Its core role is the regulation of monopolies, which restrict competition in private industry and produce worse outcomes for consumers and society.
Such abuse may, in particular, consist in: The wording of the provision gives rise to several issues to consider in the application of Article 102; namely, the concept of 'one or more undertaking', 'Relevant market', 'Dominant position' and 'Effect on trade between member states'.
As established and confirmed in several cases before EU courts and the commission, prima facie abusive conduct by dominant firms will be acceptable for one of three reasons:
As asserted in Microsoft v Commission the burden of proof rests on the defendants/alleged firm(s) to provide objective justification[22] – which cannot be vague or theoretical arguments[23] – to disprove a claim of collective dominance brought before the court.
[43] Clarification arises within Paragraph 14 and 15 of the commission's guidance that generally low market shares demonstrate a good proxy of the absence of substantial power, (i.e.: dominance).
[73]"In application, Richard Whish acknowledges that it is "more likely that large and sophisticated customers will have this kind of countervailing buyer power than smaller firms in a fragmented industry".
[72] The commission's guidance goes on to clarify, in Paragraph 18, that the countervailing buyer power will not be considered a sufficient restraint where only a particular, or limited, number of customers are shielded from the market share exercised by the dominant undertaking.
The EU commission takes all sufficient factors into account when trying to enforce Article 102, and they can conclude whether or not to put their time into a case taken to them by the effected parties.
Using the Guidance on Enforcement priorities for Article 102, it outlines the many different types of ways that a ruling body should step in to stop a myriad of strategies that firms use to abuse a position of dominance.
The commission is unable to bind the European courts when applying the law, The two step case is used as shown in Paragraph 9[79] to aide the government in penalising firms that abuse their position of dominance.
The court of justice ruled in Commercial solvents[82] that the requirement of an appreciable effect on trade between member states would be satisfied where conduct brought about an altercation in the structure of competition in the internal market.
An effects-based procedure takes into account for a detailed assessment of an economic nature to show reasonable grounds that the dominant undertaking abuse has foreclosure effects on competition.
Thus, the detailed assessment will show the economic impact of the undertaking practice to avoid false positives and to provide an effective interventionist approach.
[112] The definition of exclusionary abuse is characterised as "conduct engaged in, by a dominant undertaking which is capable of preventing competitors … from profitability entering or remaining active in a given market",[113] meaning that it will have an indirect effect on consumers.
Price discrimination falls under Article 102(c), whereby an abuse is "applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage".
In United Brands v Commission,[119] the Court of Justice recognised that a dominant firm may charge different prices to reflect the competitive market.
[124] In 2019 Google was fined a third time by the European Commission for abusing its market dominance by restricting third-party rivals from displaying search advertisements.
However, in France Telecom SA v Commission[126] a broadband internet company was forced to pay €10.35 Million for dropping its prices below its own production costs.
Margin squeeze was considered in the case of KonKurrensverket v TeliaSonera Sverige,[129] where the Court of Justice established that it exists in its own independent right.
Examples of objective justifications include that the customer would use the product for an illegal purpose or that granting access could negatively impact the incentive of the dominant firm and downstream competitors to innovate.
The issue of whether the use of an IPR could amount to abuse of a dominant position was examined for the first time by the European Court of Justice (ECJ) in the combined cases of Renault[150] and Volvo.
This meant that the interoperability information of the Personal Computers, was necessary for the exercise of a particular activity on the secondary market of workgroup servers' operating systems, and thus indispensable for the maintenance of effective competition.
[171] The test used was stated in the United Brands case that whether the charged price has no reasonable relation to the economic value of the product supplied and exceeds what the dominant undertaking would have obtained in a normal and sufficiently competitive market.
Single market abuse is presented in the case of British Leyland,[175] by where a dominant firm carried out excessive pricing, which not only has an exploitative effect but may also prevent parallel imports and limit intra-brand competition.
The well-known Michelin II[183] case included the aforementioned quantity-based rebates, but in this situation, they were found to be too loyalty inducing by the Courts and were thus a single market abuse.
In United Brands v Commission,[178] UB was also condemned for including clauses in contracts with distributors with the effect of preventing parallel imports between countries by imposing a restriction on the export of un-ripened bananas.
British Leyland's[175] refusal to supply certificates unless a fee was paid acted as a ploy to prevent the free movement of goods in the single market.
[159] In Romanian Power Exchange[186] the Courts found a discrimination based on nationality as non-Romanian wholesale electricity traders were required to obtain a VAT registration.
Interestingly, GlaxoSmithKline[187] demonstrated that manufacturers of pharmaceuticals must only supply what is determined as necessary by the national standards, not what is requested by the wholesalers and can therefore limit parallel trade to an extent, unlike undertakings in other fields.
As their punishments, BEH had to promise to the Commission to set up a new power exchange in Bulgaria, Gazprom promised to revise restrictions on resale of gas in Central and Eastern Europe, as well as ensure prices reflect the competitive benchmark and lastly, Lithuanian Energy had to rebuild a railway they destroyed to prevent a customer using a rival's services, as well as being fined 27.8 million euros.