Tagged: as efficient competitor test

Post Danmark II: A Clarification of the Law on Rebates under Article 102 TFEU

By Konstantinos Sidiropoulos

Post Danmark II constitutes the latest signal as to the view of the CJEU with regard to the assessment of rebates granted by dominant firms. As this was the first preliminary reference in a rebates case ever, there were high expectations with regard to the judgment (see e.g. here). It was seen as a golden opportunity for the Court to provide meaningful guidance, unconstrained by the limitations of judicial review in a truly fascinating and heavily disputed field of EU competition law. Indeed, this is the area where the European Commission made the most significant efforts to alter the current state of the law (see paras 37-45 of the Commission’s Enforcement Priorities Paper), albeit unsuccessfully (see judgments in Intel and Tomra). Hence, the key issue was whether the CJEU would ultimately yield to the increasing pressure to move to a more economically inspired approach to rebates under Article 102 TFEU. Overall, the ruling is valuable in that it clarifies the standard applicable to rebates granted by dominant undertakings. Continue reading

Post Danmark: does the ECJ take the effects based approach further than a mere price/cost-test and does it oblige the national judge to apply that effects based approach ex nunc?

In a grand chamber judgment in case C‑209/10, Post Danmark, the European Court of Justice (ECJ) handed down a preliminary ruling on the interpretation of abuse of a dominant position (Art. 102 TFEU). The case was referred to the ECJ by a Danish judge in a dispute between Post Danmark and Konkurrencerådet, the Danish competition authority.

I have three remarks concerning this judgment:

  • first, it seems to me that the ECJ does not embrace the average incremental costs instead of average variable costs as the relevant economic parameter for analysing a per se abuse;
  • secondly, the ECJ requires the Danish judge to apply the as-efficient-competitor-test and seems to take it further than a mere price/cost-test to decide on the question whether the pricing practices of Post Danmark were anti-competitive in effect; he must take into account all relevant circumstances;
  • lastly, when the Danish judge takes into account all those circumstances, it seems that the ECJ prescribes an ex nunc appreciation, which might be a restriction of procedural autonomy.

In the Danish market for the distribution of unaddressed mail (direct mail of brochures, guides, newspapers, etc.) the two largest players are Post Danmark and Forbruger-Kontakt (FK). This market is fully liberalised. Next to that, Post Danmark is the universal postal service provider. It uses its distribution network for both the universal postal service and the distribution of unaddressed mail. In 2003, in the Danish market for the distribution of unaddressed mail Post Danmark had a market share of 44 % which increased to 55 % in 2004. According to the Danish competition authority Post Danmark held a dominant position in that market because of such high market shares and because it could maintain its distribution network covering the whole country because of it being the universal postal service provider, regardless of its activities on the market for unaddressed mail.
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