Keywords
Summary

Keywords

1. Competition Public undertakings and undertakings to which Member States grant special or exclusive rights Powers of the Commission Effect on those powers of possible rules laid down by the Council None Adoption of directives or decisions addressed to Member States Commission's choice

(EC Treaty, Art. 90(3) (now Article 86(3) EC))

2. Competition Public undertakings and undertakings to which Member States grant special or exclusive rights Powers of the Commission Recourse, where there is an infringement common to several Member States, to a decision based on Article 90(3) of the Treaty (now Article 86(3) EC) rather than to infringement proceedings Abuse of process None

3. Acts of the institutions Statement of reasons Obligation Scope Decision based on Article 90(3) of the Treaty (now Article 86(3) EC) Obligation to give reasons for the choice of recourse to a decision rather than to infringement proceedings None

(EC Treaty, Arts 90(3) and 190 (now Articles 86(3) EC and 253 EC))

4. Competition Dominant position Definition Application of dissimilar conditions to equivalent transactions Transport Air transport Freedom to provide services Restrictions Landing charges Discrimination Differential tariff according to whether flights are domestic or international

(EC Treaty, Art. 86, second para. (now Article 82, second para., EC))

5. Competition Dominant position Abuse Quantity discounts Whether permissible Conditions

(EC Treaty, Art. 86, second para. (now Art. 82, second para., EC))

6. Competition Public undertakings and undertakings to which Member States grant special or exclusive rights Abuse of a dominant position Justifications founded on Article 90(2) of the Treaty (now Article 86(2) EC) Need for the party to avail itself of them

(EC Treaty, Arts 86 and 90(2) (now Arts 82 EC and 86(2) EC))

Summary

1. Under Article 90(3) of the Treaty (now Article 86(3) EC) the Commission is empowered to determine that a given State measure concerning one of the type of undertakings referred to in Article 90(1) is incompatible with the rules of the Treaty and to indicate what measures the State to which a decision is addressed must adopt in order to comply with its obligations under Community law. The possibility that rules containing provisions which impinge upon the specific sphere of Article 90 of the Treaty might be laid down by the Council by virtue of its general power under other articles of the Treaty does not preclude the exercise of the power which Article 90 confers on the Commission.

Moreover, in the matters covered by Article 90 of the Treaty, the Commission enjoys a wide discretion as regards both the action which it considers necessary to take and the means appropriate for that purpose. The choice offered to the Commission by Article 90(3) of the Treaty between a directive and a decision is not determined by the number of Member States which may be concerned. The choice depends on whether the Commission's objective is to specify in general terms the obligations arising under the Treaty, or to assess a specific situation in one or more Member States in the light of Community law and determine the consequences arising for the Member State or States concerned.

( see paras 19-20, 23, 28 )

2. The Commission has power under Article 90(3) of the Treaty (now Article 86(3) EC) to determine that a given State measure is incompatible with the rules of the Treaty and to indicate what measures the State to which a decision is addressed must adopt in order to comply with its obligations under Community law.

Consequently, the Commission does not commit an abuse of process where, in a case of infringement of Article 90(1) of the Treaty common to several Member States, it does not bring infringement proceedings but assesses, by way of a decision, the compatibility with the Treaty of measures enacted or maintained in force by States as regards the undertakings referred to in Article 90(1).

( see paras 33-34 )

3. It follows from the obligation to state reasons laid down in Article 190 of the Treaty (now Article 253 EC) that, where the Commission adopts a decision based on Article 90(3) of the Treaty (now Article 86(3) EC), it must make sufficiently clear why it considers that the State measure in question infringes the provisions of Article 90(1) and cannot enjoy (if such is the case) the benefit of any of the derogations under Article 90(2).

The Commission cannot, however, be required to state why it considered it necessary to adopt a decision of that kind when, as regards other rules adopted by the same Member State, it opted for proceedings for failure to act, thus adopting a different legal approach. Nor can the Commission be required to give details in its decision of the situation existing in other Member States in the area dealt with in the decision and any action it may have taken against them. Moreover, no specific reasons need be given for the choice of a decision as the appropriate instrument since that choice is determined by the Commission's objective.

( see paras 39-40 )

4. Subparagraph (c) of the second paragraph of Article 86 of the Treaty (now 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, irrespective of whether such discrimination is linked to nationality.

Measures which entail conferring an advantage on carriers who operate more than others on domestic rather than international routes must be regarded as constituting a restriction on freedom to provide transport services. Such measures also lead to dissimilar treatment being applied to equivalent transactions, thereby affecting free competition.

That is the case where discrimination results from the application to landing charges of a different tariff system for the same number of landings of aircraft of the same type, according to whether domestic or international flights are involved.

( see paras 46, 66 )

5. An undertaking occupying a dominant position is entitled to offer its customers quantity discounts linked solely to the volume of purchases made from it. However, the rules for calculating such discounts must not result in the application of dissimilar conditions to equivalent transactions with other trading parties within the meaning of subparagraph (c) of the second paragraph of Article 86 of the Treaty (now subparagraph (c) of the second paragraph of Article 82).

In that connection, it is of the very essence of a system of quantity discounts that larger purchasers of a product or users of a service enjoy lower average unit prices or which amounts to the same higher average reductions than those offered to smaller purchasers of that product or users of that service. Even where there is a linear progression in quantity discounts up to a maximum discount, initially the average discount rises (or the average price falls) mathematically in a proportion greater than the increase in purchases and subsequently in a proportion smaller than the increase in purchases, before tending to stabilise at or near the maximum discount rate. The mere fact that the result of quantity discounts is that some customers enjoy in respect of specific quantities a proportionally higher average reduction than others in relation to the difference in their respective volumes of purchase is inherent in this type of system, but it cannot be inferred from that alone that the system is discriminatory.

None the less, where as a result of the thresholds of the various discount bands, and the levels of discount offered, discounts (or additional discounts) are enjoyed by only some trading parties, giving them an economic advantage which is not justified by the volume of business they bring or by any economies of scale they allow the supplier to make compared with their competitors, a system of quantity discounts leads to the application of dissimilar conditions to equivalent transactions.

In the absence of any objective justification, having a high threshold in the system which can only be met by a few particularly large partners of the undertaking occupying a dominant position, or the absence of linear progression in the increase of the quantity discounts, may constitute evidence of such discriminatory treatment.

( see paras 50-53 )

6. If all the conditions for the application of Article 86 of the Treaty (now Article 82 EC) with regard to a system for fixing the amount of certain fees charged by a public undertaking, any justification there may be for applying such a system can only be made under Article 90(2) of the Treaty (now Article 86(2) EC). It is for the party seeking to avail itself of that justification to plead it.

( see paras 73-74 )