Short Reads

European Court of Justice provides guidance on assessing discriminatory pricing

European Court of Justice provides guidance on assessing discriminato

European Court of Justice provides guidance on assessing discriminatory pricing

01.05.2018 NL law

On 19 April 2018, the European Court of Justice clarified when the application of discriminatory prices with regard to trading partners by a dominant firm amounts to abuse of dominance.

In its judgment, the Court answered several questions that had been referred by a Portuguese court in proceedings concerning the prices charged by GDA, a Portuguese collective rights management organisation, to MEO, a television distributor. In essence, MEO argued that it was charged higher prices than its main competitor and consequently it was put at a competitive disadvantage leading to an infringement of Article 102 TFEU.

Going beyond the specifics of the case, the Court seized the opportunity to clarify two aspects of Article 102(2)(c) TFEU. First, the Court held that simply applying dissimilar conditions to trading partners is not always capable of distorting competition. This behaviour must have the effect that a trading partner is placed at a competitive disadvantage, i.e. there is a deterioration of its competitive position compared to its competitors on the downstream market. However, providing proof of actual and quantifiable deterioration of its competitive position is not required. Instead, all of the relevant circumstances of the case must be examined to determine the actual or potential competitive effect of the conduct. Second, the Court confirmed that while there is no minimum threshold for the purposes of determining whether the behaviour is abusive, not all behaviour has an anticompetitive effect.

Having set out the general framework, the Court gave the referring court several pointers to assess whether MEO was placed at a competitive disadvantage. (i) The downstream market was heavily concentrated and consisted of a duopoly of MEO and another provider, leading to significant negotiating power against GDA. (ii) The specific price charged to MEO was the result of a binding statutory arbitration between MEO and GDA. (iii) MEO actually gained a significant market share in the years the discriminatory prices were in place. The Court also observed that where the effect on the profitability of the trading partner is not significant, that fact may point towards the finding that the tariff differentiation is not capable of having any effect on the competitive position of that entity. (iv) In situations where the prices concern a downstream market on which the dominant firm is not active, the dominant firm has in principle no interest in excluding one of its trade partners from that downstream market. While the first three circumstances are quite case-specific, the Court's last observation seems to have a broader scope of application, for example if the dominant firm is vertically integrated.

In a recent private enforcement case, the Amsterdam District Court anticipated the Court's judgment by relying on Advocate General Wahl's opinion in MEO and applied a similar effects test [see our March 2018 Newsletter]. Seemingly, the Court's judgment in MEO provides welcome guidance to competition authorities and courts on the examination of discriminatory pricing by a dominant firm.

This article was published in the Competition Law Newsletter of May 2018. Other articles in this newsletter:

  1. Germany did not err in extraditing an Italian citizen to the US for a competition law infringement
  2. European Commission imposes record fine on Altice for premature implementation of PT Portugal acquisition
  3. European Commission proposes draft Regulation on online platforms and search engines
  4. District Court of Amsterdam rules on requests for pre-procedural hearings
  5. Rotterdam District Court quashes cartel fines imposed by the ACM on cold storage operators

Team

Related news

22.07.2021 NL law
Towards a European legal framework for the development and use of Artificial Intelligence

Short Reads - Back in 2014, Stephen Hawking said, “The development of full artificial intelligence could spell the end of the human race.” Although the use of artificial intelligence is nothing new and dates back to Alan Turing (the godfather of computational theory), prominent researchers – along with Stephen Hawking – have expressed their concerns about the unregulated use of AI systems and their impact on society as we know it.

Read more

08.06.2021 NL law
Actualiteiten milieustrafrecht: zorgelijke ontwikkelingen

Short Reads - Vrijdag 28 mei jl. hadden wij een inspirerend webinar over actualiteiten op het gebied van milieustrafrecht. Wij spraken gedurende 90 minuten onder meer over aansprakelijkheden van bestuurders, de zorgplichten, incidentenrapportages vanuit strafrechtelijk- en bestuursrechtelijk perspectief.

Read more

03.06.2021 NL law
First material judgment in Dutch damages proceedings in trucks infringement

Short Reads - In its judgment of 12 May 2021, the Amsterdam District Court ruled that it has not been established that it is definitively excluded that the trucks infringement led to damage to the claimants. However, this does not alter the fact that it must still be assessed for each claimant whether the threshold for referral to the damages assessment procedure has been met. For this to be the case, it must be plausible that a claimant may have suffered damage as a result of the unlawful actions of the truck manufacturers. The Amsterdam District Court has not yet ruled on this issue.

Read more

08.06.2021 NL law
De Europese Klimaatwet uitgelicht

Short Reads - Op 21 april 2021 is een voorlopig akkoord bereikt over de Europese Klimaatwet. Deze Klimaatwet kan worden gezien als de kern van de Europese Green Deal, die in december 2019 werd gepubliceerd door de Europese Commissie. Het overstijgende doel van deze instrumenten is om een klimaatneutraal Europa te bewerkstelligen in 2050. De Europese Klimaatwet zorgt ervoor dat deze klimaatneutraliteitsdoelstelling in een Europese verordening wordt vastgelegd. Dit blogbericht gaat nader in op de Europese Klimaatwet en legt uit wat dit met zich brengt.

Read more