Opinion of the Advocate General — ECLI:EU:C:2010:212
Date: 2010-04-22
Language of the case: German
Subject matter: Competition;Dominant position
Procedure: Action for annulment;Appeal - unfounded;Appeal - inadmissible;Appeal against penalty
Origin: Germany

Summary of the Judgment 1. Appeals – Pleas in law – Mere repetition of the pleas and arguments put forward before the Court of First Instance – Inadmissibility – Challenge to the interpretation or application of Community law made by the Court of First Instance – Admissibility (Art. 225 EC; Statute of the Court of Justice, Art. 58, first para.; Rules of Procedure of the Court of Justice, Art. 112(1)(c)) 2. Appeals – Pleas in law – Plea submitted for the first time in the context of the appeal – Inadmissibility (Rules of Procedure of the Court of Justice, Art. 113(2)) 3. Actions for failure to fulfil obligations – Right of the Commission to bring judicial proceedings – To be exercised at its discretion (Arts 81 EC, 82 EC and 226 EC) 4. Competition – Dominant position – Abuse – Margin squeeze – Telecommunications network access services provided by the owner-operator of the only available infrastructure – Commission decision finding the existence of the abuse in spite of the approval of the charges by the national regulatory authority – Attributability of the infringement (Arts 81 EC and 82 EC) 5. Appeals – Pleas in law – Inadequate statement of reasons – Admissibility (Statute of the Court of Justice, Art. 58, first para.) 6. Competition – Community rules – Infringements – Committed intentionally or negligently – Meaning – Margin squeeze generated by the charges of an undertaking with a monopoly on the wholesale services market and a virtual monopoly on the retail services market (Council Regulation No 17, Art. 15(2), first subpara.) 7. Acts of the institutions – Obligation to state reasons – Subject-matter – Scope (Art. 253 EC) 8. Competition – Dominant position – Abuse – Margin squeeze – Telecommunications network access services provided by the owner-operator of the only available infrastructure – Negative or insufficient spread between charges for competitors and retail charges (Art. 82 EC) 9. Competition – Dominant position – Abuse – Margin squeeze – Concept (Art. 82 EC) 10. Competition – Dominant position – Abuse – Margin squeeze – Telecommunications network access services provided by the owner-operator of the only available infrastructure – Calculation of the margin squeeze of competitors (Art. 82 EC) 11. Competition – Dominant position – Abuse – Margin squeeze – Equality of opportunity – None – Taking into account revenues from other telecommunications services – Not included (Art. 82 EC) 12. Competition – Dominant position – Abuse – Meaning – Conduct having a restrictive effect on competition (Art. 82 EC) 13. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement – Serious infringement – Margin squeeze generated by the charges of an undertaking with a monopoly – Attenuating circumstances (Council Regulation No 17, Art. 15(2); Commission Notice 98/C 9/03, Section 1A, second para.) 14. Competition – Fines – Amount – Determination – Powers of the Commission – Change from previous practice – Breach of the principle of non-discrimination – None (Council Regulation No 17) 1. It is apparent from Article 225 EC, the first paragraph of Article 58 of the Statute of the Court of Justice and Article 112(1)(c) of the Rules of Procedure of the Court of Justice that an appeal must indicate precisely the contested elements of the judgment which the appellant seeks to have set aside and also the legal arguments specifically advanced in support of the appeal. That requirement is not satisfied by an appeal which, without even including an argument specifically identifying the error of law allegedly vitiating the contested judgment, merely reproduces the pleas in law and arguments previously submitted to the Court of First Instance (now ‘the General Court’). Such an appeal amounts in reality to no more than a request for re-examination of the application submitted to the General Court, which the Court of Justice does not have jurisdiction to undertake. However, provided that the appellant challenges the interpretation or application of European Union law by the General Court, the points of law examined at first instance may be discussed again in the course of an appeal. Indeed, if an appellant could not thus base his appeal on pleas in law and arguments already relied on before the General Court, an appeal would be deprived of part of its purpose. (see paras 24-25) 2. The subject-matter of the proceedings before the General Court may not be changed in the appeal. The jurisdiction of the Court of Justice in an appeal is confined to a review of the findings of law on the pleas argued before the General Court. A party may not, therefore, put forward for the first time before the Court of Justice a plea in law which it has not raised before the General Court, since to do so would be to allow it to bring before the Court of Justice, whose jurisdiction in appeals is limited, a case of wider ambit than that which came before the General Court. (see paras 34, 42, 49) 3. It is for each Member State to take all appropriate measures, whether general or particular, to ensure the fulfilment by the national regulatory authorities of the obligations which are binding under European Union law. Articles 81 EC and 82 EC, in conjunction with Article 10 EC, require the Member States not to introduce or maintain in force measures, even of a legislative or regulatory nature, which may render ineffective the competition rules applicable to undertakings. However, as regards the possibility of the Commission bringing an action for failure to fulfil obligations against a Member State, since the judgment under appeal relates solely to the lawfulness of a decision adopted against an appellant company by the Commission pursuant to Article 82 EC, the Court of Justice must, in the context of the appeal, confine itself to ascertaining whether the complaints put forward in support of that appeal show that the General Court’s examination of the lawfulness of such a decision is vitiated by errors of law, irrespective of whether the Commission could, simultaneously or alternatively, have adopted a decision finding that the Member State in question had infringed European Union law. Consequently, even if it is not inconceivable that the national regulatory authorities infringed European Union law, and the Commission could have chosen to bring an action for failure to fulfil obligations against the Member State under Article 226 EC, such possibilities are irrelevant at the stage of the appeal. Under the system laid down by Article 226 EC, the Commission has a discretion to bring an action for failure to fulfil obligations, and it is not for the Courts of the European Union to assess whether it was appropriate to do so. (see paras 45-47) 4. It is only if anti-competitive conduct is required of undertakings by national legislation, or if the latter creates a legal framework which itself eliminates any possibility of competitive activity on their part, that Articles 81 EC and 82 EC do not apply. In such a situation, the restriction of competition is not attributable, as those provisions implicitly require, to the autonomous conduct of the undertakings. Articles 81 EC and 82 EC may apply, however, if it is found that the national legislation leaves open the possibility of competition which may be prevented, restricted or distorted by the autonomous conduct of undertakings. The possibility of excluding anti-competitive conduct from the scope of Articles 81 EC and 82 EC on the ground that it has been required of the undertakings in question by existing national legislation or that the legislation has precluded all scope for any competitive conduct on their part has been accepted only to a limited extent by the Court of Justice. If a national law merely encourages or makes it easier for undertakings to engage in autonomous anti-competitive conduct, those undertakings remain subject to Articles 81 EC and 82 EC. Dominant undertakings have a special responsibility not to allow their conduct to impair genuine undistorted competition on the common market. In that regard, the mere fact that a dominant undertaking in the telecommunications sector was encouraged by the intervention of a national regulatory authority such as the regulatory authority for telecommunications and post to maintain the pricing practices which led to the margin squeeze of competitors who are at least as efficient as that undertaking cannot, as such, in any way absolve that undertaking from responsibility under Article 82 EC. Since, notwithstanding such interventions, the undertaking had scope to adjust its retail prices for end-user access services, the margin squeeze was attributable to that undertaking. The existence or otherwise of any fault in conduct involving a failure to use that scope cannot alter the finding that the undertaking had scope to adopt that conduct, and can be taken into account only in determining whether that conduct was an infringement and at the stage of setting the level of the fines. (see paras 80-85, 88-89) 5. The question whether the grounds of a judgment of the General Court are adequate is a question of law which is amenable, as such, to judicial review on appeal. (see para. 123) 6. As regards the question whether the infringements of the competition rules were committed intentionally or negligently and are, therefore, liable to be punished by a fine in accordance with the first subparagraph of Article 15(2) of Regulation No 17, that condition is satisfied where the undertaking cannot be unaware of the anti-competitive nature of its conduct, whether or not it is aware that it is infringing the competition rules of the Treaty. This is so in the case of an undertaking in the telecommunications sector which could not have been unaware that, notwithstanding the authorisation decisions of the regulatory authority for telecommunications and post, it had genuine scope to set its retail prices for end-user access services and, moreover, the margin squeeze entailed serious restrictions on competition, particularly in view of its monopoly on the wholesale market in local loop access services and its virtual monopoly on the retail market in end-user access services. (see paras 124-125) 7. The obligation to provide a statement of reasons laid down in Article 253 EC is an essential procedural requirement which must be distinguished from the question whether the reasoning is well founded, which is concerned with the substantive legality of the measure at issue. To that end, the statement of reasons required by Article 253 EC must be appropriate to the measure at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted that measure in such a way as to enable the persons concerned to ascertain the reasons for it and to enable the competent European Union judicature to exercise its power of review. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 253 EC must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question. (see paras 130-131) 8. Subparagraph (a) of the second paragraph of Article 82 EC expressly prohibits an undertaking in a dominant position from directly or indirectly imposing unfair prices and, inter alia, from adopting pricing practices which have an exclusionary effect on its equally efficient actual or potential competitors, that is to say practices which are capable both of making market entry very difficult or impossible for such competitors, and of making it more difficult or impossible for its co-contractors to choose between various sources of supply or commercial partners, thereby strengthening its dominant position by using methods other than those which come within the scope of competition on the merits. From that point of view, therefore, not all competition by means of price can be regarded as legitimate. In so far as an undertaking in a dominant position in the telecommunications sector has scope to reduce or end a margin squeeze of its equally efficient competitors by adjusting its retail prices for end-user access services, that margin squeeze is capable, in itself, of constituting an abuse within the meaning of Article 82 EC in view of the exclusionary effect that it can create for those competitors. Article 82 EC aims, in particular, to protect consumers by means of undistorted competition. It is irrelevant in that regard that the dominant undertaking has to increase its prices in order to end the abuse. By further reducing the degree of competition existing on a market – the end-user access services market – already weakened precisely because of the presence of that undertaking, thereby strengthening its dominant position on that market, such a margin squeeze also has the effect that consumers suffer detriment as a result of the limitation of the choices available to them and, therefore, of the prospect of a longer-term reduction of retail prices as a result of competition exerted by competitors who are at least as efficient in that market. The General Court is not obliged to establish that the wholesale prices for local loop access services or retail prices for end-user access services are in themselves abusive on account of their excessive or predatory nature, as the case may be. (see paras 172, 177, 180-183) 9. In order to assess whether the pricing practices of a dominant undertaking are likely to eliminate a competitor contrary to Article 82 EC, it is necessary to adopt a test based on the costs and the strategy of the dominant undertaking. A dominant undertaking cannot drive from the market undertakings which are perhaps as efficient as the dominant undertaking but which, because of their smaller financial resources, are incapable of withstanding the competition waged against them. Where the abusive nature of the pricing practices of a dominant undertaking stems from their exclusionary effect on its competitors, it is appropriate to analyse that abusive nature solely on the basis of the charges and costs of the dominant undertaking. Such a test can establish whether a dominant undertaking in the telecommunications sector would itself have been able to offer its retail services to end-users otherwise than at a loss if it had first been obliged to pay its own wholesale prices for local loop access services. That test is therefore suitable for determining whether the pricing practices of a dominant undertaking have an exclusionary effect on competitors by squeezing their margins. Such an approach is particularly justified because it is also consistent with the general principle of legal certainty in so far as the account taken of the costs of the dominant undertaking allows that undertaking, in the light of its special responsibility under Article 82 EC, to assess the lawfulness of its own conduct. While a dominant undertaking knows what its own costs and charges are, it does not, as a general rule, know what its competitors’ costs and charges are. Those findings are not affected by the less onerous legal and material conditions to which the dominant undertaking’s competitors are subject in the provision of their telecommunications services to end-users. Even if that assertion were proved, it would not alter either the fact that a dominant undertaking cannot adopt pricing practices which are capable of driving equally efficient competitors from the relevant market, or the fact that such an undertaking must, in view of its special responsibility under Article 82 EC, be in a position itself to determine whether its pricing practices are compatible with that provision. (see paras 198-203) 10. Even if, from the point of view of the end-user, access services and call services can indeed constitute a whole, the Commission is entitled to consider the existence of a margin squeeze in relation to access services alone, without call services being included, in the light of the principles of tariff rebalancing and equality of opportunity. The General Court does not commit any error of law in taking into account the principle of tariff rebalancing which arises from the legislation relating to the telecommunications sector in order to consider the merits of the Commission’s application of Article 82 EC to the abusive pricing practices of a dominant undertaking. Since the legislation relating to the telecommunications sector defines the legal framework applicable to it and, in so doing, contributes to the determination of the competitive conditions under which a dominant undertaking carries on its business in the relevant markets, it is a relevant factor in the application of Article 82 EC to the conduct of that undertaking, whether for the purposes of defining the relevant markets, assessing the abusive nature of such conduct or setting the amount of the fines. That finding is not affected by the fact that the tariff rebalancing principle applies only to the dominant undertaking and not to its competitors, since the General Court is fully entitled to rely, in accordance with the as-efficient-competitor test, on the situation and the costs of the dominant undertaking for the purpose of determining whether that undertaking’s pricing practices constitute an abuse in the light of Article 82 EC. Consequently, since the General Court held that the tariff rebalancing referred to in European Union legislation in relation to the telecommunications sector had to take the form, in particular, of a reduction in the charges for regional and international calls and an increase in the monthly rental and local call rates, it could lawfully infer from this that the principle of tariff rebalancing does require that retail prices for access services and retail prices for call services be considered separately for the purpose of determining whether the relevant pricing practices of the dominant undertaking are abusive. (see paras 221, 223-226) 11. A system of undistorted competition can be guaranteed only if equality of opportunity is secured as between the various economic operators. This means that a dominant undertaking in the telecommunications sector and its equally efficient competitors are placed on an equal footing in the retail market in end-user access services. That condition is not fulfilled where wholesale prices paid to the dominant undertaking for local loop access services cannot be reflected in their retail prices for end-user access services other than by providing those services at a loss. Since, on the one hand, the retail market for end-user access services constitutes a separate market and, on the other, wholesale local loop access services are indispensable to enabling competitors who are at least as efficient to enter into effective competition on that market with an undertaking which has a dominant position largely as a result of the legal monopoly it enjoyed before the liberalisation of the telecommunications sector, the establishment of a system of undistorted competition requires that the dominant undertaking should not be able – by means of its pricing practices on that retail market – to impose on all its equally efficient competitors a competitive disadvantage such as to prevent or restrict their access to that market or the growth of their activities on it. That is particularly the case given that, since any provision by those competitors of other telecommunications services to end-users across the dominant undertaking’s fixed network also requires them to acquire wholesale local loop access services from the dominant undertaking, that competitive disadvantage on the retail market for end-user access services is necessarily reflected in the markets for those other telecommunications services. That last point does not, however, mean that revenues from those other telecommunications services have to be taken into account in order to ascertain whether competitors who are at least as efficient as the dominant undertaking are subject to inequality in competitive conditions on the retail market for end-user access services. Those other telecommunications services fall within markets that are distinct from the latter market. Therefore, it must be held that the dominant undertaking’s pricing practices on the retail market for end-user access services place all of its equally efficient competitors on an unequal footing on that market by comparison with the dominant undertaking itself, resulting in a margin squeeze of those competitors in relation to access services. (see paras 230, 233-236, 240) 12. By prohibiting the abuse of a dominant position in so far as trade between Member States is capable of being affected, Article 82 EC refers to the conduct of a dominant undertaking which, through recourse to methods different from those governing normal competition in products or services on the basis of the transactions of commercial operators, has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition. It follows from this that the existence of a pricing practice resulting in a margin squeeze of its equally efficient competitors constitutes an abuse within the meaning of Article 82 EC only if proof of an anti-competitive effect is produced. As regards the pricing practices of a dominant undertaking in the telecommunications sector resulting in a margin squeeze of its equally efficient competitors, the anti-competitive effect which the Commission is required to demonstrate relates to the possible barriers which those pricing practices could have created for the growth of products on the retail market in end-user access services and, therefore, on the degree of competition in that market. Such a pricing practice is an abuse within the meaning of Article 82 EC if it has an exclusionary effect on competitors who are at least as efficient as the dominant undertaking itself and is capable of making market entry more difficult or impossible for those competitors, and thus of strengthening the position of the dominant undertaking on that market to the detriment of consumers’ interests. Where a dominant undertaking actually implements a pricing practice resulting in a margin squeeze of its equally efficient competitors, with the purpose of driving them from the relevant market, the fact that the desired result is not ultimately achieved does not alter its categorisation as abuse within the meaning of Article 82 EC. However, in the absence of any effect on the competitive situation of competitors, such a pricing practice cannot be classified as exclusionary if it does not make their market penetration any more difficult. (see paras 251-254) 13. The Commission enjoys a broad discretion as regards the method for calculating fines. That method, set out in the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty, displays flexibility in a number of ways, enabling the Commission to exercise its discretion in accordance with those provisions. It is for the Court of Justice to verify whether the General Court has correctly assessed the Commission’s exercise of that discretion. The gravity of the infringements of EU competition law must be assessed in the light of numerous factors, such as, inter alia, the particular circumstances of the case, its context and the dissuasive effect of fines, although no binding or exhaustive list of the criteria to be applied has been drawn up. The factors capable of affecting the assessment of the gravity of infringements include the conduct of the undertaking concerned, the role it played in the establishment of the practice in question, the profit which it was able to derive from that practice, its size, the value of the goods concerned and the threat that infringements of that type pose to the objectives of the European Union. (see paras 271-274) 14. The fact that the Commission, in the past, imposed fines of a certain level for particular types of infringement does not mean that it is stopped from raising that level within the limits indicated in Regulation No 17, if that is necessary to ensure the implementation of European Union competition policy. The proper application of the European Union’s competition rules requires that the Commission be able at any time to adjust the level of fines to the needs of that policy. (see para. 294)