A Portuguese Court has asked the European Court of Justice (ECJ) to provide guidance on when “discriminatory pricing applied to equivalent transactions” amounts to an abuse of a dominant positon under Article 102 (c) TFEU.
Is it enough that discriminatory pricing is proved on the facts or does the Court need to consider whether the effects of the discriminatory behaviour in question place the aggrieved party at a competitive disadvantage to make out the offence? The court also asked that if this is correct, what is the minimum level of disadvantage that needs to be suffered for an abuse to be committed?
On 16 January 2017, the Official Journal published details of a request from a Portuguese court for a preliminary ruling by the ECJ concerning the application of Article 102 of the Treaty on the Functioning of the European Union on discriminatory pricing practices by a dominant company. (Case C-525/16 Meo – Serviços de Comunicações e Multimédia, Official Journal C 14/20, 16 January 2017).
Article 102 states that “any abuse by one or more undertakings of a dominant position within the internal 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.
Such abuse may, in particular, consist in:
(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;”
The first question asked by the Portuguese Court was what kind of disadvantage in terms of the gravity, relevance or importance of the discriminatory practice must exist upon the aggrieved undertaking’s competitive position and/or its ability to compete for it to result in an abuse of a dominant position? In particular did the Court need to consider whether the aggrieved party was capable of absorbing the cost differences incurred at a wholesale level without significantly blunting its ability to compete downstream?
The ECJ was also asked to answer whether an abuse of dominance should be found where the discriminatory prices charged by a dominant company had limited effect on the costs, income obtained and profitability achieved by aggrieved company (e.g. the increased costs may have been passed on to the ultimate consumer or may be cushioned in some way). Alternatively if those factors were sufficient to conclude there was a breach of Article 102, were they only relevant to determine the extent of the damages to be awarded or the level of the fine to be imposed to punish the infringement?
Finally, the Portuguese court seeks the ECJ’s guidance on how to assess whether a competitor of the allegedly dominant company has been placed in a competitive disadvantage. To that end the Portuguese court specifically asks the ECJ to opine on the meaning of the term “at a competitive disadvantage” in Article 102 (c) and whether there was a minimum disadvantage that has to be suffered by the aggrieved company for an abuse to occur.