Abuse of dominance in Ireland

Abuse of dominance

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

Section 5(2) of the Act or article 102 of the Treaty set out the examples of abuse of dominance. Such abuses 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; or
• making the conclusion of contracts subject to the acceptance by other parties of supplementary obligations, which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

In enforcing the section 5 prohibition the CCPC tends to follow an effects-based approach. A good example of such an approach is the Competition Authority’s decision in TicketMaster Ireland (referred to in question 9). Writing in a personal capacity, the member of the Competition Authority responsible for that decision subsequently noted that ‘the form-based approach strongly supported the allegations of high prices based on exclusive contracts, while the effects-based analysis found, correctly, that countervailing buyer power, efficiencies and other factors meant that TicketMaster Ireland was neither dominant nor that its conduct was anticompetitive’ (Dr Paul Gorecki, Journal of Competition Law and Economics 2006 2(3): 533-548).

Whereas formally there are no per se prohibitions of specific conduct under section 5 of the Act or article 102 of the Treaty, the CCPC is influenced by the approach of the European courts and the European Commission, such that certain forms of conduct on the part of dominant undertakings can be presumed to be abusive (although the company always retains the possibility to rebut that presumption or justify its conduct, see question 13). For example, in its decision in Drogheda Independent (Decision No. E/05/002), the Competition Authority noted that its approach towards the identification of unlawful predatory pricing was based on that of the CJEU in case C-62/86 Akzo v Commission, whereby prices below a dominant undertaking’s average variable costs are presumed to be predatory. Likewise, in its ‘Enforcement Decisions’ regarding allegedly unlawful ‘loyalty rebates’ offered by RTE and An Post respectively (see question 29), the Competition Authority noted that its approach towards the identification of unlawful ‘loyalty rebates’ was based on decisions of the CJEU in joined cases C-241/91 P and C-242/91 RTÉ and ITP v Commission and case 5/69 Volk v Vervaecke. Accordingly there is no reason in principle why the Irish Courts and the CCPC should not follow the recent decision of the CJEU in case C-413/14 P Intel v Commission, which marks a shift away from the automatic classification of certain types of conduct as a per se abuse (ie, relying solely on a form-based analysis) to adopting a more effects-based approach whereby the CJEU held that Commission are required to examine all the circumstances of a case to determine if the conduct in question is capable of restricting competition. The CJEU recently confirmed this approach in case C-525/16 MEO, which applied the effects-based principles in Intel to price discrimination, suggesting the Intel reasoning is not limited to cases involving rebates but is applicable to other pricing abuses. This further endorsement of an effects-based assessment is likely to be followed by the Irish courts and the CCPC.

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

Yes, both are covered.

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?

Dominance and abuse can take place in the same market or in neighbouring markets. Donovan and others v Electricity Supply Board [1997] 3 IR 573 involved a finding of an abuse of ESB’s dominant position on the market for the supply of electricity by restricting competition on the market for the supply of electrical contracting services to low-voltage installations, on which its presence was minimal.

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

General defences to allegations of abuse of dominance developed under EU law may be raised (eg, the concepts of objective justification and proportionality). Section 7(2) of the Act provides that it shall be a good defence to a criminal prosecution for an alleged abuse of a dominant position to provide that the ‘act or acts conceived was or were done pursuant to a determination made or a direction given by a statutory body’ (eg, a sectoral regulator). The issue of whether allegedly abusive conduct is imputable to a regulator or a regulated entity was considered in the recent case of Shannon LNG Limited v Commission for Energy Regulation & Others (see questions 22 and 29). The CCPC considered the possibility of an efficiency defence or another objective justification for allegedly unlawful rebates in its investigations of RTE and An Post (see question 29) but took the preliminary view that there was insufficient evidence that the claimed efficiency gains outweighed the likely harm on competition.

It is likely that the CCPC and the Irish courts will take account of the European Commission’s guidance on its enforcement priorities in applying article 102 of the Treaty ([2009] OJ C 45/1), paragraph 28 of which provides that a dominant undertaking may justify its conduct on the basis that the conduct in question produces substantial efficiencies that outweigh any anticompetitive effects on consumers. It is also likely that they will follow the recent judgments of the CJEU in Intel and MEO, which acknowledge that in cases involving pricing abuses that are found capable of foreclosure, a dominant firm can plead efficiencies as a defence.