A high market share is not always proof of a dominant position. The Trade and Industry Appeals Tribunal (CBb) upheld the annulment of the ACM’s fine of nearly EUR 41 million on Dutch railway operator NS for alleged abuse of dominance. According to the CBb, NS did not abuse its dominant position as the ACM failed to prove beyond reasonable doubt that NS holds a dominant position on the market for the exercise of the right to exploit the main rail network concession.
Rotterdam District Court ruling
In 2017, the ACM imposed a fine of nearly EUR 41 million on NS for alleged abuse of dominance. NS is the sole concession holder of the main rail network in the Netherlands until 2025. According to the ACM, NS had abused its alleged dominant position on this main rail network by, among other things, submitting a loss-making bid for a public transportation tender in Limburg (see also our July 2017 newsletter).
On appeal, the Rotterdam District Court annulled the ACM’s fine. The Court was unconvinced by the ACM's arguments that NS could act independently on the main rail network market. The Court considered that the ACM had neglected to investigate if and how the concession conditions affected NS' conduct (see our July 2019 newsletter).
On higher appeal, it became clear that the ACM’s concerns did not so much relate to NS’ position as operator of the concession (so in relation to competition on the market) but focused on NS’ position as holder of (and contender for) the concession itself (so in relation to competition for the market). The focal point of the dominance question was therefore whether NS, at the time of the award of the concession, could have behaved to an appreciable extent independently of its customer, the State.
The CBb considered this not to be the case for a number of reasons, including that:
NS was not the only serious contender at the award of the 2015-2025 concession,
it was no certainty that NS would be awarded any future concession or a concession of similar size,
the State is more than a mere customer of NS (e.g. the State decides on whether the concession will be awarded in full or in part, whether there will be concurrent concessions and how and to whom a concession is granted),
the ACM neglected to specify which exact decisions by NS on the award or retaining of the concession enabled it to behave independently of the State.
In line with the Rotterdam District Court ruling, but partly on different grounds, the CBb therefore concluded that the ACM had not demonstrated beyond a reasonable doubt that NS holds a dominant position on the market for the exercise of the right to exploit the main rail network concession. As a result, there could also be no abuse of dominance by NS.
‘The higher the market share, the more likely a finding of dominance’ does not always hold true. This ruling shows that the courts set a high bar for the ACM when proving its case: even in the event of a high market share, all other relevant factors need to be considered before concluding on dominance.
This article was published in the Competition Newsletter of June 2021. Other articles in this newsletter: