Significant EU case law on abuse of dominance

Extracted from Elvinger Hoss Prussen Newsletter on July 26, 2022
26 juillet 2022 par
vanessa Icardi Serrami

Important recent EU case law further defined the application of the prohibition on the abuse of a dominant market position in Article 102 of the Treaty on the Functioning of the European Union (“TFEU”) as far as exclusionary practices in liberalised markets are concerned and with regard to pricing abuses in tech markets. Important findings on due process are also to be noted.

In a judgment of 12 May 2022 in preliminary ruling case Servizio Elettrico Nazionale and Others (C-377/20), the CJEU was asked to apply Article 102 TFEU in the context of the progressive liberalisation of the electricity market in Italy. ENEL, the pre-liberalisation monopolist in electricity distribution, was fined by the national competition authority for having used its dominant position to discriminate against competitors of its subsidiaries active on separate market segments. The Italian appeals court referred several questions to the CJEU.

The CJEU recalled that the practice by a dominant undertaking affecting negatively the effective competition structure of the market must be sanctioned but Article 102 TFEU does not apply if that undertaking can prove that the exclusionary effect resulting from the practice is outweighed by positive effects on customers. Moreover, the CJEU underlined that competition authorities are not required to demonstrate the abusive intent of the undertaking to exclude competitors by using unfair means: the existence of anti-competitive effects due to the conduct is sufficient to qualify it as abusive and exclusionary. The CJEU also distinguished between what practices can be defined as “normal” competition and which are abusive in a liberalisation context: undertakings losing their legal monopoly must refrain, during the liberalisation of the market, from using means available to them due to their former monopoly and not available to other competitors.

Finally, the CJEU also clarified that a parent company is liable for an abuse of dominant position by its subsidiary unless it proves that it did not have the power to influence the latter's conduct.

In a judgment of 15 June 2022 in case  Qualcomm v. Commission (T-235/18), the General Court of the EU annulled the European Commission's 2018 decision imposing a fine of EUR 997 million on Qualcomm with respect to exclusivity payments made to Apple in order to have the latter exclusively source its iPhone and iPad chipsets from Qualcomm during the 2011-2016 period.

Regarding procedure, the General Court found that the Commission's failure to inform Qualcomm of a number of interviews it conducted with third parties and the absence of proper records of these meetings amounted to a violation of Qualcomm's rights of defence. It also held that, although the Commission could abandon charges with respect to one of the markets under investigation without hearing Qualcomm's views on that, narrowing in this way the coverage of the abusive conduct examined had affected the parameters of Qualcomm's economic analysis, thus rendering it obsolete. Failure to give Qualcomm the opportunity to update this analysis infringed its right to be heard.

On substance, the General Court set aside the Commission's analysis of anti-competitive effects. Given that Qualcomm was the sole supplier capable of satisfying Apple's technical and scheduling chipset requirements for iPhones, the Commission had not proved that Qualcomm's conduct, i.e. exclusivity payments, had an effect on Apple's incentives to switch suppliers for all relevant products. In addition, the Commission's assessment of the actual anti-competitive effects of the payments concerned failed to take into account all the relevant evidence whether there were competing suppliers from whom Apple could have sourced.