British Airways plc v Commission of the European Communities.
Date: 2007-03-15
57. Concerning, first, the plea that the Court of First Instance wrongly failed to base its argument on the criteria in subparagraph (b) of the second paragraph of Article 82 EC in assessing whether the bonus schemes at issue were abusive, the list of abusive practices contained in Article 86 EC is not exhaustive, so that the practices there mentioned are merely examples of abuses of a dominant position (see, to that effect, Case C‑333/94 P Tetra Pak  v Commission  [1996] ECR I‑5951, paragraph 37). According to consistent case-law, the list of abusive practices contained in that provision does not exhaust the methods of abusing a dominant position prohibited by the EC Treaty (Case 6/72 Europemballage and Continental Can  v Commission  [1973] ECR 215, paragraph 26; Joined Cases C‑395/96 P and C‑396/96 P Compagnie maritime belge transports a.o.  v Commission  [2000] ECR I‑1365, paragraph 112).
58. It follows that discounts and bonuses granted by undertakings in a dominant position may be contrary to Article 82 EC even where they do not correspond to any of the examples mentioned in the second paragraph of that article. Thus, in determining that fidelity discounts had an exclusionary effect, the Court based its argument in Hoffmann-La Roche  and Michelin  on Article 82 of the EEC Treaty (subsequently Article 86 of the EC Treaty, and then Article 82 EC) in its entirety, and not just on subparagraph (b) of its second paragraph. Moreover, in its judgment in Joined Cases 40/73 to 48/73, 50/73, 54/73 to 56/73, 111/73, 113/73 and 114/73 Suiker Unie and Others  v Commission  [1975] ECR 1663, paragraph 523, concerning fidelity rebates, the Court expressly referred to subparagraph (c) of the second paragraph of Article 86 of the EEC Treaty, according to which practices constituting abuse of a dominant position may consist, for example, in applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage.
66. Concerning the application of Article 82 EC to a system of discounts dependent on sales objectives, paragraph 70 of the Michelin  judgment shows that, in prohibiting the abuse of a dominant market position in so far as trade between Member States is capable of being affected, that article refers to conduct which is such as to influence the structure of a market where, as a result of the very presence of the undertaking in question, the degree of competition is already weakened and 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.
67. In order to determine whether the undertaking in a dominant position has abused such a position by applying a system of discounts such as that described in paragraph 65 of this judgment, the Court has held that it is necessary to consider all the circumstances, particularly the criteria and rules governing the grant of the discount, and to investigate whether, in providing an advantage not based on any economic service justifying it, the discount tends to remove or restrict the buyer’s freedom to choose his sources of supply, to bar competitors from access to the market, to apply dissimilar conditions to equivalent transactions with other trading parties or to strengthen the dominant position by distorting competition ( Michelin , paragraph 73).
68. It follows that in determining whether, on the part of an undertaking in a dominant position, a system of discounts or bonuses which constitute neither quantity discounts or bonuses nor fidelity discounts or bonuses within the meaning of the judgment in Hoffmann-La Roche constitutes an abuse, it first has to be determined whether those discounts or bonuses can produce an exclusionary effect, that is to say whether they are capable, first, of making market entry very difficult or impossible for competitors of the undertaking in a dominant position and, secondly, of making it more difficult or impossible for its co-contractors to choose between various sources of supply or commercial partners.
69. It then needs to be examined whether there is an objective economic justification for the discounts and bonuses granted. In accordance with the analysis carried out by the Court of First Instance in paragraphs 279 to 291 of the judgment under appeal, an undertaking is at liberty to demonstrate that its bonus system producing an exclusionary effect is economically justified.
73. It is also apparent from the case-law that the commitment of co-contractors towards the undertaking in a dominant position and the pressure exerted upon them may be particularly strong where a discount or bonus does not relate solely to the growth in turnover in relation to purchases or sales of products of that undertaking made by those co-contractors during the period under consideration, but extends also to the whole of the turnover relating to those purchases or sales. In that way, relatively modest variations – whether upwards or downwards – in the turnover figures relating to the products of the dominant undertaking have disproportionate effects on co-contractors (see, to that effect, Michelin , paragraph 81).
75. Finally, the Court took the view that the pressure exerted on resellers by an undertaking in a dominant position which granted bonuses with those characteristics is further strengthened where that undertaking holds a very much larger market share than its competitors (see, to that effect, Michelin , paragraph 82). It held that, in those circumstances, it is particularly difficult for competitors of that undertaking to outbid it in the face of discounts or bonuses based on overall sales volume. By reason of its significantly higher market share, the undertaking in a dominant position generally constitutes an unavoidable business partner in the market. Most often, discounts or bonuses granted by such an undertaking on the basis of overall turnover largely take precedence in absolute terms, even over more generous offers of its competitors. In order to attract the co-contractors of the undertaking in a dominant position, or to receive a sufficient volume of orders from them, those competitors would have to offer them significantly higher rates of discount or bonus.
78. It should be recalled, concerning the assessment of market data and the competitive situation, that it is not for the Court of Justice, on an appeal, to substitute its own assessment for that of the Court of First Instance. In accordance with Article 225 EC and the first paragraph of Article 58 of the Statute of the Court of Justice, the appeal must be limited to questions of law. Assessment of the facts does not, save where there may have been distortion of the facts or evidence, which has not been pleaded here, constitute a question of law submitted as such for review by the Court of Justice (to that effect, see for example Case C‑37/03 P BioID  v OHIM  [2005] ECR I‑7975, paragraphs 43 and 53; Case C‑113/04 P Technische Unie  v Commission  [2006] ECR I-0000, paragraph 83, and the order of 28 September 2006 in Case C‑552/03 P Unilever Bestfoods  v Commission , not published in the ECR, paragraph 57). BA’s claim that its competitors were financially capable of making competitive counter-offers to travel agents is therefore inadmissible.
86. Assessment of the economic justification for a system of discounts or bonuses established by an undertaking in a dominant position is to be made on the basis of the whole of the circumstances of the case (see, to that effect, Michelin , paragraph 73). It has to be determined whether the exclusionary effect arising from such a system, which is disadvantageous for competition, may be counterbalanced, or outweighed, by advantages in terms of efficiency which also benefit the consumer. If the exclusionary effect of that system bears no relation to advantages for the market and consumers, or if it goes beyond what is necessary in order to attain those advantages, that system must be regarded as an abuse.
133. Subparagraph (c) of the second paragraph of Article 82 EC prohibits any discrimination on the part of an undertaking in a dominant position which consists in the application of dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage (Case C‑163/99 Portugal  v Commission  [2001] ECR I‑2613, paragraph 46).
143. The specific prohibition of discrimination in subparagraph (c) of the second paragraph of Article 82 EC forms part of the system for ensuring, in accordance with Article 3(1)(g) EC, that competition is not distorted in the internal market. The commercial behaviour of the undertaking in a dominant position may not distort competition on an upstream or a downstream market, in other words between suppliers or customers of that undertaking. Co-contractors of that undertaking must not be favoured or disfavoured in the area of the competition which they practise amongst themselves.
144. Therefore, in order for the conditions for applying subparagraph (c) of the second paragraph of Article 82 EC to be met, there must be a finding not only that the behaviour of an undertaking in a dominant market position is discriminatory, but also that it tends to distort that competitive relationship, in other words to hinder the competitive position of some of the business partners of that undertaking in relation to the others (see, to that effect, Suiker Unie , paragraphs 523 and 524).
145. In that respect, there is nothing to prevent discrimination between business partners who are in a relationship of competition from being regarded as being abusive as soon as the behaviour of the undertaking in a dominant position tends, having regard to the whole of the circumstances of the case, to lead to a distortion of competition between those business partners. In such a situation, it cannot be required in addition that proof be adduced of an actual quantifiable deterioration in the competitive position of the business partners taken individually.