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November 20th, 2022

THE CONCENTRATION OF COMPANIES AND ABUSE OF DOMINANT POSITION

Over the past decades, the protection of competition in the interior market has become one of the main issues in the European Union. The Commission’s constant effort to pursue and sanction conduct considered to be anti-competitive is proof of this. One of the practices likely to alter the normal functioning of the market is the concentration of companies (see our previous article on this issue). The Advocate General of the CJEU, Juliane Kokott, has ruled on this issue in her conclusions presented before the CJEU on 13th October in the TOWERCAST case (case C-449/21), now to be resolved by the CJEU.

The case commenced with the filing of an appeal in November 2017 by the French television operator TOWERCAST S.A.S.U. («Towercast») against the decision of the French Competition Authority to dismiss the complaint filed against its competitor, the company TDF INFRASTRUCTURE HOLDING S.A.S. («TDF»), for the abuse of a dominant position in its acquisition of the company ITAS S.A.S. For Towercast, the fact that at the time that the acquisition took place

only these three companies would be operating in the French digital terrestrial television broadcasting market, with TDF having a market share clearly superior to that of its competitors, means that the acquisition constitutes an abuse of a dominant position by TDF. The acquisition, however, remained below the threshold of turnover established by article 1 of the Merger Regulation («MR»)[1] as well as French regulations, so that the operation was not object of a prior control on behalf of the Commission or the French Competition Authority.

The case was heard at the Court of Appeal in Paris which in turn referred the following question to the CJEU for a preliminary ruling ¿may a national competition authority declare that a concentration which has not been the object of an ex ante control, because it has not exceeded the thresholds established in the MR and the national regulation, constitute an abuse of a dominant position, in accordance with article 102 of the TFEU?

As far as the French Competition Authority is concerned, concentrations should only be object of examination exclusively pursuant to the MR and, the practices which are likely to constitute an abuse of a dominant position pursuant to article 102 of the TFEU. The Advocate General opposes this approach for the following reasons:

(i) Article 102 of the TFEU is a primary Law provision, and, as such, is directly applicable and hierarchically superior to the rules of derived Law, such as the MR. Therefore, a rule such as MR cannot limit nor exclude the direct applicability of the TFEU.

(ii) The thresholds established in article 1 of the MR are simple iuris tantum assumptions which allow the identification of those concentrations where there is a suspicion that they may hinder competition in the internal market. These are, therefore, mere indications, so there is nothing to prevent a concentration that does not exceed these thresholds from being anti-competitive under article 102 of the TFEU.

(iii) Article 102 of the TFEU should be interpreted as a mechanism of control which is complementary to the MR, given that it allows the examination of concentrations which have not been notified because they represent a turnover amounting to less than the thresholds established in national Law and the MR. Accordingly, the Advocate General is of the opinion that in recent years loopholes have emerged in the system of control of the concentrations, which justifies the adoption of a more transversal approach in the analysis of these operations. Since only those concentrations which exceed a certain turnover are object of control prior to their execution, the acquisition of start-ups with a low level of turnover, but with great development potential, by companies well established in the same sector, will run the risk of being excluded from the scope of protection of community law in terms of competition. This would allow companies with a high market share to disable emerging companies as possible competitors and thus secure their position in the market.

Therefore, for the Advocate General it is perfectly possible that a national competition authority exercises control over a concentration which is neither in the community interest nor does it reach the thresholds of national Law in order for it to be examined ex ante. On the other hand, a concentration which has already been the object of control by the national competition authority or by the Commission declared to be compatible with the interior market, cannot, subsequently be classified as an abuse of a dominant position in accordance with article 102 of the TFEU.

Now that the opinion of the Advocate General, which is not binding, has been delivered, it is now up to the CJEU to rule on an issue which will surely have important repercussions on the way in which concentrations are controlled from now on.

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