Article 102 of the Treaty on the functioning of the EU (ex Article 86 EEC, ex Article 82 TEC) stipulates that "any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States". Apart from the fact that this Article does not prohibit the obtaining of a dominant position, but only abuse thereof, it leaves several issues obscure, although they are now clarified by various standard Commission decisions and judgments of the Court of Justice.
First, domination of a given market cannot be defined solely on the basis of the market share held by an undertaking or of other quantitative elements, but must also be looked at in the light of its ability to exercise an appreciable influence on the functioning of the market and on the behaviour of other firms. In its judgment of 14 February 1978 [Decision 72/21] in the case of "United Brands Company v. Commission" [Case 27/76] the Court upheld and enlarged the definition of the dominant position adopted by the Commission as early as its decision of 9 December 1971 [Decision 72/21] in the "Continental Can Company" case [Case 6-72]. It thus stated that the dominant position referred to in Article 86 (EEC, new Article 102 TFEU)"relates to a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers".
The definition of the relevant market or of the market in question is also of great importance, as the more strictly that market is defined in time and space, the greater the likelihood that a dominant position can be identified in the common market. In its judgment of 13 February 1979 in the "Hoffman-La Roche v. Commission" case, the Court of Justice felt, in common with the Commission [Decision 76/642], that each group of vitamins constitutes a separate market and that one product can belong to two separate markets if it can be used for several purposes [Case 85/76]. The Court held that actual competition must be able to exist between products that belong to the relevant market, which presupposes an adequate degree of interchangeability or substitutability between such products. For the Commission, the assessment of demand substitution entails a determination of the range of products, which are viewed as substitutes by the consumer and their competition can thus affect the pricing of the parties' products. The Commission's notice on the relevant market is an analytical tool which makes it possible to calculate firm's market shares.
As regards the concept of the distortion of trade between Member States, which is the same for Articles 101 and 102 of the TFEU (ex Articles 81 and 82 TEC), the Commission and the Court of Justice agree that a concentration in which an undertaking occupies a dominant position in the common market or in a substantial part of it will always be of importance for trade between Member States. In its judgment of 13 July 1966 in the "Grundig-Consten" case the Court opined that the concept of damage to trade between Member States should be seen as a question of "whether the agreement is capable of constituting a threat... to freedom of trade between Member States in a manner which might harm the attainment of the objectives of a single market between States" [Joined cases 56 and 58/64]. It goes without saying that abuse of a dominant position is judged all the more harshly because it tends to compartmentalise the relevant market and make economic interpenetration more difficult. That was the case with British Leyland, which refused to issue type-approval certificates for left-hand-drive "Metro" vehicles in order to prevent the re-importation of such vehicles from other Member States [Case 226/84].
Lastly, as regards the concept of abuse of a dominant position, Article 102 TFEU is more explicit, as it stipulates that "abuse may in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) limiting production, markets or technical development to the prejudice of consumers; (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage and (d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations" which have no connection with such contracts. We note that the concept of abuse of a dominant position is similar to the concept of restriction or distortion of competition given by article 101 [see section 15.3].
The Commission has adopted guidelines on its enforcement priorities in applying Article 82 (new Article 102 TFEU) rules to abusive exclusionary conduct by dominant undertakings [COM/2008/832]. Such conduct aims to exclude actual competitors from expanding or would-be competitors from entering a market, thereby potentially depriving customers of more choice, more innovative goods or services and/or lower prices. Generally speaking, an undertaking in a dominant position may abuse its power on the market in one of the following ways:
· by setting the prices on the dominated market, as in the case of Deutsche Telekom AG (DT) concerning the prices for access to its fixed telecommunications network [Decision 2003/707];
· by imposing discriminatory commercial fees on service providers, as in the case of the Aéroports de Paris concerning groundhandling, catering, cleaning and freight handling services [Decision 98/513;
· by "tying" the products or services of the dominated market to other products or services (as in the case of Microsoft Corporation, which made the availability of the Windows client PC operating system conditional on the acquisition of the Windows Media Player software [Decision 2007/53, Case COMP/C-3/37.792 and Case T-201/04];
· by imposing on its customers agreements for the exclusive purchase of products, such as the vitamins in the Hoffmann-La Roche case [Decision 76/642] or services (as in the case of the company operating Frankfurt airport [Decision 98/190]);
· by restricting competition from imports, as in the case of Irish Sugar plc [Decision 97/624] or from generic products (as in the case of the anti-ulcer product, Losec, of AstraZeneca) [Decision 2006/857, case COMP/A.37.507/F3]; or
· by attempting to eliminate competition by "predatory pricing", i.e. by selling below cost for a short period of time until the competitors are driven out of the market, as in the case of Deutsche Post AG concerning the market for business parcel services [Decision 2001/354] and in the case of Wanadoo Interactive, a subsidiary of France Télécom, concerning access to the Internet by the general public [COMP/38.233].
It is certain that the Commission and the Court regard it as an abuse where an undertaking in a dominant position strengthens that position by means of a concentration or of the elimination of competitors, with the result that competition, which continued in spite of the existence of the dominant position, is virtually eliminated as regards the products concerned in a substantial part of the common market. The Commission accordingly imposed heavy fines on: AKZO Chemie, which is the chemical division of the Dutch multinational group AKZO, for having abused its dominant position on the organic peroxides market by trying to eliminate a small competitor from the market by applying prolonged, selective price-cuts designed to damage its business [Decision 85/609 and Case C-62/86]; and British Sugar plc for implementing a series of abuses designed to eliminate a smaller competitor from the retail sugar market [Decision 88/518]. On July 24, 1991, the Commission imposed a record fine on Tetra Pak for having deliberately attempted to eliminate its actual or potential competitors, in breach of Article 86 of the EEC Treaty (Article 82 TEC, Article 102 TFEU). On 24 March 2004, the Commission fined Microsoft Corporation EUR 497 million, because it used the near-monopoly position enjoyed by its Windows product on the market for PC operating systems to restrict competition on other software markets: work group server operating systems; and the market in media players [Case COMP/C-3/37.792].
In its aforementioned judgment in the "Hoffmann-La Roche" case [Decision 76/642] the Court of Justice for the first time gave a general definition of abuse by stating that it is an "objective concept relating to the behaviour of an undertaking in a dominant position which is such as to influence the structure of a market where, as a result of the very presence of the undertaking in question, the degree of competition is weakened and which, through recourse to methods different from those which condition normal competition in products or services on the basis of the transactions of commercial operators, has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition" [Case 85/76]. In the British Midland/Aer Lingus case, the Commission showed its determination to proceed against any airline or any other holder of a dominant position which tries to stand in the way of the development or maintenance of competition [Decision 92/213].
The "United Brands Company" judgment defines the scope of the concept of abuse by confirming the obligation for an undertaking in a dominant position to respect the principle of proportionality when it imposes restrictions on its resellers, even if in so doing it is pursuing legitimate objectives such as maintaining the quality of its products or protecting its commercial interests [Case 27/76]. Such objectives cannot, a fortiori, be invoked when in reality their purpose is to eliminate competitors. Hence Tetra Pak, the largest Community producer in the milk carton industry, was censured for having obtained an exclusive licence concerning technology for a method of sterilising cartons for long shelf-life milk [Decision 88/501 and Case T-51/89]. Technological prominence may even entail certain obligations for undertakings in a dominant position vis-à-vis their competitors. In 1984 the Commission obliged IBM to communicate systematically in good time to its competitors in the Community appropriate information on its interfaces in order to enable them to connect their products to its large medium-sized data-processing systems and to its network or systems interconnection system. On 3 July 2001, the Commission ordered IMS Health, the world leader in data collection on pharmaceutical sales and prescriptions, to license its "brick structure", which segmented Germany into sales zones or "bricks" and had become a national standard in the German pharmaceutical industry, because refusal to grant a licence constituted a prima facie abuse of a dominant position [Decision 2002/165]. On 5 December 2001, the Commission decided that the Belgian postal service operator De Post/La Poste abused its dominant position by making a preferential tariff for its general letter mail service subject to acceptance of a supplementary contract covering a new business-to-business ('B2B') mail service [Decision 2002/180].
In the aforementioned judgment in the Hoffmann-La Roche case, the Court of Justice felt that the prohibitions listed in Article 86 (EEC, new Article 102 TFEU), in spite of that Article's necessarily vague wording, did not show the indeterminate and unforeseeable nature alleged by Roche. According to the Court an undertaking which dominates a market must take that fact into account and itself seek legal security under the European law. As the Court stressed in its judgment of 19 June 1978 in the BP v. ABG case, such a clearance would not, however, free the Commission from its obligations peculiar to the market, where the competitive position of operators is particularly threatened, to comply scrupulously with Article 86 of the EEC Treaty [Case 77/77]. The Court thus confirmed that the purpose of Article 86 (Article 102 TFEU) is to preserve an effective competition structure in the common market, especially where it is jeopardised by the elimination of independent economic operators by an undertaking in a dominant position.