We reported in January 2017 on how a Portuguese Court has asked the Court of Justice of the European Union (“CJEU”) to provide guidance on when “discriminatory pricing applied to equivalent transactions” amounts to an abuse of a dominant positon under Article 102 (c) Treaty for the Functioning of the European Union (“TFEU”).
Article 102(c) is often invoked when a dominant company supplies an input or raw material at different prices to competing customers. These competitors then process it into a finished product and sell it in competition with each other on the downstream market.
The essential questions before the Court were; 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 20 December 2017, Advocate General Nils Wahl (the “AG”) delivered his Opinion to the CJEU. His Opinion is advisory but not binding on the CJEU. However, it is more often than not followed by the Court.
In answer to the questions posed by the Portuguese Court he suggested the following answers:
A breach of Article 102(c) is not a by object infringement which can be found merely by proving the existence of a discriminatory price. Instead the Commission and/or the Court have to examine the effects of the behaviour in each case to see whether it restricts competition. Not every discriminatory price is anti-competitive. In certain circumstances it can be either competition neutral or pro-competitive.
However, the A-G’s Opinion is disappointing in that it fails to provide any substantial guidance on the key question referred by the Portuguese Court as to what level of distortion of competition has to occur for one customer to be put at a competitive disadvantage with one another. The Opinion seems to leave us with the somewhat circular answer that a competitive disadvantage is a competitive disadvantage. Let’s hope the CJEU can be more illuminating, though we should note that the AG’s Opinion is not yet available in English.
The previous case law in this area often bears a central theme of a dominant undertaking resorting to discriminatory behaviour to disadvantage another party or even drive another competitor out of business. Good examples of such cases being Irish Sugar (ECJ Case T-228/97), Portuguese Airports Case (Commission Decision No IV/35.703) and the Napp Pharmaceutical (CAT decision 1001/1/1/01).
Finding evidence of anti-competitive intent on the part of the dominant undertaking could have the most probative value in proving an abuse of a dominant position under Article 102 (c), even before examination of whether there was an economic distortion in the market between favoured and discriminated-against parties.
Even after the AG’s Opinion, it still seems that it would be easier to work a case backward and show a distortion of competition from a proven anti-competitive intent than the other way around.
The CJEU’s judgment is expected in the near future.
The case can be found here.