Introduction : I decided to work on the topic « Abuse of a dominantposition » which is directly connected to the article 102 of the Treaty ofthe functioning of the European Union.First, I will introduce my dissertation with the explanationof the article 102 : what is it about, what is the aim, the general rule,the excpetions, etc….Then, in order to illustrate the operation and the sanctionsof this article, I will talk about two cases of abuse of dominantposition :- the famous case of Intel in 2009- the Qualcomm case from 2018 Legislation : Two primary treaties set rules for the functioning of theEuropean Union : the « Treaty on European Union » (TEU), and the« Treaty on the Functioning of the European Union » (TFEU).
The article 102 of the TFEU regulates the abuse of dominantposition, which is defined as « any abuse by one or more undertakings of adominant position within the internal market or in a substantial part ofit » by the same article. Regardingthe legislation, abuse can be found in many cases such as :- directly/indirectly imposing unfair tradingconditions, such as unfair purchase or selling prices.- limiting markets, production or technicaldevelopment to the prejudice of consumers.- Not applying the same conditions to equivalenttransactions with other trading parties, which put them on a competitivedisadvantage.- Making the conclusion of contracts subject toacceptance by the other parties of supplementry obligations which, by theirnature or according to commercial usage, have no connection with the subject ofsuch contracts. On a general point of view, this legislation does exist tocontrol and regulate the potential abuse of a dominant position of companies onthe european union market, which is seen as an anti competitive practive by theTFEU.
However, there are some exceptions for these practices.For example, those resulting from the application of alegislative text or a regulatory text made for its application.Another example is the practice of which the authors canjustify that they have the effect of ensuring economic progress and that theyreserve for the users a fair share of the resulting profit, without giving thecompanies concerned the possibility of eliminating competition for asubstantial part of the products in question. To understand this legislation, it is important to keep inmind that even if the TFEU put some words on what is an abuse of dominantposition and give cases in the article 102, the notion of abuse is still verysubjective, and it is not that simple to prove that a dominant company isabusing of its position on the market.
Main body : Intel The case of abuse of dominant position of the Americancompany Intel goes back to sixteen years ago. Indeed, in 2009, the european executive sanctioned Intel by accusingit of having benefited between 2002 and 2007 from its dominant position in theglobal semiconductor market to grant discounts to four major computermanufacturers : Dell, Lenovo, NEC and Hewlett-Packard.Intel’s condition for these manufacturers to take advantageof the rebates was that they provide almost all of Intel’s CPUs.Both parties were winners : manufacturers benefited fromdiscounts on the purchase of processors as Intel could spoil the market shareof its leading competitor: Advanced Micro Devices (ADM). In 2009, the European Commission fined the American companya fine of 1.06 billion euros for abuse of dominant position on the market.The case was well for Intel to pay his accusation: after theconviction in 2009, Intel wanted the cancellation of this decision, or at leasta consequent reduction in the amount of the fine.The company did not get what it wanted, but still managed toget a review of its file.
In the summer of 2014, the Court of the EuropeanUnion finally made official its decision on the appeal of Intel on his file :it is rejected. However, the case did not stop there : the Americansemiconductor giant immediately appealed this decision and it paid off. In October 2016, the Advocate General of the European Courtof Justice confirmed the situation of Intel.
For him, doubts remain about thereality of an infringement of competition by Intel’s practices. On 6 of September 2017, the Court of Justice of the EuropeanUnion canceled the judgment of the General Court which confirmed in 2014 thefine of 1.06 billion euros pronounced by the European Commission to the againstthe American company.Intel thus escapes once again the payment of the fine whichis intended for him, but the affair is not closed : the case file returns tothe Tribunal so that certain arguments of the company can be examined again.To justify this last decision of the Court of Justice, Intelpleaded the error of law of the General Court of the European Union. Thefoundry considered that the judges did not examine all the elements that theAmerican company presented during the trial, leading them to consider thepractices of Intel as illegal by nature.
The Court will therefore have to re-examine the case bytaking into account the arguments of the founder and by verifying whether thediscounts in question are in fact capable of restricting competition.In the end, Intel is not yet out of trouble even if thegroup got a new respite: the justice of the European Union could very wellvalidate all or part of the initial fine.Qualcomm The European Commission imposed a few days ago a fine of 997million euros on the American company Qualcomm for abuse of dominant positionin the 4G LTE modems sector. Following an investigation initiated in 2015,Brussels concluded that Qualcomm, market leader, had unlawfully impededcompetition. In more detail, Brussels accuses Qualcomm of two major practices : On the one hand, the company would have paid significantsums to Apple, its main client, in order to convince him to use his chipsetsrather than those of the competition. For the Commission, this is a measurethat has damaged competition and innovation in the UTMS and LTE basebandchipsets markets.
On the other hand, the European Commission also accuses theAmerican company of selling its chipsets at a loss in order to simply oustIcera market, a major competitor Qualcomm. This strategy would have been ineffect from 2009 to 2011. The case has just begun but according to CompetitionCommissioner Margrethe Vestager, Qualcomm has illegally ousted its competitorsfrom the LTE baseband chipsets market for more than five years, in order toconsolidate its dominant position in the market. the market. Also according to her and according to the practices ofQualcomm, no competitor could compete effectively with the American giant inthe market, whatever the quality of its products.
Qualcomm’s behavior hasdeprived consumers and other businesses of wider choice and innovation, whilethe sector is characterized by strong demand and potential for innovativetechnologies. Under the rules of the European Union, this practice isstrictly illegal is subject to anti-competitive practices on the market. Thisexplains the Commission’s decision against Qualcomm.
However, even if a fine of nearly 1 billion euros has beeninflicted on Qualcomm, the case has just started and remains to be followed:the US company will probably answer the charges and try to avoid the fine . Conclusion : Through these two cases, we can see that some companies donot hesitate to use all means to grab market share and break the competition. The article 102 of the Treaty on the functioning of theEuropean Union makes it possible to set up a set of rules which define andpunish such illicit practices. However, the concept of abuse of a dominantposition remains very subjective and even with rules testifying to examples ofabuse, it remains difficult for Justice to enforce the law. In fact, the companies accusedare often big companies, with the means to hire the best lawyers and thus tomake the subjectivity of this notion of abuse.
Because of this, fines againstthe accused companies often remain unresolved years.