How a case starts
Article 102 of the Treaty on the Functioning of the European Union (TFEU) prohibits abusive conduct by companies that have a dominant position on a particular market.
An Article 102 case dealt with by the European Commission or a national competition authority can originate either:
The Commission's first step in an Article 102 investigation is to assess whether the undertaking concerned is dominant on any given market or not.
Before assessing dominance, the Commission defines the product market and the geographic market.
- Product market: the relevant product market is made of all products/services which the consumer considers to be a substitute for each other due to their characteristics, their prices and their intended use.
- Geographic market: the relevant geographic market is an area in which the conditions of competition for a given product are homogenous.
Market shares are a useful first indication of the importance of each firm on the market in comparison to the others. The Commission's view is that the higher the market share, and the longer the period of time over which it is held, the more likely it is to be a preliminary indication of dominance. If a company has a market share of less than 40%, it is unlikely to be dominant.
The Commission also takes other factors into account in its assessment of dominance, including the ease with which other companies can enter the market – whether there are any barriers to this; the existence of countervailing buyer power; the overall size and strength of the company and its resources and the extent to which it is present at several levels of the supply chain (vertical integration).
What is an abuse of dominance?
Holding a dominant position on any given market is not in itself illegal. However, a dominant company has a special responsibility to ensure that its conduct does not distort competition. Examples of behaviour that may amount to an abuse include: requiring buyers to purchase all units of a particular product only from the dominant company (exclusive purchasing); setting prices at a loss-making level (predation or predatory pricing); refusing to supply input indispensable for competition in an ancillary market, and charging excessive prices.
The Commission's investigative powers to enforce Article 102 are detailed in Chapter V of Regulation 1/2003
The Commission is empowered to:
- enter the premises of companies;
- examine the records related to the business;
- take copies of those records;
- seal the business premises and records
- ask members of staff or company representatives questions relating to the subject-matter and purpose of the inspection and record the answers
The Commission can require undertakings to provide all information necessary to an investigation via a simple request for information (RFI) or by decision.
Statements of objections and decisions
Statements of objections
The Statement of Objections (SO) details the Commission's competition concerns. It is sent to the parties concerned. The parties are entitled to see the Commission's investigative fileand to an oral hearing conducted by an independent Hearing Officer.
Access to file
Access to the Commission's file takes place normally at the same time as the Statement of Objections is issued.
A "Prohibition Decision" based on Article 7 of Regulation 1/2003 formally finds an infringement against the concerned parties. The Commission may require the parties concerned to stop the infringement, impose remedies and/or impose a fine.
A "Commitment Decision" based on Article 9 of Regulation 1/2003 allows companies to offer commitments that are intended to address the competition concerns identified by the Commission. The commitment decision makes the commitments binding on the parties without establishing an infringement. Acceptance of the commitments is at the discretion of the Commission.
Final public versions of Decisions are published in the Official Journal, along with a Decision summary the final report of the Hearing Officer and the opinion of the Advisory Committee.
A company that has participated in an anti-competitive agreement and therefore infringed competition law may have to pay a fine. the Commission's fining policy is aimed at punishment and deterrence. They are calculated under the framework of the 2006 Guidelines on Fines.