An extract from The Dominance and Monopolies Review - Edition 9
Market definition and market power
When it comes to market definition and the assessment of dominance, the BCA and the Belgian courts can be generally expected to use the same criteria as the European Commission, the General Court and the European Court of Justice. As noted above, the definition of 'dominance' provided by Article I.6 of the CEL is directly derived from the well-known formula expressed by the European Court of Justice in Hoffmann-La Roche, because, under EU law, it is essential under Belgian law to first define the relevant markets before assessing whether an undertaking holds a dominant position.
The main criterion used to define the relevant product and geographic markets is that of 'substitutability', which is first of all assessed on the demand side. Products and services are considered part of the same market if they are regarded as substitutable for users or consumers by reason of their characteristics, prices, and intended use. The assessment of substitutability should also reflect any sources of potential competition (new products, potential entry of a new competitor on the geographical market, etc.), and any relevant constraint that may affect the demand structure, such as the existence of a specific regulatory framework. In addition, the substitutability does not need to be perfect if it is effective for a part of the goods or services at issue that is significant enough to materially affect factors driving competition, in particular prices.
Decisions by the BCA and judgments by the Belgian courts typically describe, first of all, the contentious commercial practice, to ascertain the competitive environment affecting the supply and demand of the affected products or services. Then market definitions previously adopted at the European or Belgian level (but also by the competition authorities of neighbouring countries) are generally considered a useful, if not decisive, starting point.35 Potentially converging arguments of the parties involved are further likely to influence the market definition.36 It is also common to consider several possible definitions and to test whether the defendant can be deemed to hold a dominant position under any of them. If this is not the case, or is not such as to affect the outcome of the competitive analysis, it is also common practice to leave open the question of the exact definition of the relevant markets. Generally, even though somewhat dated, the Commission's guidance on the definition of relevant markets is frequently relied upon before both the BCA and the Belgian courts, so that arguments relying on such guidance will often carry particular weight.37
In line with practices at the EU level, the assessment of dominance requires consideration of various factors that, taken separately, are not necessarily determinative.38 Among these factors, considerable importance is given to market shares. Although the CEL does not provide for a market-share threshold above which an undertaking would be deemed dominant, the BCA has considered in the past that a market share exceeding 50 per cent entailed a presumption of dominance.39 Likewise, a market share exceeding 40 per cent, while not decisive in itself, has been viewed as a very important indication of the existence of a dominant position.40 Conversely, the BCA has also proved that it is open to more sophisticated approaches whereby 'a considerable market share is not automatically considered as equivalent to a dominant position'.41 Overall, Belgian practice recognises the need to assess the position of an allegedly dominant company in comparison with the position of its competitors and to consider in particular,42 as a proxy for the ability to circumvent competitive constraints and as evidence of a possibility to behave independently of competition: the differences in market shares;43 the evolution in time of market shares; the concentration index of the relevant markets; the existence of barriers to entry; the significance of potential competition; the existence of network effects; the vertically integrated structure of competing firms; competing firms' respective economic and financial power; and the nature of the contentious practices. The BCA has also relied on earlier findings of dominance in its own decisions.44
Finally, there are only a small number of precedents in which the BCA has had recourse to the concept of collective dominance. The main example to date is the 2014 decision dismissing a complaint brought against various film studios.45 The complaint against the studios involved digital screening fees paid by major record companies (the majors) to certain theatre owners and 'incubators', but not to the complainant. The Auditorate summarily referred to the Sony v. BMG criteria,46 which it found inapplicable to the case at hand and therefore rejected the allegation of collective dominance on the part of the majors. Moreover, the Auditorate noted that the European Commission had already investigated the substance of the companies' contracts involving digital screening fees, and had closed its investigation after the contracts in question were amended.