Communication from the Commission - Guidance on the Commission's Enforcement Priorities in Applying Article 82 EC Treaty to Abusive Exclusionary Conduct by Dominant Undertakings
Date: 2008-12-05
Institutions: European Commission
Subjects: EU market, competition policy, dominant position, restriction on competition

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 5.12.2008 
COM(2008) 832 final 

COMMUNICATION FROM THE COMMISSION 

Guidance on the Commission's Enforcement Priorities in Applying Article 82 EC Treaty 
to Abusive Exclusionary Conduct by Dominant Undertakings 

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COMMUNICATION FROM THE COMMISSION 

Guidance on the Commission's Enforcement Priorities in Applying Article 82 EC Treaty 
to Abusive Exclusionary Conduct by Dominant Undertakings 

(Text with EEA relevance) 

TABLE OF CONTENTS 

I. 

II 

III 

A. 

a) 

b) 

c) 

B. 

C. 

D. 

IV 

A. 

a) 

b) 

c) 

B. 

a) 

b) 

c) 

d) 

C. 

a) 

b) 

c) 

Introduction .................................................................................................................. 4 

Purpose of this document ............................................................................................. 4 

General approach to exclusionary conduct .................................................................. 5 

Market power ............................................................................................................... 5 

Market position of the dominant undertaking and its competitors .............................. 6 

Expansion or entry ....................................................................................................... 7 

Countervailing buyer power......................................................................................... 8 

Foreclosure leading to consumer harm ("anticompetitive foreclosure") ..................... 8 

Price-based exclusionary conduct .............................................................................. 10 

Objective necessity and efficiencies .......................................................................... 12 

Specific forms of abuse.............................................................................................. 13 

Exclusive dealing ....................................................................................................... 13 

Exclusive Purchasing ................................................................................................. 13 

Conditional Rebates ................................................................................................... 14 

Efficiencies................................................................................................................. 17 

Tying and bundling .................................................................................................... 17 

Distinct products ........................................................................................................ 18 

Anticompetitive foreclosure in the tied and/or tying market ..................................... 18 

Multi-product rebates ................................................................................................. 19 

Efficiencies................................................................................................................. 19 

Predation .................................................................................................................... 20 

Sacrifice...................................................................................................................... 20 

Anticompetitive foreclosure....................................................................................... 21 

Efficiencies................................................................................................................. 22 

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D. 

a) 

b) 

c) 

d) 

Refusal to supply and margin squeeze ....................................................................... 22 

Objective necessity of the input ................................................................................. 24 

Elimination of effective competition ......................................................................... 25 

Consumer harm .......................................................................................................... 25 

Efficiencies................................................................................................................. 26 

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I. 

1. 

II 

2. 

3. 

4. 

5. 

6. 

INTRODUCTION 

Article  82  of  the  Treaty  establishing  the  European  Community  (“Article  82”) 
prohibits abuses of a dominant position. In accordance with the case-law, it is not in 
itself  illegal  for  an  undertaking  to  be  in  a  dominant  position  and  such  a  dominant 
undertaking  is  entitled  to  compete  on  the  merits.  However,  the  undertaking 
concerned  has  a  special  responsibility  not  to  allow  its  conduct  to  impair  genuine 
undistorted  competition  on  the  common  market.  Article  82  is  the  legal  basis  for  a 
crucial component of competition policy and its effective enforcement helps markets 
to  work  better  for  the  benefit  of  businesses  and  consumers.  This  is  particularly 
important  in  the  context  of  the  wider  objective  of  achieving  an  integrated  internal 
market. 

PURPOSE OF THIS DOCUMENT 

The  present  document  sets  out  the  enforcement  priorities  that  will  guide  the 
Commission’s  action  in  applying  Article  82  to  exclusionary  conduct  by  dominant 
undertakings.  Alongside  the  Commission's  specific  enforcement  decisions,  it  is 
intended  to  provide  greater  clarity  and  predictability  on  the  general  framework  of 
analysis  which  the  Commission  employs  in  determining  whether  it  should  pursue 
cases  concerning  various  forms  of  exclusionary  conduct  and  to  help  undertakings 
better  assess  whether  a  certain  behaviour  is  likely  to  result  in  intervention  by  the 
Commission under Article 82.  

This  document  is  not  intended  to  constitute  a  statement  of  the  law  and  is  without 
prejudice to the interpretation of Article 82 by the European Court of Justice or the 
Court of First Instance. In addition, the general framework set out in this document 
applies without prejudice to the possibility for the Commission to reject a complaint 
when  it  considers  that  a  case  lacks  priority  on  other  grounds  such  as  a  lack  of 
Community interest. 

Article  82  applies  to  undertakings  which  hold  a  dominant  position  on  one  or  more 
relevant  markets.  Such  a  position  may  be  held  by  one  undertaking  (single 
dominance) or by two or more undertakings (collective dominance). This document 
only relates to abuses committed by undertakings holding single dominance 

In  applying  Article  82  to  exclusionary  conduct  by  dominant  undertakings,  the 
Commission  will  focus  on  those  types  of  conduct  that  are  most  harmful  to 
consumers. Consumers benefit from competition through lower prices, better quality 
and  a  wider  choice  of  new  or  improved  goods  and  services.  The  Commission, 
therefore, will direct its enforcement to ensuring that markets function properly and 
that  consumers  benefit  from  the  efficiency  and  productivity  which  result  from 
effective competition between firms. 

The  emphasis  of  the  Commission's  enforcement  activity  in  relation  to  exclusionary 
conduct  is  on  safeguarding  the  competitive  process  in  the  internal  market  and 
ensuring that undertakings which hold a dominant position do not exclude their rivals 
by  other  means  than  competing  on  the  merits  of  the  products  or  services  they 
provide. In doing so the Commission is mindful that what really matters is to protect 

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7. 

8. 

an  effective  competitive  process  and  not  simply  protecting  competitors.  This  may 
well mean that competitors who deliver less to consumers in terms of price, choice, 
quality and innovation will leave the market. 

Conduct  which  is  directly  exploitative  of  consumers,  for  example  charging 
excessively high prices or certain behaviour that undermines the efforts to achieve an 
integrated internal market, is also liable to infringe Article 82. The Commission may 
decide to intervene in relation to such conduct, in particular where the protection of 
consumers  and  the  good  functioning  of  the  internal  market  cannot  otherwise  be 
adequately  ensured.  For  the  purpose  of  providing  guidance  on  its  enforcement 
priorities  the  Commission  at  this  stage  limits  itself  to  exclusionary  conduct  and  in 
particular  certain  specific  types  of  exclusionary  conduct  which,  based  on  its 
experience, appear to be the most common. 

In  applying  the  general  enforcement  principles  set  out  in  this  document,  the 
Commission will take into account the specific facts and circumstances of each case. 
For  example,  in  cases  involving  regulated  markets,  the  Commission  will  take  into 
account  the  specific  regulatory  environment  in  conducting  its  assessment1.  The 
Commission  may  therefore  adapt  the  approach set  out  below  to  the  extent  that  this 
would appear to be reasonable and appropriate in a given case.  

III 

GENERAL APPROACH TO EXCLUSIONARY CONDUCT 

A. 

9. 

10. 

1 
2 

3 

Market power 

The  assessment  of  whether  an  undertaking  is  in  a  dominant  position  and  of  the 
degree  of  market  power  it  holds  is  a  first  step  in  the  application  of  Article  82. 
According  to  the  case-law,  holding  a  dominant  position  confers  a  special 
responsibility  on  the firm concerned,  the scope of which must be considered in the 
light of the specific circumstances of each case2.  

Dominance  has  been  defined  under  EC  law  as  a  position  of  economic  strength 
enjoyed by an undertaking, which enables it to prevent effective competition being 
maintained  on  a  relevant  market,  by  affording  it  the  power  to  behave  to  an 
appreciable extent independently of its competitors, its customers and ultimately of 
consumers3.  This  notion  of  independence  is  related  to  the  degree  of  competitive 
constraint  exerted  on  the  undertaking  in  question.  Dominance  entails  that  these 
competitive  constraints  are  not  sufficiently  effective  and  hence  that  the  firm  in 
question enjoys substantial market power over a period of time. This means that the 
undertaking's  decisions  are  largely  insensitive  to  the  actions  and  reactions  of 
competitors,  customers  and,  ultimately,  consumers.  The  Commission  may  consider 

See for instance paragraph 81.  
Case 322/81 Nederlandsche Banden Industrie Michelin (Michelin I) v Commission [1983] ECR 3461, 
paragraph 57; Case T-83/91 Tetra Pak v Commission (Tetra Pak II) [1993] ECR II-755, paragraph 114; 
Case T-111/96 ITT Promedia v Commission [1998] ECR II-2937, paragraph 139; Case T-228/97 Irish 
Sugar v Commission [1999] ECR II-2969, paragraph 112; and Case T-203/01 Michelin v Commission 
(Michelin II) [2003] ECR II-4071, paragraph 97. 
See Case 27/76 United Brands Company and United Brands Continentaal v Commission [1978] ECR 
207, paragraph 65; Case 85/76 Hoffmann-La Roche & Co. v Commission [1979] ECR 461, paragraph 
38.  

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that  effective  competitive  constraints  are  absent  even  if  some  actual  or  potential 
competition  remains4.  In  general,  a  dominant  position  derives  from  a  combination  of 
several factors which, taken separately, are not necessarily determinative5. 

11. 

The  Commission  considers  that  an  undertaking  which  is  capable  of  profitably 
increasing prices above the competitive level for a significant period of time does not 
face sufficiently effective competitive constraints and can thus generally be regarded 
as dominant.6 In this document, the expression “increase prices” includes the power 
to  maintain  prices  above  the  competitive  level  and  is  used  as  shorthand  for  the 
various  ways  in  which  the  parameters  of  competition  -  such  as  prices,  output, 
innovation,  the  variety  or  quality  of  goods  or  services  -  can  be  influenced  for  the 
profit of the dominant undertaking and to the detriment of consumers7. 

12. 

The assessment of dominance will take into account the competitive structure of the 
market, and in particular the following factors: 

•  constraints imposed by the existing supplies from, and the position on the market 
of,  actual  competitors  (the  market  position  of  the  dominant  undertaking  and  its 
competitors); 

•  constraints  imposed  by  the  credible  threat  of  future  expansion  by  actual 

competitors or entry by potential competitors (expansion and entry); 

•  constraints  imposed  by  the  bargaining  strength  of  the  undertaking’s  customers 

(countervailing buyer power). 

Market position of the dominant undertaking and its competitors 

Market  shares  provide  a  useful  first  indication  for  the  Commission  of  the  market 
structure  and  of  the  relative  importance  of  the  various  undertakings  active  on  the 
market8.  However,  the  Commission  will  interpret  market  shares  in  the  light  of  the 
relevant market conditions, and in particular of the dynamics of the market and of the 
extent  to  which  products  are  differentiated.  The  trend  or  development  of  market 
shares over time may also be taken into account in volatile or bidding markets. 

See Case 27/76 United Brands Company and United Brands Continentaal v Commission [1978] ECR 
207,  paragraphs  113-121;  Case  T-395/94  Atlantic  Container  Line  and  Others  v  Commission  [2002] 
ECR II-875, paragraph 330.  
Case 27/76 United Brands and United Brands Continentaal v Commission [1978] ECR 207, paragraphs 
65 and 66; Case C-250/92 Gøttrup-Klim e.a. Grovvareforeninger v Dansk Landbrugs Grovvareselskab 
[1994]  ECR  I-5641,  paragraph  47;  Case  T-30/89  Hilti  v  Commission  [1991]  ECR  II-1439,  paragraph 
90. 
What is a significant period of time will depend on the product and on the circumstances of the market 
in question, but normally a period of two years will be sufficient. 
Accounting profitability may be a poor proxy for the exercise of market power. See to that effect Case 
27/76  United  Brands  Company  and  United  Brands  Continentaal  v  Commission  [1978]  ECR  207, 
paragraph 126. 
Case 85/76 Hoffmann-La Roche & Co. v Commission [1979] ECR 461, paragraph 39-41; Case C-62/86 
AKZO v Commission [1991] ECR I-3359, paragraph 60; Case T-30/89 Hilti v Commission [1991] ECR 
II-1439,  paragraphs  90-92;  Case  T-340/03  France  Télécom  v  Commission  [2007]  ECR  II-107, 
paragraph 100. 

a) 

13. 

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6 

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14. 

15. 

b) 

16. 

17. 

The Commission considers that low market shares are generally a good proxy for the 
absence  of  substantial  market  power.  The  Commission's  experience  suggests  that 
dominance  is  not  likely  if  the  undertaking's  market  share  is  below  40%  in  the 
relevant  market.  However,  there  may  be  specific  cases  below  this  threshold  where 
competitors are not in a position to constrain effectively the conduct of a dominant 
undertaking,  for  example  where  they  face  serious  capacity  limitations.  Such  cases 
may also deserve attention on the part of the Commission.  

Experience  suggests  that  the  higher  the  market  share  and  the  longer  the  period  of 
time  over  which  it  is  held,  the  more  likely  it  is  that  it  constitutes  an  important 
preliminary  indication  of  the  existence  of  a  dominant  position  and,  in  certain 
circumstances,  of  possible  serious  effects  of  abusive  conduct,  justifying  an 
intervention  by  the  Commission  under  Article  829.  However,  as  a  general  rule,  the 
Commission will not come to a final conclusion on the opportunity to pursue a case 
without examining all the factors which may be sufficient to constrain the behaviour 
of the undertaking.  

Expansion or entry 

Competition is a dynamic process and an assessment of the competitive constraints 
on  an  undertaking  cannot  be  based  solely  on  the  existing  market  situation.  The 
potential  impact  of  expansion  by  actual  competitors  or  entry  by  potential 
competitors,  including  the  threat  of  such  expansion  or  entry,  is  also  relevant.  An 
undertaking  can  be  deterred  from  increasing  prices  if  expansion  or  entry  is  likely, 
timely  and  sufficient.  For  the  Commission  to  consider  expansion  or  entry  likely  it 
must  be  sufficiently  profitable  for  the  competitor  or  entrant,  taking  into  account 
factors such as the barriers to expansion or entry, the likely reactions of the allegedly 
dominant undertaking and other competitors, and the risks and costs of failure. For 
expansion or entry to be considered timely, it must be sufficiently swift to deter or 
defeat  the  exercise  of  substantial  market  power.  For  expansion  or  entry  to  be 
sufficient, it cannot be simply small-scale entry, for example into some market niche, 
but must be of such a magnitude as to be able to deter any attempt to increase prices 
by the putatively dominant undertaking in the relevant market. 

Barriers  to  expansion  or  entry  can  take  various  forms.  They  may  be  legal  barriers, 
such  as  tariffs  or  quotas,  or  they  may  take  the  form  of  advantages  specifically 
enjoyed  by  the  dominant  undertaking,  such  as  economies  of  scale  and  scope, 
privileged access to essential inputs or natural resources, important technologies10 or 
an  established  distribution  and  sales  network11.  They  may  also  include  costs  and 
other impediments, for instance resulting from network effects,  faced by customers 
in  switching  to  a  new  supplier.  The  dominant  undertaking's  own  conduct  may  also 
create barriers to entry, for example where it has made significant investments which 
entrants or competitors would have to match12, or where it has concluded long term 

9 

10 
11 
12 

As to the relationship between the degree of dominance and the finding of abuse, see Joined Cases C-
395/96  P  and  C-396/96  P  Compagnie  Maritime  Belge  Transports,  Compagnie  Maritime  Belge  and 
Dafra-Lines  v  Commission  [2000]  ECR  I-1365,  paragraph  119;  Case  T-228/97  Irish  Sugar  v 
Commission [1999] ECR II-2969, paragraph 186. 
Case T-30/89 Hilti v Commission [1991] ECR II-1439 paragraph 19.  
Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461, paragraph 48.  
Case 27/76 United Brands v Commission [1978] ECR 207, paragraph 91.  

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c) 

18. 

B. 

19. 

contracts  with  its  customers  that  have  appreciable  foreclosing  effects.  Persistently 
high  market  shares  may  be  indicative  of  the  existence  of  barriers  to  entry  and 
expansion. 

Countervailing buyer power 

Competitive  constraints  may  be  exerted  not  only  by  actual  or  potential  competitors 
but also by customers. Even an undertaking with a high market share may not be able 
to act to an appreciable extent independently of customers with sufficient bargaining 
strength13. Such countervailing buying power may result from the customers’ size or 
their  commercial  significance  for  the  dominant  undertaking,  and  their  ability  to 
switch quickly to competing suppliers, to promote new entry or vertically integrate, 
and  to  credibly  threaten  to  do  so.  If  countervailing  power  is  of  a  sufficient 
magnitude, it may deter or defeat an attempt by the undertaking to profitably increase 
prices.  Buyer  power  may  not,  however,  be  considered  a  sufficiently  effective 
constraint  if  it  only  ensures  that  a  particular  or  limited  segment  of  customers  is 
shielded from the market power of the dominant undertaking. 

Foreclosure leading to consumer harm ("anticompetitive foreclosure") 

The  aim  of  the  Commission's  enforcement  activity  in  relation  to  exclusionary 
conduct is to ensure that dominant undertakings do not impair effective competition 
by  foreclosing  their  rivals  in  an  anticompetitive  way  and  thus  having  an  adverse 
impact on consumer welfare, whether in the form of higher price levels than would 
have otherwise prevailed or in some other form such as limiting quality or reducing 
consumer choice. In this document the term "anticompetitive foreclosure" is used to 
describe  a  situation  where  effective  access  of  actual  or  potential  competitors  to 
supplies  or  markets  is  hampered  or  eliminated  as  a  result  of  the  conduct  of  the 
dominant undertaking whereby the dominant undertaking is likely to be in a position 
to  profitably  increase  prices14  to  the  detriment  of  consumers.  The  identification  of 
likely  consumer  harm  can  rely  on  qualitative  and,  where  possible  and  appropriate, 
quantitative evidence. The Commission will moreover address such anticompetitive 
foreclosure both at the intermediate level and/or at the level of final consumers15.  

20. 

The  Commission  will  normally  intervene  under  Article  82  where,  on  the  basis  of 
cogent  and  convincing  evidence,  the  allegedly  abusive  conduct  is  likely  to  lead  to 
anticompetitive  foreclosure.  The  Commission  considers  the  following  factors  to  be 
generally relevant to such an assessment: 

13 

14 
15 

See  Case  T-228/97  Irish  Sugar  v  Commission  [1999]  ECR  II-2969,  paragraphs  97-104,  in  which  the 
CFI considered whether the alleged lack of independence of the firm vis-à-vis its customers should be 
seen as an exceptional circumstance preventing the finding of a dominant position in spite of the fact 
that the firm was responsible for a very large part of the sales recorded on the industrial sugar market in 
Ireland. 
For the meaning of the expression "increase price" see paragraph 11. 
The  concept  of  ‘consumers’  encompasses  all  direct  or  indirect  users  of  the  products  affected  by  the 
conduct, including intermediate producers that use the products as an input, as well as distributors and 
final  consumers  both  of  the  immediate  product  and  of  products  provided  by  intermediate  producers. 
Where  intermediate  users  are  actual  or  potential  competitors  of  the  dominant  undertaking,  the 
assessment focuses on the effects of the conduct on users further downstream. 

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•  the  position  of  the  dominant  undertaking.  In  general,  the  stronger  the  dominant 
position,  the  higher  the  likelihood  that  conduct  protecting  that  position  leads  to 
anticompetitive foreclosure; 

•  the  conditions  on  the  relevant  market.  This  includes  the  conditions  of  entry  and 
expansion, such as the existence of economies of scale and/or scope and network 
effects. Scale economies mean that competitors are less likely to enter or stay in 
the market if the dominant undertaking forecloses a significant part of the relevant 
market.  Similarly,  the  conduct  may  allow  the  dominant  undertaking  to  "tip"  a 
market  characterised  by  network  effects  in  its  favour  or  to  further  entrench  its 
position  on  such  a  market.  Likewise,  if  entry  barriers  in  the  upstream  and/or 
downstream market are significant, this means that it may be costly for rivals to 
overcome possible foreclosure through vertical integration; 

•  the  position  of  the  dominant  undertaking’s  competitors.  This  includes  the 
importance  of  competitors  for  the  maintenance  of  effective  competition.  A 
specific  rival  may  play  a  significant  competitive  role  even  with  only  a  small 
market  share  compared  to  other  competitors:  it  may,  for  example  be  the  closest 
competitor to the dominant firm, be a particularly innovative competitor, or have 
the reputation of systematically cutting prices. In its assessment, the Commission 
may  also  consider  in  appropriate  cases,  on  the  basis  of  information  available, 
whether there are realistic, effective and timely counterstrategies that competitors 
would be likely to deploy ; 

•  the position of the customers or input suppliers. This may include consideration of 
the possible selectivity of the conduct in question. The dominant undertaking may 
apply  the  practice  only  to  selected  customers  or  input  suppliers  who  may  be  of 
particular importance for the entry or expansion of competitors, thereby enhancing 
the  likelihood  of  anticompetitive  foreclosure16.  They  may,  for  example,  be  the 
ones  most  likely  to  respond  to  offers  from  alternative  suppliers,  they  may 
represent a particular means of distributing the product that would be suitable for 
a new entrant, they may be situated in a geographic area well suited to new entry 
or they may be likely to influence the behaviour of other customers. In the case of 
input  suppliers,  those  with  whom  the  dominant  firm  has  concluded  exclusive 
supply  arrangements  may  be  the  ones  most  likely  to  respond  to  requests  by 
customers who are competitors of the dominant firm in a downstream market, or 
may  produce  a  grade  of  the  product  -  or  produce  at  a  location  -  particularly 
suitable for a new entrant. Any strategies at the disposal of the customers or input 
suppliers  which  could  help  to  counter  the  conduct  of  the  dominant  undertaking 
will also be considered;  

•  the extent of the allegedly abusive conduct. In general, the higher the percentage 
of  total  sales  in  the  relevant  market  affected  by  the  conduct,  the  longer  its 
duration,  and  the  more  regularly  it  has  been  applied,  the  greater  is  the  likely 
foreclosure effect; 

•  possible  evidence  of  actual  foreclosure.  If  the  conduct  has  been  in  place  for  a 
sufficient  period  of  time,  the  market  performance  of  the  dominant  firm  and  its 

16 

Case T-228/97 Irish Sugar v Commission [1999] ECR II-2969, paragraph 188. 

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competitors  may  provide  direct  evidence  about  anticompetitive  foreclosure;  for 
reasons  attributable  to  the  allegedly  abusive  conduct,  the  market  share  of  the 
dominant firm may have risen or a decline in market share may have been slowed; 
for similar reasons, actual competitors may have been marginalised or may have 
exited, or potential competitors may have tried to enter and failed; 

•  direct  evidence  of  any  exclusionary  strategy.  This  includes  internal  documents 
which  contain  direct  evidence  of  a  strategy  to  exclude  competitors,  such  as  a 
detailed plan to engage in certain conduct in order to exclude a rival, to prevent 
entry or to pre-empt the emergence of a market, or evidence of concrete threats of 
exclusionary action. Such direct evidence may be helpful to interpret the dominant 
undertaking's conduct. 

When pursuing a case the Commission will develop the analysis of the above general 
factors,  together  with  the  more  specific  factors  described  below  in  the  sections 
dealing  with  certain  types  of  exclusionary  conduct,  and  any  other  factors  which  it 
may consider to be appropriate. This assessment will usually be made by comparing 
the  actual  or  likely  future  situation  in  the  relevant  market  (with  the  dominant 
undertaking’s  conduct  in  place)  with  an  appropriate  counterfactual,  such  as  the 
simple  absence  of  the  conduct  in  question  or  with  another  realistic  alternative 
scenario, having regard to established business practices.  

There  may  be  circumstances  where  it  may not  be  necessary for the Commission to 
carry  out  a  detailed  assessment  before  concluding  that  the  conduct  in  question  is 
likely  to  result  in  consumer  harm.  If  it  appears  that  the  conduct  can  only  raise 
obstacles to competition and that it creates no efficiencies, its anti-competitive effect 
may  be  inferred.  This  could  be  the  case,  for  instance,  if  the  dominant  undertaking 
prevents its customers from testing the products of competitors or provides financial 
incentives to its customers on condition that they do not test such products, or pays a 
distributor or a customer to delay the introduction of a rival's product.  

Price-based exclusionary conduct  

The  following  considerations  apply  to  price-based  exclusionary  conduct.  Vigorous 
price  competition  is  generally  beneficial  to  consumers.  With  a  view  to  preventing 
anticompetitive foreclosure, the Commission will normally only intervene where the 
conduct  concerned  has  already  been  or  is  capable  of  hampering  competition  from 
competitors which are considered to be as efficient as the dominant undertaking17. 

However,  the  Commission  recognises  that  in  certain  circumstances  a  less  efficient 
competitor  may  also  exert  a  constraint  which  should  be  taken  into  account  when 
considering  whether  a  particular  price-based  conduct  leads  to  anticompetitive 
foreclosure. The Commission will take a dynamic view of this constraint, given that 
in the absence of an  abusive practice such  a  competitor  may benefit  from demand-

Case 62/86 AKZO Chemie v Commission [1991] ECR I-3359, paragraph 72: in relation to pricing below 
average  total  cost  (ATC)  the  ECJ  expressed:  “Such  prices  can  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”.  See  also 
Judgment of 10 April 2008 in Case T-271/03 Deutsche Telekom v Commission nyr, paragraph 194. 

21. 

C. 

22. 

23. 

17 

EN 

10 

   EN 

 
                                                 
24. 

25. 

26. 

18 

19 

related advantages, such as network and learning effects, which will tend to enhance 
its efficiency.  

In  order  to  determine  whether  even  a  hypothetical  competitor  as  efficient  as  the 
dominant  undertaking  would  likely  be  foreclosed  by  the  conduct  in  question,  the 
Commission  will  examine  economic  data  relating  to  cost  and  sales  prices,  and  in 
particular whether the dominant undertaking is engaging in below-cost pricing. This 
will  require  that  sufficiently  reliable  data  are  available.  Where  available,  the 
Commission will use information on the costs of the dominant undertaking itself. If 
reliable  information  on  those  costs  is  not  available,  the  Commission  may  decide  to 
use the cost data of competitors or other comparable reliable data. 

The cost benchmarks that the Commission is likely to use are average avoidable cost 
(AAC)  and  long-run  average  incremental  cost  (LRAIC)18.  Failure  to  cover  AAC 
indicates  that  the  dominant  undertaking  is  sacrificing  profits  in  the  short  term  and 
that an as efficient competitor cannot serve the targeted customers without incurring 
a  loss.  LRAIC  is  usually  above  AAC  because  contrary  to  the  latter  (which  only 
includes  fixed  costs  if  incurred  during  the  period  under  examination),  it  includes 
product  specific  fixed  costs  made  before  the  period  in  which  allegedly  abusive 
conduct took place. Failure to cover LRAIC indicates that the dominant undertaking 
is not recovering all the (attributable) fixed costs of producing the good or service in 
question and that an as efficient competitor could be foreclosed from the market19.  

If  the  data  clearly  suggest  that  an  as  efficient  competitor  can  compete  effectively 
with the pricing conduct of the dominant firm, the Commission will in principle infer 
that  the  dominant  undertaking’s  pricing  conduct  is  not  likely  to  have  an  adverse 
impact  on  effective  competition,  and  thus  on  consumers,  and  will  be  therefore 
unlikely to intervene. If, on the contrary, the data suggest that the price charged by 
the dominant undertaking has the potential to foreclose as efficient competitors, then 
the  Commission  will  integrate  this  in  the  general  assessment  of  anticompetitive 
foreclosure  (see  Section  B  above),  taking  into  account  other  relevant  quantitative 
and/or qualitative evidence.  

Average avoidable cost is the average of the costs that could have been avoided if the company had not 
produced a discrete amount of (extra) output, in this case the amount allegedly the subject of abusive 
conduct. In most cases, AAC and the average variable cost (AVC) will be the same, as it is often only 
variable costs that can be avoided. Long-run average incremental cost is the average of all the (variable 
and fixed) costs that a company incurs to produce a particular product. LRAIC and average total cost 
(ATC) are good proxies for each other, and are the same in the case of single product undertakings. If 
multi-product undertakings have economies of scope, LRAIC would be below ATC for each individual 
product, as true common costs are not taken into account in LRAIC. In the case of multiple products, 
any  costs  that  could  have  been  avoided  by  not  producing  a  particular  product  or  range  are  not 
considered to be common costs. In situations where common costs are significant, they may have to be 
taken into account when assessing the ability to foreclose as efficient competitors. 
In order to apply these cost benchmarks it may also be necessary to look at revenues and costs of the 
dominant  company  and  its  competitors  in  a  wider  context.  It  may  not  be  sufficient  to  only  assess 
whether  the  price  or  revenue  covers  the  costs  for  the  product  in  question,  but  it  may  be  necessary  to 
look at incremental revenues in case the dominant company's conduct in question negatively affects its 
revenues in other markets or of other products. Similarly, in the case of two sided markets it may  be 
necessary to look at revenues and costs of both sides at the same time. 

EN 

11 

   EN 

 
                                                 
D. 

27. 

28. 

29. 

Objective necessity and efficiencies  

In the enforcement of Article 82, the Commission also intends to examine claims put 
forward  by  a  dominant  undertaking  that  its  conduct  is  justified20.  A  dominant 
undertaking  may  do  so  either  by  demonstrating  that  its  conduct  is  objectively 
necessary  or  by  demonstrating  that  its  conduct  produces  substantial  efficiencies 
which  outweigh  any  anticompetitive  effects  on  consumers.  In  this  context,  the 
Commission  will  assess  whether  the  conduct  in  question  is  indispensable  and 
proportionate to the goal allegedly pursued by the dominant undertaking. 

The question of whether conduct is objectively necessary and proportionate must be 
determined  on  the  basis  of  factors  external  to  the  dominant  undertaking. 
Exclusionary  conduct  may,  for  example,  be  considered  objectively  necessary  for 
health  or  safety  reasons  related  to  the  nature  of  the  product  in  question.  However, 
proof of whether conduct of this kind is objectively necessary must take into account 
that it is normally the task of public authorities to set and enforce public health and 
safety standards. It is not the task of a dominant undertaking to take steps on its own 
initiative  to  exclude  products  which  it  regards,  rightly  or  wrongly,  as  dangerous  or 
inferior to its own product21. 

The  Commission  considers  that  a  dominant  undertaking  may  also  justify  conduct 
leading to foreclosure of competitors on the ground of efficiencies that are sufficient 
to  guarantee  that  no  net  harm  to  consumers  is  likely  to  arise.  In  this  context,  the 
dominant  undertaking  will  generally  be  expected  to  demonstrate,  with  a  sufficient 
degree  of  probability,  and  on  the  basis  of  verifiable  evidence,  that  the  following 
cumulative conditions are fulfilled22: 

•  the efficiencies have been, or are likely to be, realised as a result of the conduct. 
They may, for example, include technical improvements in the quality of goods, 
or a reduction in the cost of production or distribution;  

•  the conduct is indispensable to the realisation of these efficiencies: there must be 
no less anti-competitive alternatives to the conduct that are capable of producing 
the same efficiencies; 

•  the  likely  efficiencies  brought  about  by  the  conduct  concerned  outweigh  any 
likely  negative  effects  on  competition  and  consumer  welfare  in  the  affected 
markets;  

20 

21 

22 

See  Case  27/76  United  Brands  v  Commission  [1978]  ECR  207,  paragraph  184;  Case  311/84  Centre 
Belge  d'études  de  marché  -  Télémarketing  (CBEM)  v  Compagnie  luxembourgeoise  de  télédiffusion 
(CLT) and Information publicité Benelux (IPB) [1985] ECR 3261, paragraph 27; Case T-30/89 Hilti v 
Commission  [1991]  ECR  II-1439,  paragraphs  102-119;  Case  T-83/91  Tetra  Pak  International  v 
Commission  (Tetra  Pak  II)  [1994]  ECR  II-755,  paragraphs  136  and  207;  Case  C-95/04  P  British 
Airways v Commission [2007] ECR I-2331, paragraphs 69 and 86.  
See, for instance, Case T-30/89 Hilti v Commission [1991] ECR II-1439, paragraph 118-119; Case T-
83/91 Tetra Pak International v Commission (Tetra Pak II) [1994] ECR II-755, paragraphs 83-84 and 
138. 
See, in the different context of Article 81, the Commission Communication – Notice – Guidelines on 
the application of Article 81(3) of the Treaty (OJ 101, 27.4.2004, p. 97).  

EN 

12 

   EN 

 
                                                 
•  the  conduct  does  not  eliminate  effective  competition,  by  removing  all  or  most 
existing  sources  of  actual  or  potential  competition.  Rivalry  between  firms  is  an 
essential driver of economic efficiency, including dynamic efficiencies in the form 
of  innovation.  In  its  absence  the  dominant  firm  will  lack  adequate  incentives  to 
continue  to  create  and  pass  on  efficiency  gains.  Where  there  is  no  residual 
competition  and  no  foreseeable  threat  of  entry,  the  protection  of  rivalry  and  the 
competitive  process  outweighs  possible  efficiency  gains.  In  the  Commission’s 
view,  exclusionary  conduct  which  maintains,  creates  or  strengthens  a  market 
position  approaching  that  of  a  monopoly  can  normally  not  be  justified  on  the 
grounds that it also creates efficiency gains. 

It  is  incumbent  upon  the  dominant  firm  to  provide  all  the  evidence  necessary  to 
demonstrate  that  the  conduct  concerned  is  objectively  justified.  It  then  falls  to  the 
Commission to make the ultimate assessment of whether the conduct being examined 
is  not  objectively  necessary  and,  based  on  a  weighing-up  of  any  apparent  anti-
competitive  effects  against  any  advanced  and  substantiated  efficiencies,  is  likely  to 
result in consumer harm. 

SPECIFIC FORMS OF ABUSE 

Exclusive dealing 

A dominant undertaking may try to foreclose its competitors by hindering them from 
selling  to  customers  through  use  of  exclusive  purchasing  obligations  or  rebates, 
together  referred  to  as  exclusive  dealing23.  This  section  sets  out  the  circumstances 
which  are  most  likely  to  prompt  an  intervention  by  the  Commission  in  respect  of 
exclusive dealing arrangements entered into by dominant undertakings. 

Exclusive Purchasing 

An  exclusive  purchasing  obligation  requires  a  customer  on  a  particular  market  to 
purchase  exclusively  or  to  a  large  extent  only  from  the  dominant  undertaking. 
Certain other obligations, such as stocking requirements, which appear to fall short 
of requiring exclusive purchasing, may in practice lead to the same effect24. 

Exclusive  purchasing  may  require  the  dominant  undertaking  to  compensate  buyers, 
in whole or in part, for the loss in competition resulting from the exclusivity. Where 
such compensation is given, it may be in the individual interest of a customer to enter 
into an exclusive purchasing obligation with the dominant undertaking. But it would 
be  wrong  to  conclude  automatically  from  this  that  all  the  exclusivity  obligations, 
taken together, are overall beneficial for the customers, including those currently not 

The notion of exclusive dealing also includes exclusive supply obligations or incentives with the same 
effect,  whereby  the  dominant  undertaking  tries  to  foreclose  its  competitors  by  hindering  them  from 
purchasing from suppliers. The Commission considers that such input foreclosure is in principle liable 
to result in anticompetitive foreclosure if the exclusive supply obligation or incentive ties most of the 
efficient input suppliers and customers competing with the dominant firm are unable to find alternative 
efficient sources of input supply. 
Case T-65/98 Van den Bergh Foods v Commission [2003] ECR II-4653. In this case the obligation to 
use coolers exclusively for the products of the dominant undertaking was considered to lead to outlet 
exclusivity. 

30. 

IV 

A. 

31. 

a) 

32. 

33. 

23 

24 

EN 

13 

   EN 

 
                                                 
the  dominant  undertaking,  and 

purchasing  from 
the  final  consumers.  The 
Commission will focus its attention on those cases where it is likely that consumers 
as  a  whole  will  not  benefit.  This  would  in  particular  be  the  case  if  there  are  many 
buyers and the exclusive purchasing obligations of the dominant undertaking, taken 
together, have the effect of preventing the entry or expansion of rival firms. 

In  addition  to  the  factors  mentioned  in  paragraph  20,  the  following  factors  will 
generally  be  of  particular  relevance  in  determining  whether  the  Commission  will 
intervene against exclusive purchasing arrangements. 

The  capacity  for  exclusive  purchasing  obligations  to  result  in  anticompetitive 
foreclosure  arises  in  particular  where,  without  the  obligations,  an  important 
competitive constraint is exercised by competitors who either are not yet present in 
the market at the time the obligations are concluded, or who are not in a position to 
compete for the full supply of the customers. Rivals may not be able to compete for 
an  individual  customer’s  entire  demand  because  the  dominant  undertaking  is  an 
unavoidable trading partner at least for part of the demand on the market, for instance 
because  its  brand  is  a  ‘must  stock  item’  preferred  by  many  final  consumers  or 
because the capacity constraints on the other suppliers are such that a part of demand 
can only be provided for by the dominant supplier25. If competitors can compete on 
equal  terms  for  each  individual  customer’s  entire  demand,  exclusive  purchasing 
obligations  are  generally  unlikely  to  hamper  effective  competition  unless  the 
switching  of  supplier  by  customers  is  rendered  difficult  due  to  the  duration  of  the 
exclusive purchasing obligation. In general, the longer the duration of the obligation, 
the greater the likely foreclosure effect. However, if the dominant undertaking is an 
unavoidable trading partner for all or most customers, even an exclusive purchasing 
obligation of short duration can lead to anticompetitive foreclosure. 

Conditional Rebates 

Conditional rebates are rebates granted to customers to reward them for a particular 
form  of  purchasing  behaviour.  The  usual  nature  of  a  conditional  rebate  is  that  the 
customer is given a rebate if its purchases over a defined reference period exceed a 
certain  threshold,  the  rebate  being  granted  either  on  all  purchases  (retroactive 
rebates) or only on those made in excess of those required to achieve the threshold 
(incremental rebates). Conditional rebates are not an uncommon practice. Firms may 
offer such rebates in order to attract more demand, and as such they may stimulate 
demand  and  benefit  consumers.  However,  such  rebates  –  when  granted  by  a 
dominant undertaking – can also have actual or potential foreclosure effects similar 
to  exclusive  purchasing  obligations.  Conditional  rebates  can  have  such  effects 
without necessarily entailing a sacrifice for the dominant undertaking26.  

In  addition  to  the  factors  already  mentioned  in  paragraph  20,  the  following  factors 
are  of  particular  importance  to  the  Commission  in  determining  whether  a  given 
system  of  conditional  rebates  is  liable  to  result  in  anticompetitive  foreclosure  and, 
consequently, will be part of the Commission’s enforcement priorities. 

Case T-65/98 Van den Bergh Foods v Commission [2003] ECR II-4653, paragraphs 104 and 156.  
In this regard, the assessment of conditional rebates differs from that of predation, which always entails 
a sacrifice. 

34. 

35. 

b) 

36. 

37. 

25 
26 

EN 

14 

   EN 

 
                                                 
38. 

39. 

40. 

41. 

As  with  exclusive  purchasing  obligations,  the  likelihood  of  anticompetitive 
foreclosure is higher where competitors are not able to compete on equal terms for 
the  entire  demand  of  each  individual  customer.  A  conditional  rebate  granted  by  a 
dominant  undertaking  may  enable  it  to  use  the  ‘non  contestable’  portion  of  the 
demand  of  each  customer  (i.e.  the  amount that  would  anyhow  be  purchased  by  the 
customer from the dominant undertaking) as leverage to decrease the price to be paid 
for the ‘contestable’ portion of demand (i.e. the amount for which the customer may 
prefer and be able to find substitutes)27. 

In general terms, retroactive rebates may foreclose the market significantly, as they 
may make it less attractive for customers to switch small amounts of demand to an 
alternative  supplier,  if  this  would  lead  to  loss  of  the  retroactive  rebates28.  The 
potential foreclosing effect of retroactive rebates is in principle strongest on the last 
purchased unit of the product before the threshold is exceeded. However, what is in 
the Commission’s view relevant for an assessment of the loyalty enhancing effect of 
a rebate is not simply the effect on competition to provide the last individual unit, but 
the foreclosing effect of the rebate system on (actual or potential) competitors of the 
dominant  supplier.  The  higher  the  rebate  as  a  percentage  of  the  total  price  and  the 
higher the threshold, the greater the inducement below the threshold and, therefore, 
the stronger the likely foreclosure of actual or potential competitors. 

When  applying  the  methodology  explained  in  paragraphs  22-26,  the  Commission 
intends to investigate, to the extent that the data are available and reliable, whether 
the rebate system is capable of hindering the expansion or entry even of as efficient 
competitors by making it more difficult for them to supply part of the requirements 
of  individual  customers.  In  this  context  the  Commission  will  estimate  what  price  a 
rival  would  have  to  offer  in  order  to  compensate  the  customer  for  the  loss  of  the 
conditional rebate if the latter would switch part of its demand (‘the relevant range’) 
away from the dominant undertaking. The effective price that the rival will have to 
match  is  not  the  average  price  of  the  dominant  undertaking,  but  the  normal  (list) 
price less the rebate it loses by switching, calculated over the relevant range of sales 
and in the relevant period of time. The Commission will take into account the margin 
of error that may be caused by the uncertainties inherent in this kind of analysis. 

The  relevant  range  over  which  to  calculate  the  effective  price  in  a  particular  case 
depends on the specific facts of each case and on whether the rebate is incremental or 
retroactive.  For  incremental  rebates,  the  relevant  range  is  normally  the  incremental 
purchases  that  are  being  considered.  For  retroactive  rebates,  it  will  generally  be 
relevant to assess in the specific market context how much of a customer’s purchase 
requirements  can  realistically  be  switched  to  a  rival  (the  ‘contestable  share’  or 
‘contestable  portion’).  If  it  is  likely  that  customers  would  be  willing  and  able  to 
switch large amounts of demand to a (potential) rival relatively quickly, the relevant 
range is likely to be relatively large. If on the other hand it is likely that customers 
would  only  be  willing  or  able  to  switch  small  amounts  incrementally,  then  the 
relevant  range  will  be  relatively  small.  For  existing  competitors  their  capacity  to 

27 

28 

See Case T-203/01 Michelin v Commission (Michelin II) [2003] ECR II-4071, paragraphs 162-163. See 
also Case T-219/99 British Airways v Commission [2003] ECR II-5917, paragraphs 277 and 278.  
Case 322/81 Nederlandsche Banden Industrie Michelin v Commission (Michelin I) [1983] ECR 3461, 
paragraphs 70-73.  

EN 

15 

   EN 

 
                                                 
42. 

43. 

44. 

expand  sales  to  customers  and  the  fluctuations  in  these  sales  over  time  may  also 
provide an indication of the relevant range. For potential competitors, when possible, 
an assessment of the scale at which a new entrant would realistically be able to enter 
may be undertaken. It may be possible to take the historical growth pattern of new 
entrants in the same or in similar markets as an indication of a realistic market share 
of a new entrant29. 

The  lower  the  estimated  effective  price  over  the  relevant  range  is  compared  to  the 
average  price  of  the  dominant  supplier,  the  stronger  the  loyalty-enhancing  effect. 
However, as long as the effective price remains consistently above the LRAIC of the 
dominant undertaking, this would normally allow an equally efficient competitor to 
compete  profitably  notwithstanding  the  rebate.  In  those  circumstances  the  rebate  is 
normally not capable of foreclosing in an anti-competitive way.  

Where  the  effective  price  is  below  AAC,  as  a  general  rule  the  rebate  scheme  is 
capable  of  foreclosing  even  as  efficient  competitors.  Where  the  effective  price  is 
between  AAC  and  LRAIC,  the  Commission  will  investigate  whether  other  factors 
point  to  the  conclusion  that  entry  or  expansion  even  by  as  efficient  competitors  is 
likely to be affected. In this context, the Commission will investigate whether and to 
what extent rivals have realistic and effective counterstrategies at their disposal, for 
instance their capacity to also use a ‘non contestable’ portion of their buyer’s demand 
as  leverage  to  decrease  the  price  for  the  relevant  range.  Where  competitors  do  not 
have such counterstrategies at their disposal, the Commission will consider that the 
rebate scheme is capable of foreclosing equally efficient competitors. 

As  indicated  in  paragraph  26  above,  this  analysis  will  be  integrated  in  the  general 
assessment, taking into account other relevant quantitative or qualitative evidence. It 
is  normally  important  to  consider  whether  the  rebate  system  is  applied  with  an 
individualised or a standardised threshold. An individualised threshold – one based 
on a percentage of the total requirements of the customer or an individualised volume 
target - allows the dominant supplier to set the threshold at such a level as to make it 
difficult  for  customers  to  switch  suppliers,  thereby  creating  a  maximum  loyalty 
enhancing  effect30.  By  contrast,  a  standardised  volume  threshold  –  where  the 
threshold  is  the  same  for  all  or  a  group  of  customers  –  may  be  too  high  for  some 
smaller  customers  and/or  too  low  for  larger  customers  to  have  a  loyalty  enhancing 
effect.  If,  however,  it  can  be  established  that  a  standardised  volume  threshold 
approximates  the  requirements  of  an  appreciable  proportion  of  customers,  the 
Commission  is  likely  to  consider  that  such  a  standardised  system  of  rebates  may 
produce anticompetitive foreclosure effects. 

29 

30 

The relevant range will be estimated on the basis of data which may have varying degrees of precision. 
The  Commission  will  take  this  into  account  in  drawing  any  conclusions  regarding  the  dominant 
undertaking's ability to foreclose as efficient competitors. It may also be useful to calculate how big a 
share  of  customers'  requirements  on  average  the  entrant  should  capture  as  a  minimum  so  that  the 
effective price is at least as high as the LRAIC of the dominant company. In a number of cases the size 
of  this  share,  when  compared  with  the  actual  market  shares  of  competitors  and  their  shares  of  the 
customers'  requirements,  may  make  it  clear  whether  the  rebate  scheme  is  capable  to  have  an 
anticompetitive foreclosure effect.  
See Case 85/76 Hoffmann-La Roche & Co. v Commission [1979] ECR 461, paragraphs 89-90; Case T-
288/97 Irish Sugar v Commission [1999] ECR II-2969, paragraph 213; Case T- 219/99 British Airways 
v Commission [2003] ECR II-5917, paragraphs 7-11 and 270-273.  

EN 

16 

   EN 

 
                                                 
c) 

45. 

B. 

46. 

47. 

48. 

Efficiencies  

Provided  that  the  conditions  mentioned  in  Section  III  D  above  are  fulfilled,  the 
Commission  will  consider  claims  by  dominant  undertakings  that  rebate  systems 
achieve  cost  or  other  advantages  which  are  passed  on  to  customers31.  Transaction-
related  cost  advantages  are  often  more  likely  to  be  achieved  with  standardised 
volume targets than with individualised volume targets. Similarly, incremental rebate 
schemes are in general more likely to give resellers an incentive to produce and resell 
a  higher  volume  than  retroactive  rebate  schemes32.  Under  the  same  conditions,  the 
Commission  will  consider  evidence  demonstrating 
that  exclusive  dealing 
arrangements result in advantages to particular customers if those arrangements are 
necessary  for  the  dominant  undertaking  to  make  certain  relationship-specific 
investments in order to be able to supply those customers.  

Tying and bundling 

A  dominant  undertaking  may  try  to  foreclose  its  competitors  by  tying  or  bundling. 
This  section  sets  out  the  circumstances  which  are  most  likely  to  prompt  an 
intervention  by  the  Commission  when  assessing  tying  and  bundling  by  dominant 
undertakings. 

“Tying” usually refers to situations where customers that purchase one product (the 
tying  product)  are  required  also  to  purchase  another  product  from  the  dominant 
undertaking  (the  tied  product).  Tying  can  take  place  on  a  technical  or  contractual 
basis33. “Bundling” usually refers to the way products are offered and priced by the 
dominant undertaking. In the case of pure bundling the products are only sold jointly 
in fixed proportions. In case of mixed bundling, often referred to as a multi-product 
rebate,  the  products  are  also  made  available  separately,  but  the  sum  of  the  prices 
when sold separately is higher than the bundled price.  

Tying and bundling are common practices aiming at providing customers with better 
products or offerings in more cost effective ways. However, an undertaking which is 
dominant in one product market (or more) of a tie or bundle (referred to as the tying 
market) can harm consumers through tying or bundling by foreclosing the market for 
the  other  products  that  are  part  of  the  tie  or  bundle  (referred  to  as  the  tied  market) 
and, indirectly, the tying market. 

49. 

The Commission will normally take action under Article 82 where an undertaking is 
dominant in the tying market34 and where, in addition, the following conditions are 

31 

32 

33 

34 

For  instance,  for  rebates  see  Case  C-95/04  P  British  Airways  v  Commission  [2007]  ECR  I-2331, 
paragraph 86.  
See,  to  that  effect,  Case  T-203/01  Michelin  v  Commission  (Michelin  II)  [2003]  ECR  II-4071, 
paragraphs 56-60 and 74-75. 
Technical  tying  occurs when  the  tying  product  is  designed  in  such  a  way  that  it  only  works  properly 
with  the  tied  product  (and  not  with  the  alternatives  offered  by  competitors).  Contractual  tying  occurs 
when the customer who purchases the tying product undertakes also to purchase the tied product (and 
not the alternatives offered by competitors). 
The undertaking should be dominant in the tying market, though not necessarily in the tied market. In 
bundling cases, the firm needs to be dominant in one of the bundled markets. In the special case of tying 
in  after-markets,  the  condition  is  that  the  firm  is  dominant  in  the  tying  market  and/or  the  tied  after-
market.  

EN 

17 

   EN 

 
                                                 
a) 

50. 

b) 

51. 

52. 

53. 

54. 

fulfilled:  (i)  the  tying  and  tied  products  are  distinct  products,  and  (ii)  the  tying 
practice is likely to lead to anticompetitive foreclosure35. 

Distinct products 

Whether the products will be considered by the Commission to be distinct depends 
on  customer  demand.  Two  products  are  distinct  if,  in  the  absence  of  tying  or 
bundling,  a  substantial  number  of  customers  would  purchase  or  would  have 
purchased  the  tying  product  without  also  buying  the  tied  product  from  the  same 
supplier,  thereby  allowing  stand-alone  production  for  both  the  tying  and  the  tied 
product36. Evidence that two products are distinct could include direct evidence that, 
when given a choice, customers purchase the tying and the tied products separately 
from  different  sources  of  supply,  or  indirect  evidence,  such  as  the  presence  on  the 
market  of  undertakings  specialised  in  the  manufacture  or  sale  of  the  tied  product 
without the tying product37 or of each of the products bundled by the dominant firm, 
or  evidence  indicating  that  undertakings  with  little  market  power,  particularly  in 
competitive markets, tend not to tie or not to bundle such products. 

Anticompetitive foreclosure in the tied and/or tying market 

Tying  or  bundling  may  lead  to  anticompetitive  effects  in  the  tied  market,  the  tying 
market,  or  both  at  the  same  time.  However,  even  when  the  aim  of  the  tying  or 
bundling is to protect the dominant undertaking's position in the tying market, this is 
done indirectly through foreclosing the tied market. In addition to the factors already 
mentioned in paragraph 20, the Commission considers that the following factors are 
generally  of  particular  importance  for  identifying  cases  of  likely  or  actual 
anticompetitive foreclosure. 

The risk of anticompetitive foreclosure is expected to be greater where the dominant 
undertaking makes its tying or bundling strategy a lasting one, for example through 
technical  tying  which  is  costly  to  reverse.  Technical  tying  also  reduces  the 
opportunities for resale of individual components. 

In the case of bundling, the undertaking may have a dominant position for more than 
one  of  the  products  in  the  bundle.  The  greater  the  number  of  such  products  in  the 
bundle, the stronger the likely anticompetitive foreclosure. This is particularly true if 
the  bundle  is  difficult  for  a  competitor  to  replicate,  either  on  its  own  or  in 
combination with others. 

The  tying  may  lead  to  less  competition  for  customers  interested  in  buying  the  tied 
product,  but  not  the  tying  product.  If  there  is  not  a  sufficient  number  of  customers 
who  will  buy  the  tied  product  alone  to  sustain  competitors  of  the  dominant 
undertaking  in  the  tied  market,  the  tying  can  lead  to  these  customers  facing  higher 
prices. 

35 

36 

37 

Judgment  of  17  September  2007  in  Case  T-201/04  Microsoft  v  Commission  [2007]  ECR  II-3601,  in 
particular paragraphs 842, 859-862, 867 and 869. 
Judgment  of  17  September  2007  in  Case  T-201/04  Microsoft  v  Commission  [2007]  ECR  II-3601, 
paragraphs 917, 921 and 922. 
Case T-30/89 Hilti v Commission [1991] ECR II-1439, paragraph 67. 

EN 

18 

   EN 

 
                                                 
55. 

56. 

57. 

c) 

58. 

59. 

60. 

d) 

61. 

If  the  tying  and  the  tied  product  can  be  used  in  variable  proportions  as  inputs  to  a 
production process, customers may react to an increase in price for the tying product 
by increasing their demand for the tied product while decreasing their demand for the 
tying  product.  By  tying  the  two  products  the  dominant  undertaking  may  seek  to 
avoid this substitution and as a result be able to raise its prices. 

If the prices the dominant undertaking can charge in the tying market are regulated, 
tying  may  allow  the  dominant  firm  to  raise  prices  in  the  tied  market  in  order  to 
compensate for the loss of revenue caused by the regulation in the tying market. 

If the tied product is an important complementary product for customers of the tying 
product, a reduction of alternative suppliers of the tied product and hence a reduced 
availability of this product can make entry to the tying market alone more difficult. 

Multi-product rebates 

A multi-product rebate may be anticompetitive on the tied or the tying market if it is 
so  large  that  as  efficient  competitors  offering  only  some  of  the  components  cannot 
compete against the discounted bundle. 

In theory, it would be ideal if the effect of the rebate could be assessed by examining 
whether the incremental revenue covers the incremental costs for each product in the 
dominant  undertaking's  bundle.  However,  in  practice  assessing  the  incremental 
revenue  is  complex.  Therefore,  in  its  enforcement  practice  the  Commission  will  in 
most  situations  use  the  incremental  price  as  a  good  proxy.  If  the  incremental  price 
that  customers  pay  for  each  of  the  dominant  undertaking’s  products  in  the  bundle 
remains  above  the  LRAIC  of  the  dominant  firm  from  including  this  product  in  the 
bundle,  the  Commission  will  normally  not  intervene  since  an  equally  efficient 
competitor with only one product should in principle be able to compete profitably 
against the bundle. Enforcement action may however be warranted if the incremental 
price  is  below  the  LRAIC,  because  in  such  a  case  even  an  equally  efficient 
competitor may be prevented from expanding or entering38. 

If  the  evidence  suggests  that  competitors  to  the  dominant  undertaking  are  selling 
identical bundles, or could do so in a timely way without being deterred by possible 
additional  costs,  the  Commission  will  generally  regard  this  as  bundle  competing 
against a bundle, in which case the relevant question is not whether the incremental 
revenue  covers  the  incremental  costs  for  each  product  in  the  bundle,  but  rather 
whether the price of the bundle as a whole is predatory. 

Efficiencies  

Provided  that  the  conditions  mentioned  in  Section  III  D  above  are  fulfilled,  the 
Commission  will  look  into  claims  by  dominant  undertakings  that  their  tying  and 
bundling  practices  may  lead  to  savings  in  production  or  distribution  that  would 
benefit customers. The Commission may also consider whether such practices reduce 
transaction  costs  for  customers,  who  otherwise  would  be  forced  to  buy  the 
components separately, and enable substantial savings on packaging and distribution 

38 

In  principle,  the  LRAIC  cost  benchmark  is  relevant  here  as  long  as  rivals  are  not  able  to  also  sell 
bundles (see paragraphs 22 to 26 and paragraph 60). 

EN 

19 

   EN 

 
                                                 
C. 

62. 

a) 

63. 

costs  for  suppliers.  It  may  also  examine  whether  combining  two  independent 
products into a new, single product might enhance the ability to bring such a product 
to  the  market  to  the  benefit  of  consumers.  The  Commission  may  also  consider 
whether  tying  and  bundling  practices  allow  the  supplier  to  pass  on  efficiencies 
arising from its production or purchase of large quantities of the tied product. 

Predation 

In  line  with  its  enforcement  priorities,  the  Commission  will  generally  intervene 
where  there  is  evidence  showing  that  a  dominant  undertaking  engages  in  predatory 
conduct  by  deliberately  incurring  losses  or  foregoing  profits  in  the  short  term 
(referred to hereafter as "sacrifice"), so as to foreclose or be likely to foreclose one or 
more  of  its  actual  or  potential  competitors  with  a  view  to  strengthening  or 
maintaining its market power, thereby causing consumer harm39. 

Sacrifice 

Conduct will be viewed by the Commission as entailing a sacrifice if the dominant 
undertaking, by charging a lower price for all or a particular part of its output over 
the  relevant  time  period,  or  by  expanding  its  output  over  the  relevant  time  period, 
incurred  or  is  incurring  losses  that  could  have  been  avoided.  The  Commission  will 
take AAC as the appropriate starting point for assessing whether the dominant firm 
incurs or incurred avoidable losses. If a dominant undertaking charges a price below 
AAC for all or part of its output, it is not recovering the costs that could have been 
avoided  by  not  producing  that  output:  it  is  incurring  a  loss  that  could  have  been 
avoided40. Pricing below AAC will thus in most cases be viewed by the Commission 
as a clear indication of sacrifice41. 

64. 

However, the concept of sacrifice includes not just pricing below AAC42. In order to 
show  a  predatory  strategy,  the  Commission  may  also  investigate  whether  the 
allegedly  predatory  conduct  led  in  the  short  term  to  net  revenues  lower  than  could 
have been expected from a reasonable alternative conduct, i.e. whether the dominant 

39 

40 

41 

42 

The Commission may also pursue predatory practices by dominant undertakings on secondary markets 
on which they are not yet dominant. In particular, the Commission will be more likely to find such an 
abuse in sectors where activities are protected by a legal monopoly. While the dominant firm does not 
need to predate to protect its dominant position in the market protected by legal monopoly, it may use 
the profits gained in the monopoly market to cross-subsidize its activities in another market and thereby 
threaten to eliminate effective competition in that other market. 
In most cases the average variable cost (AVC) and AAC will be the same, as often only variable costs 
can  be  avoided.  However,  in  circumstances  where  AVC  and  AAC  differ,  the  latter  better  reflects 
possible  sacrifice:  for  example,  if  the  dominant  firm  had  to  expand  capacity  in  order  to  be  able  to 
predate,  then  the  sunk  costs  of  this  extra  capacity  should  be  taken  into  account  in  looking  at  the 
dominant undertaking’s losses. These costs would be reflected in the AAC, but not the AVC.  
In the AKZO case the ECJ, in relation to pricing below average variable cost (AVC), held: “A dominant 
undertaking  has  no  interest  in  applying  such  prices  except  that  of  eliminating  competitors  so  as  to 
enable it subsequently to raise its price by taking advantage of its monopolistic position, since each sale 
generates a loss…". (Case 62/86 AKZO Chemie v Commission [1991] ECR I-3359, paragraph 71).  
If the estimate of cost is based on the direct cost of production (as registered in the firm's accounts), it 
may not adequately capture whether or not there has been a sacrifice.  

EN 

20 

   EN 

 
                                                 
undertaking  incurred  a  loss  that  it  could  have  avoided43.  The  Commission  will  not 
compare  the  actual  conduct  with  hypothetical  or  theoretical  alternatives  that  might 
have  been  more  profitable.  Only  economically  rational  and  practicable  alternatives 
will  be  considered  which,  taking  into  account  the  market  conditions  and  business 
realities  facing  the  dominant  undertaking,  can  realistically  be  expected  to  be  more 
profitable. 

In  some  cases  it  will  be  possible  to  rely  upon  direct  evidence  consisting  of 
documents  from  the  dominant  undertaking  showing  clearly  a  predatory  strategy44, 
such as a detailed plan to sacrifice in order to exclude a rival, to prevent entry or to 
pre-empt  the  emergence  of  a  market,  or  evidence  of  concrete  threats  of  predatory 
action45. 

Anticompetitive foreclosure 

If  sufficient  reliable  data  are  available,  the  Commission  will  apply  the  as  efficient 
competitor  analysis,  described  in  paragraphs  24-26,  to  determine  whether  the 
conduct  is  capable  of  harming  consumers.  Normally  only  pricing  below  LRAIC  is 
capable of foreclosing as efficient competitors from the market.  

In  addition  to  the  factors  already  mentioned  in  paragraph  20,  the  Commission  will 
generally investigate whether and how the suspected conduct reduces the likelihood 
that rivals will compete. For instance, if the dominant firm is better informed about 
cost  or  other  market  conditions,  or  can  distort  market  signals  about  profitability,  it 
may  predate  so  as  to  influence  the  expectations  of  potential  entrants  and  thereby 
deter entry. If the conduct and its likely effects are felt on multiple markets and/or in 
successive periods of possible entry, the dominant firm may be shown to be seeking 
a  reputation  for  predatory  conduct.  If  the  targeted  competitor  is  dependent  on 
external  financing,  substantial  price  decreases  or  other  predatory  conduct  by  the 
dominant firm could adversely affect the competitor’s performance so that its access 
to further financing may be seriously undermined. 

The Commission does not consider that it is necessary to show that competitors have 
exited the market in order to show that there has been anticompetitive foreclosure. It 
cannot  be  excluded  that  the  dominant  undertaking  may  prefer  to  prevent  the 
competitor  from  competing  vigorously  and  have  it  follow  the  dominant  firm’s 
pricing, rather than eliminate it from the market altogether. Such disciplining avoids 
the risk inherent in eliminating competitors, in particular the risk that the assets of the 
competitor  are  sold  at  a  low  price  and  stay  in  the  market,  creating  a  new  low  cost 
entrant. 

However, undertakings should not be penalised for incurring ex post losses where the ex ante decision 
to engage in the conduct was taken in good faith, i.e. if they can provide conclusive evidence that they 
could reasonably expect that the activity would be profitable. 
See Case T-83/91 Tetra Pak International v Commission (Tetra Pak II) [1994] ECR II-755, paragraphs 
151,  171,  and  Case  T-340/03  France  Télécom  v  Commission  [2007]  ECR  II-107,  paragraphs  198  to 
215. 
In the AKZO case (Case 62/86 AKZO Chemie v Commission [1991] ECR I-3359) the Court accepted 
that there was clear evidence of AKZO threatening ECS in two meetings with below cost pricing if it 
did not withdraw from the organic peroxides market. In addition there was a detailed plan, with figures, 
describing the measures that AKZO would put into effect if ECS would not withdraw from the market 
(see paragraphs 76-82, 115, and 131-140). 

65. 

b) 

66. 

67. 

68. 

43 

44 

45 

EN 

21 

   EN 

 
                                                 
69. 

70. 

71. 

72. 

c) 

73. 

D. 

74. 

46 

47 

Generally speaking, consumers are likely to be harmed if the dominant undertaking 
can reasonably expect its market power after the predatory conduct comes to an end 
to be greater than it would have been had the firm not engaged in that conduct in the 
first place, i.e. if the firm is likely to be in a position to benefit from the sacrifice. 

This  does  not  mean  that  the  Commission  will  only  intervene  if  the  dominant  firm 
would  be  likely  to  be  able  to  increase  its  prices  above  the  level  persisting  in  the 
market  before  the  conduct.  It  is  sufficient,  for  instance,  that  the  conduct  would  be 
likely  to  prevent  or  delay  a  decline  in  prices  that  would  otherwise  have  occurred. 
Identifying consumer harm is not a mechanical calculation of profits and losses, and 
proof of overall profits is not required. Likely consumer harm may be demonstrated 
by  assessing 
the  conduct,  combined  with 
consideration  of  other  factors,  such  as  entry  barriers46.  In  this  context,  the 
Commission will also consider possibilities of re-entry. 

likely  foreclosure  effect  of 

the 

It  may  be  easier  for  the  dominant  undertaking  to  predate  if  it  selectively  targets 
specific  customers  with  low  prices,  as  this  will  limit  the  losses  incurred  by  the 
dominant undertaking.  

It is less likely that the dominant undertaking predates if the conduct concerns a low 
price applied generally for a long period of time. 

Efficiencies  

In general it is considered unlikely that predation will create efficiencies. However, 
provided  that  the  conditions  mentioned  in  Section  III  D  above  are  fulfilled,  the 
Commission  will  consider  claims  by  dominant  undertakings  that  the  low  pricing 
enables  it  to  achieve  economies  of  scale  or  efficiencies  related  to  expanding  the 
market.  

Refusal to supply and margin squeeze 

When setting its enforcement priorities, the Commission starts from the position that, 
generally speaking, any undertaking, whether dominant or not, should have the right 
to choose its trading partners and to dispose freely of its property. The Commission 
therefore  considers  that  intervention  on  competition  law  grounds  requires  careful 
consideration  where  the  application  of  Article  82  would  lead  to  imposing  an 
obligation  to  supply  on  the  dominant  firm47.  The  existence  of  such  an  obligation  - 
even for a fair remuneration - may undermine firms' incentives to invest and innovate 

This was confirmed in Case T-83/91 Tetra Pak International v Commission (Tetra Pak II) [1994] ECR 
II-755 , upheld on appeal to the ECJ in Case C-333/94 P Tetra Pak International v Commission [1996] 
ECR I-5951, where the Court of First Instance stated that proof of actual recoupment was not required 
(paragraph 150 in fine). More in general, as predation may turn out to be more difficult than expected at 
the start of the conduct, the total costs to the dominant firm of predating could outweigh its later profits 
and thus make actual recoupment impossible while it may still be rational to decide to continue with the 
predatory  strategy  that  it  started  some  time  ago.  See  also  COMP/38.233  Wanadoo  Interactive, 
Commission Decision of 16 July 2003, paragraphs 332-367. 
Joined  Cases  C-241/91  P  and  C-242/91  Radio  Telefis  Eireann  (RTE)  and  Independent  Television 
Publications (ITP) v Commission (Magill) [1995] ECR I-743, paragraph 50; Case C-418/01 IMS Health 
v NDC Health [2004] ECR I-5039, paragraph 35; Case T-201/04 Microsoft v Commission [2007] ECR 
II-3601, paragraphs 319, 330-332 and 336.  

EN 

22 

   EN 

 
                                                 
75. 

76. 

77. 

78. 

and, thereby, possibly harm consumers. The knowledge that they may have a duty to 
supply  against  their  will  may  lead  dominant  undertakings  –  or  undertakings  who 
foresee  that  they  may  become  dominant  -  not  to  invest,  or  to  invest  less,  in  the 
activity  in  question.  Also,  competitors  may  be  tempted  to  free  ride  on  investments 
made by the dominant undertaking instead of investing themselves. Neither of these 
consequences would in the long run be in the interest of consumers. 

Typically  competition  problems  arise  when  the  dominant  undertaking  competes  on 
the  “downstream”  market  with  the  buyer  whom  it  refuses  to  supply.  The  term 
"downstream  market"  is  used  to  refer  to  the  market  for  which  the  refused  input  is 
needed  in  order  to  manufacture a product  or provide a service. The present section 
deals only with this type of refusals. 

Other  types  of  possibly  unlawful  refusal  to  supply,  in  which  the  supply  is  made 
conditional  upon  the  purchaser  accepting  limitations  on  its  conduct,  are  not  dealt 
with  in  this  section.  For  instance,  halting  supplies  in  order  to  punish  customers  for 
dealing with competitors or refusing to supply customers that do not agree to tying 
arrangements, will be examined by the Commission in line with the principles set out 
in  the  sections  on  exclusive  dealing  and  tying  and  bundling.  Similarly,  refusals  to 
supply aimed at  preventing  the purchaser  from  engaging  in  parallel  trade48 or  from 
lowering its resale price are also not dealt with in this section. 

The concept of refusal to supply covers a broad range of practices, such as a refusal 
to  supply  products  to  existing  or  new  customers49,  to  license  intellectual  property 
rights50,  including  when  this  is  necessary  to  provide  interface  information51,  or  to 
grant access to an essential facility or a network52. 

The Commission does not regard it as necessary for the refused product to have been 
already traded: it is sufficient that there is demand from potential purchasers and that 
a  potential  market  for  the  input  at  stake  can  be  identified53.  Likewise,  it  is  not 
necessary  that  there  is  actual  refusal  on  the  part  of  a  dominant  undertaking; 
"constructive refusal" is sufficient. Constructive refusal could, for example, take the 
form of unduly delaying or otherwise degrading the supply of the product or involve 
the imposition of unreasonable conditions in return for the supply. 

79. 

Finally, instead of refusing to supply, a dominant undertaking may charge a price for 
the product on the upstream market which, compared to the price it charges on the 

48 

49 

50 

51 
52 

53 

See  Judgment  of  16  September  2008  in  Joined  Cases  C-468/06  à  C-478/06  Sot.  Lélos  kai  Sia  and 
Others v GlaxoSmithKline, nyr. 
Joined Cases 6/73 and 7/73 Istituto Chemioterapico Italiano and Commercial Solvents v Commission 
[1974] ECR 223.  
Joined  cases  C-241/91  P  and  C-242/91  P  Radio  Telefis  Eireann  (RTE)  and  Independent  Television 
Publications  Ltd  (ITP)  v  Commission  (Magill)  [1995]  ECR  743;  Case  C-418/01  IMS  Health  v  NDC 
Health [2004] ECR I-5039. These judgments show that in exceptional circumstances a refusal to license 
IPRs is abusive.  
Judgment of 17 September 2007 in Case T-201/04 Microsoft v Commission [2007] ECR II-3601.  
See  Commission  Decisions  B&I  Line  v  Sealink  Harbours  and  Stena  Sealink  [1992]  5  CMLR  255; 
IV/34.689 Sea Containers v Stena Sealink – Interim Measures (Commission Decision 94/19/EC of 21 
December  1993,  OJ  1994  L  15,  18.01.1994,  pp.  8–19);  IV/33.544  British  Midland  v  Aer  Lingus 
(Commission Decision 92/213/EEC of 26 February 1992 - OJ 1992 L 96, 10.4.1992, p. 34).  
Case C-418/01 IMS Health v NDC Health [2004] ECR I-5039, paragraph 44.  

EN 

23 

   EN 

 
                                                 
downstream  market54,  does  not  allow  even  an  as  efficient  competitor  to  trade 
profitably  in  the  downstream  market  on  a  lasting  basis  (a  so-called  "margin 
squeeze").  In  margin  squeeze  cases  the  benchmark  which  the  Commission  will 
generally rely on to determine the costs of an as efficient competitor are the LRAIC 
of the downstream division of the integrated dominant firm55. 

80. 

The  Commission  will  consider  these  practices  as  an  enforcement  priority  if  the 
following cumulative circumstances are present: 

•  the refusal relates to a product or service that is objectively necessary to be able to 

compete effectively on a downstream market;  

•  the  refusal  is  likely  to  lead  to  the  elimination  of  effective  competition  on  the 

downstream market; and 

•  the refusal is likely to lead to consumer harm. 

In  certain  specific  cases,  it  may  be  clear  that  imposing  an  obligation  to  supply  is 
manifestly not capable of having negative effects on the input owner's and/or other 
operators' incentives to invest and innovate upstream, whether ex ante or ex post. The 
Commission considers that this is particularly likely to be the case where regulation 
compatible  with  Community  law  already  imposes  an  obligation  to  supply  on  the 
dominant  undertaking  and  it  is  clear,  from  the  considerations  underlying  such 
regulation, that the necessary balancing of incentives has already been made by the 
public authority when imposing such an obligation to supply. This could also be the 
case  where  the  upstream  market  position  of  the  dominant  undertaking  has  been 
developed under the protection of special or exclusive rights or has been financed by 
state  resources.  In  such  specific  cases  there  is  no  reason  for  the  Commission  to 
deviate from its general enforcement standard and it may show likely anticompetitive 
foreclosure  without  considering  whether  the  above  three  cumulative  circumstances 
are present. 

Objective necessity of the input 

In  examining  whether  a  refusal  to  supply  deserves  its  priority  attention,  he 
Commission  will  consider  whether  the  supply  of  the  refused  input  is  objectively 
needed for operators to be able to compete effectively on the market. This does not 
mean that, without the refused input, no competitor could ever enter or survive on the 
downstream  market56.  Rather,  an  input  is  indispensable  where  there  is  no  actual  or 
potential substitute on which competitors in the downstream market could rely so as 
to counter – at least in the long term - the negative consequences of the refusal57. In 

Including  a  situation  in  which  an  integrated  firm  that  sells  a  “system”  of  complementary  products 
refuses to sell one of the complementary products on an unbundled basis to a competitor that produces 
the other complementary product.  
In some cases, however, the LRAIC of a non-integrated competitor downstream might be used as the 
benchmark,  for  example  when  it  is  not  possible  to  clearly  allocate  the  dominant  firm's  costs  to 
downstream and upstream operations.  
Judgment  of  17  September  2007  in  Case  T-201/04  Microsoft  v  Commission  [2007]  ECR  II-3601, 
paragraphs 428 and 560-563.  
Joined  Cases  C-241/91  P  and  C-242/91  Radio  Telefis  Eireann  (RTE)  and  Independent  Television 
Publications  (ITP)  v  Commission  (Magill)  [1995]  ECR  743,  paragraphs  52  and  53;  Case  7/97  Oscar 

81. 

a) 

82. 

54 

55 

56 

57 

EN 

24 

   EN 

 
                                                 
this  regard,  the  Commission  will  normally  make  an  assessment  of  whether 
competitors  could  effectively  duplicate  the  input  produced  by  the  dominant 
undertaking in the foreseeable future58. The notion of duplication means the creation 
of an alternative source of efficient supply that is capable of allowing competitors to 
exert  a  competitive  constraint  on  the  dominant  undertaking  in  the  downstream 
market59. 

The  criteria  set  out  in  paragraph  80  apply  both  to  cases  of  disruption  of  previous 
supply, and to refusals to supply a good or service which the dominant company has 
not  previously  supplied  to  others  (de  novo  refusals  to  supply).  However,  it  is  more 
likely that the termination of an existing supply arrangement is found to be abusive 
than  a  de  novo  refusal  to  supply.  For  example,  if  the  dominant  undertaking  had 
previously  been  supplying  the  requesting  undertaking,  and  the  latter  had  made 
relationship-specific investments in order to use the subsequently refused input, the 
Commission  may  be  more  likely  to  regard  the  input  in  question  as  indispensable. 
Similarly, the fact that the owner of the essential input in the past has found it in its 
interest  to  supply  is  an  indication  that  supplying  the  input  does  not  imply  any  risk 
that  the  owner  receives  inadequate  compensation  for  the  original  investment.  It 
would therefore be up to the dominant company to demonstrate why circumstances 
have  actually  changed  in  such  a  way  that  the  continuation  of  its  existing  supply 
relationship would put in danger its adequate compensation.  

Elimination of effective competition  

If  the  requirements  set  out  in  paragraphs  82  to  83  are  fulfilled,  the  Commission 
considers  that  a  dominant  undertaking's  refusal  to  supply  is  generally  liable  to 
eliminate,  immediately  or  over  time,  effective  competition  in  the  downstream 
market. The likelihood of effective competition being eliminated is generally greater 
the higher the market share of the dominant firm in the downstream market; the less 
capacity-constrained the dominant firm is relative to competitors in the downstream 
market; the closer the substitutability between the dominant firm's output and that of 
its competitors in the downstream market; the greater the proportion of competitors 
in the downstream market that are affected, and; the more likely it is that the demand 
that  could  be  served  by  the  foreclosed  competitors  would  be  diverted  away  from 
them to the advantage of the dominant undertaking. 

Consumer harm 

In  examining  the  likely  impact  of  a  refusal  to  supply  on  consumer  welfare,  the 
Commission  will  examine  whether  for  the  consumers,  the  likely  negative 
consequences of the refusal to supply in the relevant market outweigh over time the 

Bronner v Mediaprint Zeitungs- und Zeitschriftenverlag, Mediaprint Zeitungsvertriebsgesellschaft and 
Mediaprint  Anzeigengesellschaft  [1998]  ECR  I-7791,  paragraphs  44-45;  Judgment  of  17  September 
2007 in Case T-201/04 Microsoft v Commission [2007] ECR II-3601, paragraph 421.  
In general, an input is likely to be impossible to replicate when it involves a natural monopoly due to 
scale or scope economies, where there are strong network effects or when it concerns so-called "single 
source"  information.  However,  in  all  cases  account  should  be  taken  of  the  dynamic  nature  of  the 
industry and, in particular whether or not market power can rapidly dissipate. 
Case  7/97  Oscar  Bronner  v  Mediaprint  Zeitungs-  und  Zeitschriftenverlag,  Mediaprint 
Zeitungsvertriebsgesellschaft  and  Mediaprint  Anzeigengesellschaft  [1998]  ECR  I-7791,  paragraph  46; 
Case C-418/01 IMS Health v NDC Health [2004] ECR I-5039, paragraph 29.  

83. 

b) 

84. 

c) 

85. 

58 

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86. 

87. 

d) 

88. 

89. 

negative  consequences  of  imposing  an  obligation  to  supply.  If  they  do,  the 
Commission will normally pursue the case. 

The  Commission  considers  that  consumer  harm  may,  for  instance,  arise  where  the 
competitors that the  dominant undertaking forecloses are, as a  result  of the  refusal, 
prevented from bringing to market innovative goods or services and/or where follow-
on  innovation  is  likely  to  be  stifled60.  This  may  be  particularly  the  case  if  the 
undertaking  which  requests  supply  does  not  intend  to  limit  itself  essentially  to 
duplicating the goods or services already offered by the dominant undertaking on the 
downstream  market,  but  intends  to  produce  new  or  improved  goods  or  services  for 
which  there  is  a  potential  consumer  demand  or  is  likely  to  contribute  to  technical 
development61. 

The Commission also considers that a refusal to supply may lead to consumer harm 
where  the  price  in  the  upstream  input  market  is  regulated,  the  price  in  the 
downstream  market  is  not  regulated  and  the  dominant  undertaking,  by  excluding 
competitors on the downstream market through a refusal to supply, is able to extract 
more profits in the unregulated downstream market than it would otherwise do. 

Efficiencies  

The Commission will consider claims by the dominant undertaking that a refusal to 
supply is necessary to allow the dominant undertaking to realise an adequate return 
on the investments required to develop its input business, thus generating incentives 
to continue to invest in the future, taking the risk of failed projects into account. The 
Commission  will  also  consider  claims  by  the  dominant  undertaking  that  its  own 
innovation will be negatively affected by the obligation to supply, or by the structural 
changes in the market conditions that imposing such an obligation will bring about, 
including the development of follow-on innovation by competitors. 

However,  when  considering  such  claims,  the  Commission  will  ensure  that  the 
conditions  set  out  in  Section  III  D  above  are  fulfilled.  In  particular,  it  falls  on  the 
dominant  undertaking  to  demonstrate  any  negative  impact  which  an  obligation  to 
supply  is  likely  to  have  on  its  own  level  of  innovation62,  and  if  a  dominant 
undertaking has previously supplied the input in question, this can be relevant for the 
assessment of any claim that the refusal to supply is justified on efficiency grounds.  

60 

61 

62 

Judgment  of  17  September  2007  in  Case  T-201/04  Microsoft  v  Commission  [2007]  ECR  II-3601, 
paragraphs 643, 647-649, 652-653 and 656. 
Case  C-418/01  IMS  Health  v  NDC  Health  [2004]  ECR  I-5039,  paragraph  49;  Judgment  of  17 
September 2007 in Case T-201/04 Microsoft v Commission [2007] ECR II-3601, paragraph 658. 
Judgment  of  17  September  2007  in  Case  T-201/04  Microsoft  v  Commission  [2007]  ECR  II-3601, 
paragraph 659. 

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