Judgment — ECLI:EU:C:2001:189
Date: 2001-03-29
Language of the case: Portuguese
Court formation: Sixth Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Competition;Principles, objectives and tasks of the Treaties;Dominant position
Concepts: Statement of reasons;Definition of abuse;Public undertakings;Air transport;General
Procedure: Action for annulment - unfounded
Origin: Portugal

Summary of the Judgment 
1. Competition — Public undertakings and undertakings to which Member States grant 
special or exclusive rights — Powers of the Commission — Effect on those powers of 
possible rules laid down by the Council — None — Adoption of directives or 
decisions addressed to Member States — Commission's choice 
(EC Treaty, Art. 90(3) (now Article 86(3) EC)) 
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SUMMARY — CASE C-163/99 
2. Competition — Public undertakings and undertakings to which Member States grant 
special or exclusive rights — Powers of the Commission — Recourse, where there is 
an infringement common to several Member States, to a decision based on 
Article 90(3) of the Treaty (now Article 86(3) EC) rather than to infringement 
proceedings — Abuse of process — None 
3. Acts of the institutions — Statement of reasons — Obligation — Scope — Decision 
based on Article 90(3) of the Treaty (now Article 86(3) EC) — Obligation to give 
reasons for the choice of recourse to a decision rather than to infringement 
proceedings — None 
(EC Treaty, Arts 90(3) and 190 (now Articles 86(3) EC and 253 EC)) 
4. Competition — Dominant position — Definition — Application of dissimilar con­
ditions to equivalent transactions — Transport — Air transport — Freedom to 
provide services — Restrictions — Landing charges — Discrimination — Differen­
tial tariff according to whether flights are domestic or international 
(EC Treaty, Art. 86, second para, (now Article 82, second para., EC)) 
5. Competition — Dominant position — Abuse — Quantity discounts — Whether 
permissible — Conditions 
(EC Treaty, Art. 86, second para, (now Art. 82, second para., EC)) 
6. Competition — Public undertakings and undertakings to which Member States grant 
special or exclusive rights — Abuse of a dominant position — justifications founded 
on Article 90(2) of the Treaty (now Article 86(2) EC) — Need for the party to avail 
itself of them 
(EC Treaty, Arts 86 and 90(2) (now Arts 82 EC and 86(2) EC)) 
1. Under Article 90(3) of the Treaty (now 
Article 86(3) EC) the Commission is 
empowered to determine that a given 
State measure concerning one of the 
type of undertakings referred to in 
Article 90(1) is incompatible with the 
rules of the Treaty and to indicate what 
measures the State to which a decision 
is addressed must adopt in order to 
comply with its obligations under 
Community law. The possibility that 
rules containing provisions which 
impinge upon the specific sphere of 
Article 90 of the Treaty might be laid 
down by the Council by virtue of its 
general power under other articles of 
the Treaty does not preclude the exer­
cise of the power which Article 90 
confers on the Commission. 
Moreover, in the matters covered by 
Article 90 of the Treaty, the Commis-
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PORTUGAL V COMMISSION 
sion enjoys a wide discretion as regards 
both the action which it considers 
necessary to take and the means appro­
priate for that purpose. The choice 
offered to the Commission by Arti­
cle 90(3) of the Treaty between a 
directive and a decision is not deter­
mined by the number of Member States 
which may be concerned. The choice 
depends on whether the Commission's 
objective is to specify in general terms 
the obligations arising under the 
Treaty, or to assess a specific situation 
in one or more Member States in the 
light of Community law and determine 
the consequences arising for the Mem­
ber State or States concerned. 
(see paras 19-20, 23, 28) 
2. The Commission has power under 
Article 90(3) of the Treaty (now Arti­
cle 86(3) EC) to determine that a given 
State measure is incompatible with the 
rules of the Treaty and to indicate what 
measures the State to which a decision 
is addressed must adopt in order to 
comply with its obligations under 
Community law. 
Consequently, the Commission does 
not commit an abuse of process where, 
in a case of infringement of Arti­
cle 90(1) of the Treaty common to 
several Member States, it does not 
bring infringement proceedings but 
assesses, by way of a decision, the 
compatibility with the Treaty of mea­
sures enacted or maintained in force by 
States as regards the undertakings 
referred to in Article 90(1). 
(see paras 33-34) 
3. It follows from the obligation to state 
reasons laid down in Article 190 of the 
Treaty (now Article 253 EC) that, 
where the Commission adopts a deci­
sion based on Article 90(3) of the 
Treaty (now Article 86(3) EC), it must 
make sufficiently clear why it considers 
that the State measure in question 
infringes the provisions of Article 90(1) 
and cannot enjoy (if such is the case) 
the benefit of any of the derogations 
under Article 90(2). 
The Commission cannot, however, be 
required to state why it considered it 
necessary to adopt a decision of that 
kind when, as regards other rules 
adopted by the same Member State, it 
opted for proceedings for failure to act, 
thus adopting a different legal 
approach. Nor can the Commission 
be required to give details in its deci­
sion of the situation existing in other 
Member States in the area dealt with in 
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SUMMARY — CASE C-163/99 
the decision and any action it may have 
taken against them. Moreover, no spe­
cific reasons need be given for the 
choice of a decision as the appropriate 
instrument since that choice is deter­
mined by the Commission's objective. 
(see paras 39-40) 
4. Subparagraph (c) of the second para­
graph of Article 86 of the Treaty (now 
subparagraph (c) of the second para­
graph of Article 82 EC) prohibits any 
discrimination on the part of an under­
taking in a dominant position which 
consists in the application of dissimilar 
conditions to equivalent transactions 
with other trading parties, thereby 
placing them at a competitive disad­
vantage, irrespective of whether such 
discrimination is linked to nationality. 
Measures which entail conferring an 
advantage on carriers who operate 
more than others on domestic rather 
than international routes must be 
regarded as constituting a restriction 
on freedom to provide transport ser­
vices. Such measures also lead to dis­
similar treatment being applied to 
equivalent transactions, thereby affect­
ing free competition. 
That is the case where discrimination 
results from the application to landing 
charges of a different tariff system for 
the same number of landings of aircraft 
of the same type, according to whether 
domestic or international flights are 
involved. 
(see paras 46, 66) 
5. An undertaking occupying a dominant 
position is entitled to offer its custo­
mers quantity discounts linked solely to 
the volume of purchases made from it. 
However, the rules for calculating such 
discounts must not result in the appli­
cation of dissimilar conditions to 
equivalent transactions with other 
trading parties within the meaning of 
subparagraph (c) of the second para­
graph of Article 86 of the Treaty (now 
subparagraph (c) of the second para­
graph of Article 82). 
In that connection, it is of the very 
essence of a system of quantity dis­
counts that larger purchasers of a 
product or users of a service enjoy 
lower average unit prices or — which 
amounts to the same — higher aver­
age reductions than those offered to 
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PORTUGAL V COMMISSION 
smaller purchasers of that product or 
users of that service. Even where there 
is a linear progression in quantity 
discounts up to a maximum discount, 
initially the average discount rises (or 
the average price falls) mathematically 
in a proportion greater than the 
increase in purchases and subsequently 
in a proportion smaller than the 
increase in purchases, before tending 
to stabilise at or near the maximum 
discount rate. The mere fact that the 
result of quantity discounts is that 
some customers enjoy in respect of 
specific quantities a proportionally 
higher average reduction than others 
in relation to the difference in their 
respective volumes of purchase is inher­
ent in this type of system, but it cannot 
be inferred from that alone that the 
system is discriminatory. 
None the less, where as a result of the 
thresholds of the various discount 
bands, and the levels of discount 
offered, discounts (or additional dis­
counts) are enjoyed by only some 
trading parties, giving them an eco­
nomic advantage which is not justified 
by the volume of business they bring or 
by any economies of scale they allow 
the supplier to make compared with 
their competitors, a system of quantity 
discounts leads to the application of 
dissimilar conditions to equivalent 
transactions. 
In the absence of any objective justifi­
cation, having a high threshold in the 
system which can only be met by a few 
particularly large partners of the under­
taking occupying a dominant position, 
or the absence of linear progression in 
the increase of the quantity discounts, 
may constitute evidence of such discri­
minatory treatment. 
(see paras 50-53) 
6. If all the conditions for the application 
of Article 86 of the Treaty (now Arti­
cle 82 EC) with regard to a system for 
fixing the amount of certain fees 
charged by a public undertaking, any 
justification there may be for applying 
such a system can only be made under 
Article 90(2) of the Treaty (now Arti­
cle 86(2) EC). It is for the party seeking 
to avail itself of that justification to 
plead it. 
(see paras 73-74) 
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