Abuse of dominance in Sweden

Abuse of dominance

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

Chapter 2, article 7 of the Act (which mirrors article 102 of the TFEU) contains a non-exhaustive list of potential abuses. It does not, however, contain a definition of abuse. The concept of abuse encompasses measures by a dominant firm that harm customers or consumers directly, or the structure of the market (in an anticompetitive manner). While certain exploitative exercise of market power (eg, excessive pricing) can concern individual agreements, the prohibition against abuse is more commonly applied to protect the structure of the market, rather than individual firms or consumers.

The concept of abuse is an objective one; the dominant undertaking’s subjective intention is not determinative. That said, an anticompetitive or abusive intent is an aggravating circumstance.

It is not necessary under Swedish or EU law to establish an anticompetitive effect; it suffices that the abuse risks are having this effect. At the same time, the SCA is more likely to intervene if concrete effects can be demonstrated. The SCA can be said to adopt an effects-based approach, as set out in the Commission’s guidance paper on exclusionary abuse. However, the effect does not necessarily have to be significant, affect a large share of the economy or similar. For example, the SCA has pursued abuse cases concerning taxis at Stockholm Arlanda Airport (case No. 378/2013, Swedavia) and refusal to provide access to an electricity network in a small city in northern Sweden (case No. 533/2009, Ekfors Kraft).

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

As in EU law, the concept of abuse in the Act is divided into (and covers) exploitative and exclusionary practices, the latter being practices that foreclose competitors from the market and the former where the dominant firm exploits its position to the detriment of competitors, customers, etc. The SCA can be said to focus mainly on exclusionary abuse, but from time to time also investigates exploitative abuses.

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?

There must be a causal link between the dominant position and the abuse. However, practices where a firm uses its dominant position on one market as leverage to gain an advantage on another (typically adjacent) market, thus distorting competition on the latter market, can be caught. For example, in Telia the Market Court considered that Telia had used its dominant position in relation to fixed telephony to strengthen its position on the mobile telephony market (MD 2001:30, Telia).

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

Objective justification can be invoked as a defence. Conduct for which there is an objective justification cannot be abusive. A refusal to supply is, for example, likely objectively justified if the customer has a history of not paying invoices, and a price discrimination is likely objectively justified if sales to one customer incur higher costs on the (dominant) supplier compared to sales to another. In a case regarding Swedish Match and its (short-lived) policy for generic labels in snus coolers, the Patent and Market Court of Appeal in June 2018 found that while the introduction of the policy was considered abusive behaviour, the behaviour was found to be objectively justified (and proportionate) in light of the marketing restrictions in the Swedish Tobacco Act.

Unlike the regime for anticompetitive agreements, the dominance rules do not include an efficiency defence. However, the Commission has introduced a soft law efficiency defence in its article 102 guidance paper concerning exclusionary abuse, which should also be considered applicable under Swedish law. In practice, therefore, a dominant company that can demonstrate efficiency gains that outweigh any anticompetitive effects of an alleged abuse may escape the prohibition.

While perhaps not a defence against abuse, a dominant firm’s right to compete on the merits should be mentioned. Only the abuse of a market power is prohibited, not legitimate competition on the merits.