing.

Refusals to deal and denied access to essential facilities

On several occasions in the past, the Agency has held that refusal to deal constitutes an abuse of a dominant position. In 2009, the Agency issued a decision against the undertaking operating the only Slovenian port, stating that an undertaking owning or managing an infrastructure, without which its competitors cannot carry out their activities, may not refuse access to infrastructure without justification. Access to the port infrastructure was considered to be an essential facility for undertakings performing the towing of ships. Refusal to deal and access to infrastructure was also examined by the Competition Protection Agency in the context of telecommunications infrastructure.

In 2017, the Agency opened an investigation concerning a potential abuse of dominance by a multinational automobile manufacturer by refusing to supply technical information and training to car repairers.

Predatory product design or a failure to disclose new technology

According to publicly available information, the Agency has not yet examined cases concerning predatory product design or a failure to disclose new technology.

Price discrimination

Price discrimination has been investigated by the Competition Protection Agency with respect to retail prices of mobile telephony, the pricing strategies of a society holding a statutory monopoly on collective management of copyrights to music authors and the prices for excessive consumption of electric energy charged by the electricity distribution system operator.

Outside the scope of antitrust law, price discrimination is regulated and prohibited by the Consumer Protection Act, which, in article 25, states that an undertaking must sell goods and services to all consumers under the same conditions. In contrast to the abuse of dominance legislation, this provision only applies to the sale of goods and services to consumers and does not require the undertaking to hold a dominant position on the market.

Exploitative prices or terms of supply

Exploitative prices and terms of supply are covered by article 9 of the Competition Act. The Agency, however, has not yet issued any decisions concerning these forms of abuse.

Abuse of administrative or government process

According to publicly available information, the Agency has not yet examined cases of abuse of administrative or judicial proceedings.

Mergers and acquisitions as exclusionary practices

According to publicly available information, the Agency has not yet examined cases of abuse of dominance by way of mergers and acquisitions.

Other abuses

The Agency has not yet decided on any case dealing specifically with strategic capacity construction or underinvestment in capacity, predatory advertising or excessive product differentiation. The list of forms of abuse in article 9 of the Competition Act is not exhaustive, therefore the Agency may in the future deal with other types of abuse.