Introduction
The rapid rise of digitisation has profoundly changed the way we live, communicate, and do business. Search engines, social networks, online marketplaces, and app stores, for example, have emerged as key players in the digital economy. By connecting different groups of users through electronic means, digital platforms reduce information and transaction costs, and allow for considerable value creation. The importance of digital platforms is likely to grow in line with the rapid evolution of artificial intelligence and the innovation possibilities it unlocks, and it is no coincidence that the very companies that operate the most popular digital platforms are pioneers in the field of machine learning and AI.
Article 102 TFEU
The major goals of article 102 are to stop businesses from abusing their positions that would give them a dominant market share, which could harm both customers and competitors The European Court does not recognise a dominant position, which it defines as “an undertaking’s position of economic strength that allows it to prevent effective competition from being maintained on the relevant market by providing it with the ability to operate significantly independently of its competitors, customers, and ultimately of its consumers” If the undertaking holds a dominant position in the relevant market, the Commission will take two factors into account, consequently, the primary indication will be the market share that the undertaking holds, with additional aspects contributing to its potential to be dominant in the market. In fact, completion law ensures that businesses can compete against one another without being driven out of the market, so the court held that “extremely substantial shares are proof of the presence of a dominating position,” in other words, an endeavour with a statutory monopoly will be in a dominant position and will be subject to Community completion legislation. A significant enough market share indicates a dominant position.
Article 102 further defines abuse as an undertaking operating in a threatening manner that might potentially affect competition and customers. Although the term “abuse” is not defined under the Treaty, the courts noted in Hoffman [1] that misuse was interfering with the market system, arousing and impeding competition. The commission categorises abuses as exploitative, which exploit consumers, or anti-competitive, which hinder competition. Some businesses utilise a variety of exploitative abuse strategies, the most common of which is to charge unreasonable pricing that directly affect the consumer. An unfair price is often an exorbitant price, as the court determined that the price has no relationship to the economic worth of the object given. However, it should be noted that quantifying the economic worth of some things, such as services, may be challenging. Some businesses utilise a variety of exploitative abuse strategies, the most common of which is to charge unreasonable pricing that directly affect the consumer. An unfair price is often an exorbitant price, as the court determined that the price has no relationship to the economic worth of the object given. However, it should be noted that quantifying the economic worth of some things, such as services, may be challenging.
The second type of exploitative abuse is unfair trading conditions, which are dealt with in Article 102(a). These conditions may sometimes be beneficial to the consumer, but the courts will not allow this type of exploitative abuse, as demonstrated in United Brands, where the company imposed a condition requiring them to resell their bananas while they were still green. This was ruled unjust since it compelled the wholesaler to have a certain sort of storage. The court ignored the fact that the buyer might have bought a higher-quality product. However, because Article 102(c) does not require companies to charge the same price for all of their transactions, various charges will be imposed. The problem is that it may lead to discriminatory pricing, which would directly harm consumers. As a result, the Commission prohibits overpriced prices that vary among Member States, which is deemed discriminatory.
Article 102 also tackles anti-competitive actions that directly harm commercial competitiveness. To begin, predatory pricing is a business strategy in which corporations decrease their prices, often below cost, to force competitors out of the market. Predatory pricing is harmful, according to the Commission, because it serves “no conceivable economic objective other than rival elimination.” However, the Commission took into account the reality that certain enterprises were forced to reduce their prices for a number of reasons; In such circumstances, the Commission would thoroughly investigate the causes.
Tying is defined in Article 102(d) as “making the execution of contracts reliant on the acceptance by the other parties of extra obligations that have no link with the subject matter of such contracts by their nature or according to commercial custom.” In the instance of Microsoft, the courts tried to set a precedent so they penalised the company $493 million[2]. Furthermore, threatening and intimidating behavior by a dominating business toward its competitors or consumers has been deemed an abuse under Article 102[3]. As a result, the court ruled that threats to discontinue providing unless a carrier stopped conveying competitor’s items constituted bullying.
Article 102’s key legal difference was that it only applied to private businesses, and while the text of Article 102 generally mirrors the text of the Treaty of Rome 1957, the language employed is far more basic.
Is there a dominant position?
To assess if an enterprise has a dominating position, the market definition must first be defined, and then the market power in the relevant market must be determined.
The legal phrase “dominant position” is a binary concept: either an undertaking is dominant and subject to article 102, or it is not, and its unilateral activity is not subject to EU competition law.
The Relevant Market
For the purposes of Article (102), any judgement on purportedly anti-competitive behavior must take into account the correct definition of the relevant market. This is the circumstance in which demonstrating the presence of a dominant position in a certain market necessitates establishing the existence of that market, which presupposes that such a market has previously been recognised.
Demand-side Substitutability
Demand substitutability is of the utmost significance for market definition, as stated in paragraph 14 of the Notice: “that the evaluation of demand substitution comprises identification of the range of items which are perceived as replacements by the consumer.” It suggests a technique that may be used to assess whether two items are in the same market.
The Geographic Market
To determine if a firm has market power, the appropriate geographic market should be determined.
The Temporal Market
It may also be required to assess the market’s temporal quality. Seasonal variations in competitive situations are possible. A company may be exposed to competition at one time throughout the year yet essentially free of it at another. In this case, it may have market power during some times of the year but not others. The time frame that underpins market analysis. Certain items may have restricted manufacturing times.
Market Power
According to Article 102, an indicator of dominance arises when one endeavor has the potential to successfully raise prices over time, or to behave similarly, such as by limiting output or limiting customer choice.
It is not unlawful for a Company to have a dominant position; what is prohibited is the abuse of a dominant position.
[1] Hoffman La-Roche v Commission Case 85/76 [1979] ECR 461
[2] Microsoft v Commission Case T-201/04 [2004] ECR II-4463
[3] Irish Sugar Plc v Commission Case T-288/97 [1999] ECR II-2969
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