Konkurrensverket v TeliaSonera Sverige AB.
Date: 2011-02-17
15. However, it should be recalled that, according to settled case-law, in proceedings under Article 267 TFEU, it is solely for the national court before which the dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances of the case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions referred concern the interpretation of EU law, the Court of Justice is, in principle, bound to give a ruling (see, inter alia, Case C‑414/07 Magoora  [2008] ECR I‑10921, paragraph 22; Joined Cases C‑316/07, C‑358/07 to C‑360/07, C‑409/07 and C‑410/07 Stoß and Others  [2010] ECR I‑0000, paragraph 51; and Case C‑45/09 Rosenbladt  [2010] ECR I‑0000, paragraph 32).
16. The Court may refuse to rule on a question referred for a preliminary ruling from a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to (Joined Cases C‑222/05 to C‑225/05 van der Weerd and Others  [2007] ECR I‑4233, paragraph 22; Magoora , paragraph 23; and Stoß and Others , paragraph 52).
22. The function of those rules is precisely to prevent competition from being distorted to the detriment of the public interest, individual undertakings and consumers, thereby ensuring the well-being of the European Union (see, to that effect, Case C‑94/00 Roquette Frères  [2002] ECR I‑9011, paragraph 42).
23. In that context, the dominant position referred to in Article 102 TFEU relates to a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of consumers (Case 85/76 Hoffmann-La Roche  v Commission  [1979] ECR 461, paragraph 38, and Case C‑280/08 P Deutsche Telekom  v Commission  [2010] ECR I‑0000, paragraph 170).
24. Accordingly, Article 102 TFEU must be interpreted as referring not only to practices which may cause damage to consumers directly (see, to that effect, Joined Cases C‑468/06 to C‑478/06 Sot. Lélos kai Sia and Others  [2008] ECR I‑7139, paragraph 68, and Deutsche Telekom  v Commission , paragraph 176), but also to those which are detrimental to them through their impact on competition. Whilst Article 102 TFEU does not prohibit an undertaking from acquiring, on its own merits, the dominant position in a market, and while, a fortiori, a finding that an undertaking has a dominant position is not in itself a ground of criticism of the undertaking concerned (see, to that effect, Case 322/81 Nederlandsche Banden-Industrie-Michelin  v Commission  [1983] ECR 3461, paragraph 57, and Joined Cases C‑395/96 P and C‑396/96 P Compagnie maritime belge transports and Others  v Commission  [2000] ECR I‑1365, paragraph 37), it remains the case that, in accordance with settled case-law, an undertaking which holds a dominant position has a special responsibility not to allow its conduct to impair genuine undistorted competition in the internal market (see, to that effect, Case C‑202/07 P France Télécom  v Commission  [2009] ECR I‑2369, paragraph 105 and case-law cited).
26. Furthermore, the list of abusive practices contained in Article 102 TFEU is not exhaustive, so that the list of abusive practices contained in that provision does not exhaust the methods of abusing a dominant position prohibited by EU law ( Deutsche Telekom  v Commission , paragraph 173 and case-law cited).
27. The concept of abuse of a dominant position prohibited by that provision is an objective concept relating to the conduct of a dominant undertaking which, on a market where the degree of competition is already weakened precisely because of the presence of the undertaking concerned, 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 ( Deutsche Telekom  v Commission , paragraph 174 and case-law cited).
28. In order to determine whether the dominant undertaking has abused its position by the pricing practices it applies, it is necessary to consider all the circumstances and to investigate whether the practice 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 ( Deutsche Telekom  v Commission , paragraph 175 and case-law cited).
31. A margin squeeze, in view of the exclusionary effect which it may create for competitors who are at least as efficient as the dominant undertaking, in the absence of any objective justification, is in itself capable of constituting an abuse within the meaning of Article 102 TFEU (see, to that effect, Deutsche Telekom  v Commission , paragraph 183).
34. It must moreover be made clear that since the unfairness, within the meaning of Article 102 TFEU, of such a pricing practice is linked to the very existence of the margin squeeze and not to its precise spread, it is in no way necessary to establish that the wholesale prices for ADSL input services to operators or the retail prices for broadband connection services to end users are in themselves abusive on account of their excessive or predatory nature, as the case may be ( Deutsche Telekom  v Commission , paragraphs 167 and 183).
39. It must be recalled, in that regard, that the Court has already made clear that Article 102 TFEU prohibits a dominant undertaking from, inter alia, adopting pricing practices which have an exclusionary effect on its equally efficient actual or potential competitors (see, to that effect, Deutsche Telekom  v Commission , paragraph 177 and case-law cited).
40. Where an undertaking introduces a pricing policy intended to drive from the market competitors who are perhaps as efficient as that dominant undertaking but who, because of their smaller financial resources, are incapable of withstanding the competition waged against them, that undertaking is, accordingly, abusing its dominant position (see, to that effect, Deutsche Telekom  v Commission , paragraph 199).
41. In order to assess the lawfulness of the pricing policy applied by a dominant undertaking, reference should be made, as a general rule, to pricing criteria based on the costs incurred by the dominant undertaking itself and on its strategy (see, to that effect, Case C‑62/86 AKZO  v Commission  [1991] ECR I‑3359, paragraph 74, and France Télécom  v Commission , paragraph 108).
42. In particular, as regards a pricing practice which causes margin squeeze, the use of such analytical criteria can establish whether that undertaking would have been sufficiently efficient to offer its retail services to end users otherwise than at a loss if it had first been obliged to pay its own wholesale prices for the intermediary services (see, to that effect, Deutsche Telekom  v Commission , paragraph 201).
43. If that undertaking would have been unable to offer its retail services otherwise than at a loss, that would mean that competitors who might be excluded by the application of the pricing practice in question could not be considered to be less efficient than the dominant undertaking and, consequently, that the risk of their exclusion was due to distorted competition. Such competition would not be based solely on the respective merits of the undertakings concerned.
44. Furthermore, the validity of such an approach is reinforced by the fact that it conforms to the general principle of legal certainty, since taking into account the costs and prices of the dominant undertaking enables that undertaking to assess the lawfulness of its own conduct, which is consistent with its special responsibility under Article 102 TFEU, as stated in paragraph 24 of this judgment. While a dominant undertaking knows its own costs and prices, it does not as a general rule know those of its competitors ( Deutsche Telekom  v Commission , paragraph 202).
45. That said, it cannot be ruled out that the costs and prices of competitors may be relevant to the examination of the pricing practice at issue in the main proceedings. That might in particular be the case where the cost structure of the dominant undertaking is not precisely identifiable for objective reasons, or where the service supplied to competitors consists in the mere use of an infrastructure the production cost of which has already been written off, so that access to such an infrastructure no longer represents a cost for the dominant undertaking which is economically comparable to the cost which its competitors have to incur to have access to it, or again where the particular market conditions of competition dictate it, by reason, for example, of the fact that the level of the dominant undertaking’s costs is specifically attributable to the competitively advantageous situation in which its dominant position places it.
46. It must therefore be concluded that, when assessing whether a pricing practice which causes a margin squeeze is abusive, account should as a general rule be taken primarily of the prices and costs of the undertaking concerned on the retail services market. Only where it is not possible, in particular circumstances, to refer to those prices and costs should those of its competitors on the same market be examined.
The absence of any regulatory obligation to supply
47. It is apparent from the order for reference that, contrary to the case which gave rise to Deutsche Telekom  v Commission , TeliaSonera, as stated in paragraph 6 of this judgment, was not under any regulatory obligation to supply ADSL input services to operators.
49. In that regard, it must be borne in mind that Article 102 TFEU applies only to anti-competitive conduct engaged in by undertakings on their own initiative. If anti-competitive conduct is required of undertakings by national legislation or if the latter creates a legal framework which itself eliminates any possibility of competitive activity on their part, Article 102 TFEU does not apply. In such a situation, the restriction of competition is not attributable, as those provisions implicitly require, to the autonomous conduct of the undertakings (see, to that effect, Joined Cases C‑359/95 P and C‑379/95 P Commission and France  v Ladbroke Racing  [1997] ECR I‑6265, paragraph 33 and case-law cited).
50. Article 102 TFEU may apply, however, if it is found that the national legislation does not preclude undertakings from engaging in autonomous conduct which prevents, restricts or distorts competition (see Commission and France  v Ladbroke Racing , paragraph 34).
51. The Court has stated that notwithstanding such legislation, if a dominant vertically integrated undertaking has scope to adjust even its retail prices alone, the margin squeeze may on that ground alone be attributable to it (see, to that effect, Deutsche Telekom  v Commission , paragraph 85).
55. Such an interpretation is based on a misunderstanding of that judgment. In particular, it cannot be inferred from paragraphs 48 and 49 of that judgment that the conditions to be met in order to establish that a refusal to supply is abusive must necessarily also apply when assessing the abusive nature of conduct which consists in supplying services or selling goods on conditions which are disadvantageous or on which there might be no purchaser.
56. Such conduct may, in itself, constitute an independent form of abuse distinct from that of refusal to supply.
57. Moreover, it must be observed that since the Court was, in the said paragraphs of Bronner , called upon, in essence, only to interpret Article 86 of the EC Treaty (thereafter Article 82 EC, now Article 102 TFEU) with regard to the conditions under which a refusal to supply may be abusive, the Court did not make any ruling on whether the fact that an undertaking refuses access to its home-delivery scheme to the publisher of a rival newspaper where the latter does not at the same time entrust to it the carrying out of other services, such as sales in kiosks or printing, constitutes some other form of abuse of a dominant position, such as tied sales.
58. Moroever, if Bronner  were to be interpreted otherwise, in the way advocated by TeliaSonera, that would, as submitted by the European Commission, amount to a requirement that before any conduct of a dominant undertaking in relation to its terms of trade could be regarded as abusive the conditions to be met to establish that there was a refusal to supply would in every case have to be satisfied, and that would unduly reduce the effectiveness of Article 102 TFEU.
61. It must be observed in that regard that, bearing in mind the concept of abuse of a dominant position explained in paragraph 27 of this judgment, the Court has ruled out the possibility that the very existence of a pricing practice of a dominant undertaking which leads to the margin squeeze of its equally efficient competitors can constitute an abuse within the meaning of Article 102 TFEU without it being necessary to demonstrate an anti-competitive effect (see, to that effect, Deutsche Telekom  v Commission , paragraphs 250 and 251).
62. The case-law has furthermore made clear that the anti-competitive effect must relate to the possible barriers which such a pricing practice may create to the growth on the retail market of the services offered to end users and, therefore, on the degree of competition in that market ( Deutsche Telekom  v Commission , paragraph 252).
63. Accordingly, the practice in question, adopted by a dominant undertaking, constitutes an abuse within the meaning of Article 102 TFEU, where, given its effect of excluding competitors who are at least as efficient as itself by squeezing their margins, it is capable of making more difficult, or impossible, the entry of those competitors onto the market concerned (see, to that effect, Deutsche Telekom  v Commission , paragraph 253).
64. It follows that, in order to establish whether such a practice is abusive, that practice must have an anti-competitive effect on the market, but the effect does not necessarily have to be concrete, and it is sufficient to demonstrate that there is an anti-competitive effect which may potentially exclude competitors who are at least as efficient as the dominant undertaking.
65. Where a dominant undertaking actually implements a pricing practice resulting in a margin squeeze on its equally efficient competitors, with the purpose of driving them from the relevant market, the fact that the desired result, namely the exclusion of those competitors, is not ultimately achieved does not alter its categorisation as abuse within the meaning of Article 102 TFEU.
66. However, in the absence of any effect on the competitive situation of competitors, a pricing practice such as that at issue in the main proceedings cannot be classified as an exclusionary practice where the penetration of those competitors in the market concerned is not made any more difficult by that practice (see, to that effect, Deutsche Telekom  v Commission , paragraph 254).
69. In particular, the first matter to be analysed must be the functional relationship of the wholesale products to the retail products. Accordingly, when assessing the effects of the margin squeeze, the question whether the wholesale product is indispensable may be relevant.
70. Where access to the supply of the wholesale product is indispensable for the sale of the retail product, competitors who are at least as efficient as the undertaking which dominates the wholesale market and who are unable to operate on the retail market other than at a loss or, in any event, with reduced profitability suffer a competitive disadvantage on that market which is such as to prevent or restrict their access to it or the growth of their activities on it (see, to that effect, Deutsche Telekom  v Commission , paragraph 234).
75. That said, it must be borne in mind that an undertaking remains at liberty to demonstrate that its pricing practice, albeit producing an exclusionary effect, is economically justified (see, to that effect, Case C‑95/04 P British Airways  v Commission  [2007] ECR I‑2331, paragraph 69, and France Télécom  v Commission , paragraph 111).
76. The assessment of the economic justification for a pricing practice established by an undertaking in a dominant position which is capable of producing an exclusionary effect is to be made on the basis of all the circumstances of the case (see, to that effect, Nederlandsche Banden-Industrie-Michelin  v Commission , paragraph 73). In that regard, it has to be determined whether the exclusionary effect arising from such a practice, 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 practice 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 practice must be regarded as an abuse ( British Airways  v Commission , paragraph 86).
79. As stated in paragraph 23 of this judgment, the dominant position referred to in Article 102 TFEU relates to a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of consumers.
81. Of course, that does not mean that an undertaking’s strength is not relevant to the assessment of the lawfulness of the conduct in the market of such an undertaking in the light of Article 102 TFEU. The Court itself has based its analyses on the fact that an undertaking enjoyed a position of super-dominance or a quasi-monopoly (see, to that effect, Case C‑333/94 P Tetra Pak  v Commission  [1996] ECR I‑5951, paragraph 31, and Compagnie maritime belge transports and Others  v Commission , paragraph 119). Nonetheless the degree of market strength is, as a general rule, significant in relation to the extent of the effects of the conduct of the undertaking concerned rather than in relation to the question of whether the abuse as such exists.
84. It must be stressed, in that regard, that Article 102 TFEU gives no explicit guidance as to what is required in relation to where on the product markets the abuse took place. Accordingly, the actual scope of the special responsibility imposed on a dominant undertaking must be considered in the light of the specific circumstances of each case which show that competition has been weakened ( Tetra Pak  v Commission , paragraph 24).
85. It follows that certain conduct on markets other than the dominated markets and having effects either on the dominated markets or on the non-dominated markets themselves can be categorised as abusive (see, to that effect, Tetra Pak  v Commission , paragraph 25).
86. While the application of Article 102 TFEU presupposes a link between the dominant position and the alleged abusive conduct, which is normally not present where conduct on a market distinct from the dominated market produces effects on that distinct market, the fact remains that in the case of distinct, but associated, markets, the application of Article 102 TFEU to conduct found on the associated, non-dominated, market and having effects on that associated market can be justified by special circumstances (see, to that effect, Case 311/84 CBEM  [1985] ECR 3261, paragraph 26, and Tetra Pak  v Commission , paragraph 27).
94. The point must be made that the abusiveness of a pricing practice such as that at issue in the main proceedings must be assessed not only with regard to the possibility that the effect of that practice may be that equally efficient operators who are already active in the relevant market may be driven from it, but also by taking into account any barriers which the practice is capable of creating in the way of operators who are potentially equally efficient and who are not yet present on the market (see, to that effect, Deutsche Telekom  v Commission , paragraph 178).
102. Lastly, in the event that the dominant undertaking were nonetheless to apply a price on the retail market which was so low that sales would engender losses, beyond the fact that such conduct is likely to constitute an autonomous form of abuse, namely the application of predatory prices, the Court has in any event already rejected the argument that, even in such a case, proof of the possibility of recoupment of losses suffered by the application, by an undertaking in a dominant position, of prices lower than a certain level of costs constitutes a necessary precondition to establishing that such a pricing policy is abusive (see, to that effect, France Télécom  v Commission , paragraph 110).