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Abuse of dominance
Article 102 is aimed at preventing undertakings that have a dominant market position from abusing that position to the detriment of consumers. It provides 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 common market insofar as it may affect trade between Member States." This can mean, (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; (d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts."

The provision aims to protect competition and promote consumer welfare by preventing firms from abusing dominant market positions. This objective has been emphasised by EU institutions and officials on numerous occasions – for example, it was stated as such during the judgement in Deutsche Telekom v Commission, whilst the former Commissioner for Competition, Neelie Kroes, also specified in 2005 that: “First, it is competition, and not competitors, that is to be protected. Second, ultimately the aim is to avoid consumer harm”.

Additionally, the European Commission published its Guidance on Article [102] Enforcement Priorities, which details the body’s aims when applying Article 102, reiterating that the ultimate goal is the protection of the competitive process and the concomitant consumer benefits that are derived from it.

Notwithstanding these stated objectives, Article 102 is quite controversial and has been much scrutinised. In large part, this stems from the fact that the provision applies only where dominance is present; meaning a firm that is not in a dominant market position could legitimately pursue competitive practices – such as bundling – that would otherwise constitute abuse if committed by a dominant firm. That is not to suggest that it is unlawful for a firm to hold a dominant position; rather, it is the abuse of that position that is the concern of Article 102 – as was stated in Michelin v Commission a dominant firm has a: “special responsibility not to allow its conduct to impair undistorted competition”.

In applying Article 102, the Commission must consider two points. Firstly, it is necessary to show that an undertaking holds a dominant position in the relevant market and, secondly, there must be an analysis of the undertaking’s behaviour to ascertain whether it is abusive. Determining dominance is often a question of whether a firm behaves "to an appreciable extent independently of its competitors, customers and ultimately of its consumer." Under EU law, very large market shares raise a presumption that a firm is dominant, which may be rebuttable. If a firm has a dominant position, because it has beyond a 39.7% market share then there is "a special responsibility not to allow its conduct to impair competition on the common market" Same as with collusive conduct, market shares are determined with reference to the particular market in which the firm and product in question is sold.

With regard to abuse, it is possible to identify three different forms that the EU Commission and Courts have recognised. Firstly, there are exploitative abuses, whereby a dominant firm abuses its market position to exploit consumers – for example by reducing output and increasing the price of its goods or services. Secondly, there are exclusionary abuses, involving behaviour by a dominant firm which is aimed at, or has the effect of, preventing the development of competition by excluding competitors. Finally, there exists a possible third category of single market abuse, which concerns behaviour that is harmful to the principles of the single market more broadly, such as the impeding of parallel imports or limiting of intra-brand competition.

Although there is no rigid demarcation between these three types, Article 102 has most frequently been applied to forms of conduct falling under the heading of exclusionary abuse. Generally, this is because exploitative abuses are perceived to be less invidious than exclusionary abuses because the former can easily be remedied by competitors provided there are no barriers to market entry, whilst the latter require more authoritative intervention. Indeed, the Commission’s Guidance explicitly recognises the distinction between the different types of abusive conduct and states that the Guidance is limited to examples of exclusionary abuse. As such, much of the jurisprudence of Article 102 concerns behaviour which can be categorised as exclusionary.

The Article does not contain an explicit definition of what amounts to abusive conduct and the courts have made clear that the types of abusive conduct in which a dominant firm may engage is not closed. However, it is possible to discern a general meaning of the term from the jurisprudence of the EU courts. In Hoffman-La Roche, it was specified that dominant firms must refrain from ‘methods different from those which condition normal competition’. This notion of ‘normal’ competition has developed into the idea of ‘competition on the merits’, which states that competitive practices leading to the marginalisation of inefficient competitors will be permissible so long as it is within the realm of normal, or on the merit, competitive behaviour. The Commission provides examples of normal, positive, competitive behaviour as offering lower prices, better quality products and a wider choice of new and improved goods and services. From this, it can be inferred that behaviour that is abnormal – or not ‘on the merits’ – and therefore amounting to abuse, includes such infractions as margin squeezing, refusals to supply and the misleading of patent authorities.

Some examples of the types of conduct held by the EU Courts to constitute abuse include: Whereby a customer is required to purchase all or most of a particular type of good or service from a dominant supplier and is prevented from buying from others. Purported loyalty schemes that are equivalent in effect to exclusive dealing agreements. Tying one product to the sale of another, thereby restricting consumer choice. Similar to tying, whereby a supplier will only supply its products in a bundle with one or more other products. Vertical practices that have the effect of excluding downstream competitors. Whereby a dominant firm holding patented rights refuses to licence those rights to others. Refusing to supply a competitor with a good or service, often in a bid to drive them out of the market. Where a dominant firm deliberately reduces prices to loss-making levels in order to force competitors out of the market. Arbitrarily charging some market participants higher prices that are unconnected to the actual costs of supplying the goods or services.
 * Exclusive dealing agreements
 * Granting of exclusivity rebates
 * Tying
 * Bundling
 * Margin squeezing
 * Refusing to license intellectual property rights
 * Refusal to supply
 * Predatory pricing
 * Price discrimination

Whilst there are no statutory defences under Article 102, the Court of Justice has stressed that a dominant firm may seek to justify behaviour that would otherwise constitute abuse, either by arguing that the behaviour is objectively justifiable or by showing that any resulting negative consequences are outweighed by the greater efficiencies it promotes. In order for behaviour to be objectively justifiable, the conduct in question must be proportionate and would have to be based on factors external to the dominant undertaking’s control – such as health or safety considerations. To substantiate a claim on efficiency grounds, the Commission’s Guidance states that four cumulative conditions must be satisfied: If an abuse of dominance is established, the Commission has the power, pursuant to Article 23 of Regulation 1/2003, to impose a fine and to order the dominant undertaking to cease and desist from the unlawful conduct in question. Additionally, though yet to be imposed, Article 7 of Regulation 1/2003 permits the Commission, where proportionate and necessary, to order the divestiture of an undertaking’s assets.
 * 1) The efficiencies would have to be realised, or be likely to be realised, as a result of the conduct;
 * 2) The conduct would have to be indispensable to the realisation of those efficiencies;
 * 3) The efficiencies would have to outweigh any negative effects on competition and consumer welfare; And
 * 4) The conduct must not eliminate all effective competition.