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?

Article L420-2 provides no definition of abuse but specifies (by referring to article L420-1) that the abusive exploitation of a dominant position is prohibited when it has as an object or may have as an effect to prevent, restrict or distort competition on the market and sets the following non-exhaustive list of examples of abuses: refusal to sell, tie-in sales, discriminatory selling conditions and termination of established commercial relationships solely on the ground that the partner refuses to comply with unjustified commercial conditions.

While some practices are presumed to be abusive, no conduct is subject to an absolute per se prohibition with the FCA preferring to conduct a case-by-case analysis of the object and actual or potential effects of the alleged abusive practice and the potential grounds for exemption.

Exploitative and exclusionary practices

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

Article L420-2 of the FCC prohibits both exploitative and exclusionary practices, even though cases relating to exclusionary practices are more common.

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?

A causal link must be demonstrated between the dominant position and the abuse of that position.

However, article L420-2 may apply even if the abuse takes place on an adjacent market to the dominant market provided that close associated links are demonstrated between the dominant and the related markets, and a link exists between the position held on the dominant market and the practice observed on the related market (decisions No. 17-D-02 of 10 February 2017 Obut and No. 17-D-08 of 1 June 2017 Ouibus).

Defences

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

According to article L420-4 of the FCC, the following abusive practices are not subject to the provisions of article L420-2 and may benefit from exemption:

  • abusive practices that result from the application of a statute or a regulation adopted for its implementation;
  • abusive practices for which the authors can prove that they have the effect of ensuring economic progress (including by creating or maintaining jobs) and that they reserve for users a fair share in the resulting profit, without giving the undertakings involved the opportunity to eliminate competition for a substantial part of the products in question; and
  • certain categories of agreement or certain agreements that are recognised as meeting the above conditions by decree (in particular when their object is to improve the management of small or medium-sized undertakings).

However, individual exemptions are seldom granted by the FCA and the requirement to not eliminate competition on the market makes it difficult in practice for an exclusionary practice to meet the exemption conditions.