EU Competition Law: Prohibited Conducts

Posted on Mar 10, 2025 in Law

Prohibited conducts include collusion (Article 101 TFEU and Article 1 LDC) and abuse of a dominant position (Article 102 TFEU and Article 2 LDC). Controlled conducts include mergers (Regulation 139/2004 and Articles 7-10 LDC) and state aids (Articles 107-109 TFEU and Article 11 LDC).

Relevant Market

The definition of the Relevant Market (RM) is provided in the Commission Notice on the definition of the Relevant Market for the purposes of Community Competition Law. It is a concept also used in national cases. An RM is defined in two main dimensions:

  1. Product/Service Market: According to the Commission Notice, a relevant product market comprises all those products and/or services which are regarded as interchangeable or substitutable by the consumer, by reason of the products’ characteristics, their prices, and their intended use. There are three basic criteria:
    • Characteristics
    • Prices
    • Intended Use

    Complementary criteria also appear, regarding the structure of demand-side, consumer preferences, and supply-side substitutability.

  2. Geographical Market: The Commission Notice states that the relevant geographical market comprises the area in which the undertakings concerned are involved in the supply and demand of products or services, in which the conditions of competition are sufficiently homogeneous, and which can be distinguished from neighboring areas due to the different competition conditions in those areas.

Undertaking

The definition does not appear in the Treaty but has been defined by the ECJ based more on economic nature than legal. The concept of an undertaking encompasses every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed. Secondly, that employment procedure is an economic activity.

Antitrust Law: Collusion

General Prohibition

Article 101 prohibits agreements between undertakings, decisions by associations of undertakings, or concerted practices that are considered capable of affecting trade between Member States and that have as their object the prevention, restriction, or distortion of competition within the common market.

  1. Agreements: This has a broad definition and is inclusive of agreements between independent undertakings.
    • Contracts: Very common in vertical relationships, such as distribution contracts.
    • Gentleman Agreements: Oral agreements, more common in horizontal relationships (cartels).
  2. Decisions by Associations of Undertakings: Those associations send some instructions to their members regarding the way to operate on the market. Some of these instructions may affect the competitive behavior of these undertakings and would fall under this prohibition.
  3. Concerted Practices: It is more difficult to appreciate them. Refers to a coordinated course of actions aimed to eliminate the uncertainty as to the way competitors will behave in the market, thus to eliminate the very risk of competing.

Abusive Conducts: Article 102

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:

  • (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.

Dominant Position

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.

Concept: Defined by the ECJ, it relates to a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, customers, and ultimately of its consumers.

A firm is dominant if it behaves “to an appreciable extent independently of its competitors, customers and ultimately of its consumer”.

Criteria for Dominant Position

  1. Market Structure: Based on the sales in the relevant market made by the undertaking; the higher it is, the more dominant position it has. EC criteria: dominance is not likely below 40%. On the other hand, ECJ practice above 75% shows a high likelihood of dominance. The differences with the market shares of competitors are very important.
  2. Potential Competition: Competitive pressure can come from undertakings not yet in the market but willing to enter if conditions are interesting, although there are barriers to entry and conditions established for entering the relevant market. Examples of barriers to entry accepted by the EU Commission and ECJ:
    • Legal barriers, such as administrative authorization
    • IP rights
    • Financial barriers (necessary cost to start an economic activity)
    • Economies of scale
    • Consumer preferences
    • Opportunity costs

Abuse

There is no legal definition of abuse. The concept was developed by the ECJ; leading cases are Hoffman-La Roche and Michelin. The concept of abuse is an objective concept relating to the behavior of an undertaking in a dominant position which is such as to influence the structure of a market where, as a result of the very presence of the undertaking, the degree of competition is weakened and which, through recourse to methods different from those governing normal competition in products or services based on traders’ performance, has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition.

Characteristics of Abuse

  • Objective Concept: Intentions are not relevant to deciding whether the conduct was abusive or not.
  • Objective Standard: Competition based on trader’s performance, also called competition on the merits. The correct way to compete is to be more efficient than competitors, for example, in price or innovation.
  • Exploitative Abuse: Taking advantage of the economic dependence in which other undertakings may find themselves with respect to the undertakings in a dominant position (discrimination) or conduct which is directly exploitative of consumers (charging excessively high prices).
  • Anticompetitive Abuse: Harming competitors, either actual or potential (closing markets).

Specific Forms of Abuse

  1. Exclusionary/Anti-competitive Abuses: Practices that exclude competitors from the relevant market and restrict competition. May be beneficial for consumers in the short term but may have long-term detrimental effects due to reduced competition. Examples include predatory pricing, margin squeeze, exclusivity agreements, refusals to deal/refusals to license IPRs, and tying/bundling. (E.g., Article 102 (b): “limiting production, markets or technical development to the prejudice of consumers”).
  2. Exploitative Abuses: Practices that exploit consumers directly. Directly harmful to consumers. (E.g., Article 102 (a): “directly or indirectly imposing unfair selling prices or other unfair conditions”).
  3. Discriminatory Abuses: Practices that discriminate between various customers. (E.g., Article 102 (c): “applying dissimilar conditions to equivalent transactions with other trading parties”).

Sanctions for Infringement: Abusive practices can’t be exempted; it is an absolute prohibition. Sanctions for infringement include fines. Guidelines on the method of setting fines imposed pursuant to Article 23 of Regulation 1/2003.

Article 102: Summary

  • Prohibits certain forms of unilateral market behavior.
  • Applies only to “undertakings”.
  • Applies only insofar as the conduct affects trade between Member States.
  • Applies only to undertakings holding a dominant market position.
  • Applies only to abusive conduct.
  • The list of examples is not exhaustive.
  • Types of abuses (may be classified in various ways):
    • Exclusionary
    • Exploitative
    • Discriminatory