The Concept of Dominance in Article 82

Introduction:

It is trite law that an undertaking must hold a dominant position for the prohibition in Article 82 to apply. Concomitantly, to hold a dominant position is not in itself an infringement of EC competition law. However, the meaning of dominance in the decisions of the European Commission and the Court’s case law on Article 82 is far from clear.

In this article, four concepts of dominance are canvassed. The first, based on economics, equates dominance with substantial market power (that is, the power to increase prices and reduce output). The second suggests that dominance is defined by reference to commercial power. It is submitted that the current approach in EC competition law is to define dominance by a mixture of both of these methods, with an emphasis on commercial power in some of the major cases. This is problematic in view of the Commission’s aim to redirect the application of Article 82 so that it is in line with economic thinking.

Therefore, the definition of dominance in the Discussion Paper on the application of Article 82 of the Treaty to exclusionary abuses attempts to shift the concept of dominance away from the established case law and to ground a finding of dominance exclusively upon a determination of substantial market power. However, the manner by which this is carried out is unconvincing. The Discussion Paper in part codifies the current case law, while in part tries to reformulate the current approach. This seems to be done in an attempt to show that the reforms suggested in the Discussion Paper are a marginal alteration to the current practice. However, if the Commission is seriously committed to moving away from seeing dominance as commercial power and towards seeing dominance as the presence of substantial market power, this is a significant change, which can lead to a reduction in the scope of Article 82.

There are two other ways of conceptualising dominance. One is to define dominance as the power to exclude rivals so as to gain the power to increase prices and reduce output, while the another is to suggests that dominance is purely a jurisdictional matter to determine whether Article 82 applies. These two approaches to dominance offer interesting opportunities for a radical reconsideration of the role of the concept of dominance, which the Commission seems to have dismissed.

Each of these four concepts of dominance are examined in turn in light of the ideas inherent in the Discussion Paper. This allows for an identification of the following weaknesses with the Discussion Paper: a lack of clarity as to the precise nature of the policy change and a failure to offer a useful set of guidelines. The cause for these weaknesses is that the Discussion Paper is torn between providing a restatement of the current law on the one hand and offering innovative solutions on the other. This suggests that drafting a Discussion Paper in the style of guidelines was inappropriate, because what seems to be the central message of the Discussion Paper, that dominance means substantial market power, is hidden among a raft of paragraphs that make the document unworkable as a set of guidelines.