It will not have escaped anyone’s attention that the competition authorities have set their sights on tech companies like Amazon, Apple and Google, as well as some pharmaceutical companies. For some time now, the Netherlands Authority for Consumers and Markets (ACM) and in particular the European Commission (the Commission) have been handing out fines of millions and billions of euros for violations of the prohibition on abuse of a dominant position (Article 24 of the Competition Act and Article 102 TFEU). This article of law, although “old”, appears to lend itself well to this purpose. The question is whether the entry into force of the Digital Markets Act will change this. For now, the fines imposed on Tech companies are holding up in the courts, except in the case of price-related abuse. This is also apparent from the (largely) upheld record fine imposed on Google. Interestingly, abuse prohibitions are being relied on and damages are being claimed more frequently also in civil cases. This blog lists the latest trends.

The Netherlands

ACM does not shy away from reprimanding tech giants, as clearly apparent from the battle between Apple and ACM. Apple obligated dating app providers to use Apple’s payment method, which constitutes abuse of a dominant position. ACM therefore demanded of Apple, under threat of penalties, that it allows dating app providers to choose their own payment system and to direct customers to their own website. Only after forfeiting all the penalty payments (€50 million) did Apple amend its terms for the Dutch market. Apple did object to ACM’s decision, however. It is likely that the Trade and Industry Appeals Tribunal (CBb) will ultimately have to rule on this point. ACM has now launched an investigation into similar behaviour by Google, on the basis of a complaint by Match Group, the parent company of dating app Tinder.

ACM earlier revealed that it is targeting overpricing in the pharma sector. Pharmaceutical company Leadiant ultimately paid the fine of approximately €19.5 million imposed on it by ACM in 2021. ACM had imposed the fine for charging an excessive price for the drug CDCA. A salient point here is that ACM is believed to have rejected an enforcement request from Leadiant related to the excessive pricing. Leadiant had complained to ACM that health insurers had colluded to avoid having to negotiate a price reduction with it. Leadiant has appealed both ACM decisions. Also in this case it is likely that the case will be litigated all the way to the Dutch Supreme Court.

To find out where ACM will set its sights next, its (draft) guidelines are the place to look, such as the (draft) Guidelines on Well-functioning Markets for Healthcare ICT. ACM has found that hospitals are often squeezed by their electronic patient record (EPR) providers. ACM believes that excessive dependence on a supplier poses a risk to a well-functioning market and therefore to the provision of good care. In its Guidelines, ACM describes which behaviours in healthcare ICT markets may constitute abuse. In particular, interoperability between different suppliers should be guaranteed and improved, according to ACM. There should also be room for procurement cooperation between healthcare institutions and more use should be made of healthcare information standards, according to ACM.

Providers of cloud services may have to adjust their services to avoid sanctions imposed by ACM. A market survey of ACM shows that it is difficult for users of business cloud services to switch providers. ACM is therefore proposing an amendment to the Data Act to make it easier to combine cloud services. ACM will also further investigate to what extent switching barriers for users give rise to competition problems and whether they can be addressed. ACM will presumably also focus on platform companies and the business customers that depend on their platform services for their sales. Guidelines in this field are likely to be published in the autumn to clarify which rules apply under the European Platform-to-Business Regulation.

ACM is also expected to challenge abuses in the energy markets, prompted in part by the war in Ukraine and the related increased energy prices. ACM has announced, for instance, that it will be on the lookout for companies that, in violation of the REMIT (Regulation on wholesale Energy Market Integrity and Transparency), act with insider information in the wholesale gas and electricity markets. In June 2022, ACM already fined an energy company on that ground. Another company is reportedly still under investigation.

It is also notable that the prohibition on abuse of a dominant position is increasingly being relied on in civil proceedings as well (see our earlier blogs on the Funda and Blendle cases). The same applies to the Buma/Stemra case. In that case, the Amsterdam Court of Appeal ruled that collective management organisation Buma/Stemra had abused its dominant position in relation to suppliers of music for bars and restaurants. In the past, suppliers paid a licence fee to Buma/Stemra per customer. The suppliers had sued Buma/Stemra for allegedly tolerating the use of private streaming subscriptions such as Spotify for commercial purposes (for instance in bars). The Court of Appeal ruled that, by allowing the “dual system” to continue, Buma/Stemra created an unequal situation between the suppliers and streaming services. Buma/Stemra was ordered to adjust its licensing and to pay damages over a period of 12 years. Buma/Stemra filed an appeal at the Dutch Supreme Court.

There is also a trend of claims for damages being brought against dominant parties. Google, for instance, may face a Dutch-British mass claim of no less than €25 billion because, according to a group of publishers, Google abused its dominant position (monopoly) in the online advertising markets. The Dutch Stichting Consumer Competition Claims, a foundation, is also pursuing a class action claim of almost €5 billion against Apple. According to the foundation, Apple abused its dominant position by charging app developers “excessive commissions” of up to 30%. The Dutch Stichting App Stores Claims, another foundation, instituted proceedings against Apple and Google. It argued that Dutch consumers overpaid a total of €1 billion for purchases via app stores in recent years. The bringing of such cases has been facilitated by the entry into force of the Wet afwikkeling massaschade in collective actie (Class Action (Financial Settlement) Act).

Europe

Big Tech and the pharmaceutical sector also have the Commission’s undiminished attention. A case in point is the investigation launched by the Commission into a deal between Google and Meta (formerly Facebook) regarding their online advertising services. The Commission is furthermore investigating Apple. It suspects that Apple is abusing its dominant position in the mobile wallet markets through its payment service Apple Pay. It is also investigating Apple’s mandatory payment system and the high commissions for other app providers. Investigations into Amazon are also ongoing. One of those investigations focuses on Amazon’s use of non‑public data as both a provider and a user of its marketplace. The other focuses on the Buy Box and Prime programme that allegedly favours Amazon and its own customers. The Commission has asked for input on Amazon’s commitments to address these competition concerns. Initial reactions from the market are not positive, however: see here. The Commission has furthermore taken over a previously secret investigation by the Portuguese competition authority regarding Google’s online advertising services, because the Portuguese investigation largely overlaps with the investigation that the Commission itself had launched in 2021 already into Google’s practices in this area. The investigation examines whether Google distorts competition by restricting third-party access to user data for advertising purposes on websites and apps, while reserving such data for its own use.

In the pharma sector, the Commission has launched an investigation into possible abuse of a dominant position by Vifor Pharma. The abuse allegedly consists of spreading misleading information about its only and closest competitor in the intravenous iron therapy market. Vifor Pharma’s misleading comments about competitor Pharmacosmos’s iron deficiency therapy may have delayed its acceptance. The Commission ruled on this point that this would ultimately harm patients “by stifling competition from an innovative medicine”. This is not the first time the Commission has investigated the discrediting of a competitor as an abuse of a dominant position. The Commission has furthermore carried out unannounced raids on companies in Germany, including Gazprom, that operate in the field of the supply, transportation and storage of natural gas. The companies may have played a role in the high energy prices, thereby abusing their dominant position.

Fines imposed by the Commission for price-related abuses do not always hold up in court, however. Intel, for instance, was previously fined €1.06 billion by the Commission for providing rebates to computer manufacturers on condition that they purchased all (or almost all) their processors from Intel (known as loyalty rebates). The General Court of the European Union (the General Court) later annulled the fine. In line with the ECJ’s judgment (see our blog), the General Court first of all noted that a system of exclusivity rebates may be classified as a restriction of competition, since by its nature it may be deemed to have anti-competitive effects. This is a presumption, which does not relieve the Commission of the obligation to investigate the effects. If a company presents evidence that its conduct was not capable of restricting competition, the Commission must investigate whether the rebate system served to exclude competitors. The Commission must also examine whether a strategy was followed aimed at excluding competitors. According to the General Court, the Commission’s analysis on this point was insufficient. Intel is now claiming almost €600 million in interest from the Commission. The Commission has filed an appeal.

Another defeat suffered by the Commission is the annulment of the almost €1 billion fine for chipmaker Qualcomm. This fine had been imposed for alleged abuse of its dominant position by paying Apple not to buy its chips for iPhones and iPads from competitors. According to the General Court, the Commission had made a number of procedural errors and the economic analysis carried out was too limited. As in the case of Intel, the Commission had failed to assess all the circumstances of the case and had insufficiently analysed the extent to which Apple did indeed have a reduced incentive to purchase from competitors. The Commission had therefore wrongly concluded that Qualcomm had abused its dominant position. The Commission decided not to appeal this ruling.

A great boost for the Commission is the recent General Court ruling in which it largely upheld the Commission’s record fine of €4.34 billion for Google. This fine was imposed for abuse of the Google search engine and the Play Store on Android devices. Among other things, Google had made payments to manufacturers and mobile providers if they installed the Google Search app exclusively on their devices. The General Court slightly reduced the fine to €4.125 billion, however. As in the Intel and Qualcomm proceedings, the Commission had failed also in this case to demonstrate as part of the proceedings that the underlying exclusivity agreements had had anti-competitive effects. Google will undoubtedly appeal this ruling. However, these are not the only proceedings against Google in which the Commission is embroiled at present: Google’s appeal against the fine of almost €2.5 billion for favouring its own shopping service is still pending. Google is also challenging the €1.49 billion fine for favouring its own ad service AdSense over other advertising providers.

The proceedings on alleged abuse of a dominant position by Philips have, however, probably come to an end for the Commission. The reason for this proceeding was the complaint filed by Design Light, an Italian organisation that supports and promotes European LED technology, that Philips had a dominant position in the market because of its special licensing programme and many patents on LED technology. The Commission, however, considered the allegations to be so implausible that it decided not to launch an in-depth investigation into possible infringements by Philips, on the grounds of a comparison between the infringement of the proper functioning of the market and the efforts required to prove the infringement: the General Court ruled that the Commission’s decision not to investigate was correct. It is currently unclear whether Design Light will appeal.

It will be interesting to see what regulators do about the prohibition on abuse of a dominant position once the Digital Markets Act (DMA) enters into force in early 2023 (read more about the DMA here). Although the wording of the DMA suggests that it will have a major impact on the regulation of Big Tech, it remains to be seen how effective it will be. It is therefore not expected to put an end to investigations of abuse of a dominant position in the digital sector. There are practices that are not covered by the DMA. The investigations relating to app stores discussed above, for instance, are unlikely to fall within the scope of the DMA. In particular, it would appear that the conditions for access to dominant app stores will not be regulated by the DMA. The practices on the dominant app stores do, of course, fall within the scope of the DMA. It will be interesting to see how this potential conflict will work out in practice.

Information on dawn raids by ACM and the Commission can be found at invalacm.nl