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2018:270 MEO – Serviços de Comuniçações e Multimédia SA v Autoridade da Concorrência

Court

Court of Justice

Date of ruling

19 April 2018

Case name (short version)

MEO – Serviços de Comuniçações e Multimédia SA v Autoridade da Concorrência

Case Citation

C-525/16

ECLI:EU:C:2018:270

Key words

Reference for a preliminary ruling — Competition — Abuse of dominant position — Subparagraph (c) of the second paragraph of Article 102 TFEU — Concept of ‘competitive disadvantage’ — Discriminatory prices on the downstream market — Cooperative for the management of rights relating to copyright — Royalty payable by domestic entities which provide a paid television signal transmission service and television content

Basic context

This request for a preliminary ruling concerns the interpretation of point (c) of the second paragraph of Article 102 TFEU.  The request has been made in the course of proceedings between MEO — Serviços de Comunicações e Multimédia SA (‘MEO’) and the Autoridade da Concorrência (competition authority, Portugal) concerning the latter’s decision to take no further action on MEO’s complaint against GDA — Cooperativa de Gestão dos Direitos dos Artistas Intérpretes ou Executantes (Cooperative for the Management of the Rights of Performing Artists, Portugal) (‘GDA’) concerning an alleged abuse of a dominant position, in particular, discrimination in the amount of the royalty which GDA charged MEO in its capacity as an entity which provides a paid television signal transmission service and television content.

Points arising – admissibility

Points arising – substance

The questions referred to the Court

 

(1)      If, in infringement proceedings, there is proof or evidence that an undertaking in a dominant position is applying discriminatory prices to a retail undertaking and that that is putting that undertaking at a disadvantage in relation to its competitors, is it necessary, in order for that conduct to be characterised as placing the undertaking at a competitive disadvantage, within the meaning of point (c) of [the second paragraph of] Article 102 TFEU, for the severity, the relevance or the significance of the effect on the undertaking’s competitive position and/or competitiveness to be assessed, in particular in so far as concerns its ability to absorb the difference in costs borne in connection with the wholesale offering?

 

(2)      If there is proof or evidence in infringement proceedings that the discriminatory prices charged by an undertaking in a dominant position are of significantly reduced importance for the costs incurred, income obtained and profitability achieved by the affected retail undertaking, is an assessment that there is no evidence of abuse of a dominant position and prohibited practices compatible with an interpretation consistent with subparagraph (c) of [the second paragraph of] Article 102 TFEU and the judgments of 15 March 2007, British Airways v Commission (C95/04 P, EU:C:2007:166) and of 9 September 2009, Clearstream v Commission (T301/04, EU:T:2009:317)?

 

(3)      Or, on the contrary, is such a circumstance insufficient to preclude the conduct in question from being characterised as abuse of a dominant position and a prohibited practice within the meaning of subparagraph (c) of [the second paragraph of] Article 102 TFEU, that circumstance being of relevance only for the purposes of determining the degree of liability or punishment of the infringing undertaking?

 

(4)      The fact that, under subparagraph (c) of [the second paragraph of] Article 102 TFEU, [the situation covered by that provision] has to be such as to place the trading partners at a ‘competitive disadvantage’, must that be interpreted to the effect that the advantage arising from the discrimination must equate to a minimum percentage of the costs structure of the undertaking concerned?

 

(5)      The fact that, under subparagraph (c) of [the second paragraph of] Article 102 TFEU, [the situation covered by that provision] has to be such as to place the trading partners at a ‘competitive disadvantage’, must that be interpreted to the effect that the advantage arising from the discrimination must equate to a minimal amount of the difference between the average costs borne by the competing undertakings for the wholesale offering at issue?

 

(6)      The fact that, under subparagraph (c) of [the second paragraph of] Article 102 TFEU, [the situation covered by that provision] has to be such as to place the trading partners at a ‘competitive disadvantage’, can that be interpreted to the effect that the advantage arising from the discrimination must, in the context of the market and the service in question, equate to values higher than the differences indicated in Tables 5 to 7 [referred to in this request for a preliminary ruling] in order for the conduct to be characterised as a prohibited practice?

 

(7)      If the answer to any of questions 4 to 6 is in the affirmative, how is such a minimum threshold of significance of the disadvantage in relation to the costs structure or the average costs borne by the competing undertakings in the retail market in question to be determined?

 

(8)      If such a minimum threshold has been defined, does the fact that it has not been reached every year rebut the presumption in the judgment, [of 9 September 2009, Clearstream v Commission (T301/04, EU:T:2009:317)], according to which it must be held that the application to a trading partner of different prices for equivalent services continuously over a period of five years and by an undertaking having a de facto monopoly on the upstream market could not fail to cause that partner a competitive disadvantage?

 

 

26      In order to establish whether the price discrimination on the part of an undertaking in a dominant position vis-à-vis its trade partners tends to distort competition on the downstream market, as the Advocate General submitted, in essence, in paragraph 63 of his Opinion, the mere presence of an immediate disadvantage affecting operators who were charged more, compared with the tariffs applied to their competitors for an equivalent service, does not, however, mean that competition is distorted or is capable of being distorted.

27      It is only if the behavior of the undertaking in a dominant position tends, having regard to the whole of the circumstances of the case, to lead to a distortion of competition between those business partners that the discrimination between trade partners which are in a competitive relationship may be regarded as abusive. In such a situation, it cannot, however, be required in addition that proof be adduced of an actual, quantifiable deterioration in the competitive position of the business partners taken individually (judgment of 15 March 2007, British Airways v Commission, C‑95/04 P, EU:C:2007:166, paragraph 145).

28      Therefore, as the Advocate General submitted in paragraph 86 of his Opinion, it is necessary to examine all the relevant circumstances in order to determine whether price discrimination produces or is capable of producing a competitive disadvantage, for the purposes of subparagraph (c) of the second paragraph of Article 102 TFEU. 

29      With regard to the issue whether, for the application of subparagraph (c) of the second paragraph of Article 102 TFEU, it is necessary to take into account the seriousness of a possible competitive disadvantage, it must be pointed out that fixing an appreciability (de minimis) threshold for the purposes of determining whether there is an abuse of a dominant position is not justified (see, to that effect, judgment of 6 October 2015, Post Danmark, C‑23/14, EU:C:2015:651, paragraph 73).

30      However, in order for it to be capable of creating a competitive disadvantage, the price discrimination referred to in subparagraph (c) of the second paragraph of Article 102 TFEU must affect the interests of the operator which was charged higher tariffs compared with its competitors.

37      In view of the foregoing, the answer to the questions referred is that the concept of ‘competitive disadvantage’, for the purposes of subparagraph (c) of the second paragraph of Article 102 TFEU, must be interpreted to the effect that, where a dominant undertaking applies discriminatory prices to trade partners on the downstream market, it covers a situation in which that behaviour is capable of distorting competition between those trade partners. A finding of such a ‘competitive disadvantage’ does not require proof of actual quantifiable deterioration in the competitive situation, but must be based on an analysis of all the relevant circumstances of the case leading to the conclusion that that behaviour has an effect on the costs, profits or any other relevant interest of one or more of those partners, so that that conduct is such as to affect that situation.

 

Intervention

Interim measures

Order

The concept of ‘competitive disadvantage’, for the purposes of subparagraph (c) of the second paragraph of Article 102 TFEU, must be interpreted to the effect that, where a dominant undertaking applies discriminatory prices to trade partners on the downstream market, it covers a situation in which that behaviour is capable of distorting competition between those trade partners. A finding of such a ‘competitive disadvantage’ does not require proof of actual quantifiable deterioration in the competitive situation, but must be based on an analysis of all the relevant circumstances of the case leading to the conclusion that that behaviour has an effect on the costs, profits or any other relevant interest of one or more of those partners, so that that conduct is such as to affect that situation.

Fine changed

Case duration

18 months

Judge-rapporteur

Prechal

Advocate-general

Wahl

Notes on academic writings

  1. Idot, Laurence: Abus d’exploitation et prix discriminatoires, Europe 2018 Juin Comm. nº 6 p.23-24 (FR)
  2. Balthasar-Wach, Agnes ; Wollmann, Hanno: EUGH: Preisliche Diskriminierungen ohne Wettbewerbsnachteil sind erlaubt, Ecolex 2018 p.746-747 (DE)
  3. Göckler, Till: Auswirkungen einer Preisdiskriminierung auf die Wettbewerbsposition des Diskriminierten, Neue Zeitschrift für Kartellrecht 2018 p.416-419 (DE)
  4. Hemler, Caroline: Wettbewerbsrecht: Wettbewerbsverzerrung bei preislicher Diskriminierung zwischen Handelspartnern auf dem nachgelagerten Markt durch marktbeherrschendes Unternehmen – Anmerkung von Rechtsanwältin Dr. Caroline Hemler, Europäische Zeitschrift für Wirtschaftsrecht 2018 p.541-545 (DE)
  5. Safron, Johannes: Zum Begriff der Wettbewerbsbenachteiligung bei Diskriminierungen unter Artikel 102 AEUV, ÖZK aktuell : Österreichische Zeitschrift für Kartell- und Wettbewerbsrecht 2018 p.128-135 (DE)
  6. Decocq, Georges: L’établissement d’un “désavantage dans la concurence” produit par une disrimination tarifaire requiert une analyse des effets réels ou potentiels de celle-ci sur la situation concurrentielle de l’entreprise discriminée, Revue de jurisprudence commerciale 2018 p.384-392 (FR)
  7. O’Donoghue, Robert: The Quiet Death of Secondary-Line Discrimination as an Abuse of Dominance: Case C-525/16 MEO, Journal of European Competition Law & Practice 2018 Vol. 9 nº 7 p.443-445 (EN)
  8. Parmentier, Hugues: Prix discriminatoires et abus de position dominante, Revue Lamy de la Concurrence : droit, économie, régulation 2018 nº 76 p.23-27 (FR)
  9. Horstkotte, Christian ; Wingerter, Eugen: Preisdiskriminierung durch marktbeherrschendes Unternehmen, IWRZ – Zeitschrift für internationales Wirtschaftsrecht 2018 N°6 p.270 (DE)
  10. Graef, Inge: Grenzen aan discriminatie als misbruik van machtspositie, S.E.W. : Tijdschrift voor Europees en economisch recht 2018 n° 66 p.541-546 (NL)
  11. Van Damme, Eric ; Sauter, Wolf: Kan prijsdifferentiatie mededingings-beperkend zijn? Zaak C-525/16 (MEO), Markt & Mededinging 2018 n°5 p.212-218 (NL)
Kiran Desai

Kiran Desai

Partner at EY Law
Kiran S. Desai has over 25 years’ experience of private practice in EU competition law.He is engaged in all aspects of EU competition law, including litigation before the courts and has written extensively on EU competition law matters.He is a partner at EY Law, based in Brussels, and is the EU Competition Law Leader for the global EY Law network of firms.
Kiran Desai

About the Author

Kiran Desai

Kiran Desai

Kiran S. Desai has over 25 years’ experience of private practice in EU competition law. He is engaged in all aspects of EU competition law, including litigation before the courts and has written extensively on EU competition law matters. He is a partner at EY Law, based in Brussels, and is the EU Competition Law Leader for the global EY Law network of firms.


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