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Document 62010CJ0549

Summary of the Judgment

Judgment of the Court (Third Chamber), 19 April 2012.
Tomra Systems ASA and Others v European Commission.
Appeal — Competition — Dominant position — Abuse — Market for machines for the collection of used beverage containers — Decision finding an infringement of Article 82 EC and Article 54 of the EEA Agreement — Exclusivity agreements, quantity commitments and loyalty rebates.
Case C‑549/10 P.

Case C-549/10 P

Tomra Systems ASA and Others

v

European Commission

‛Appeal — Competition — Dominant position — Abuse — Market for machines for the collection of used beverage containers — Decision finding an infringement of Article 82 EC and Article 54 of the EEA Agreement — Exclusivity agreements, quantity commitments and loyalty rebates’

Summary of the Judgment

  1. Competition — Dominant position — Abuse — Meaning — Objective concept relating to conduct likely to affect the structure of the market and having the effect of hindering the maintenance or the growth of competition — Not necessary to establish anti-competitive intent — None

    (Art. 102 TFEU)

  2. Competition — Dominant position — Abuse — Meaning — Foreclosure of a substantial part of the market by a dominant undertaking — Degree of domination of the market concerned — No effect — Not necessary to determine a precise threshold of market foreclosure — None

    (Art. 102 TFEU)

  3. Competition — Dominant position — Abuse — Meaning — Conduct having either the effect or the object of hindering the maintenance or development of competition — Retroactive rebates

    (Art. 102 TFEU)

  4. Competition — Dominant position — Abuse — Exclusive supply contracts — Loyalty discounts — Whether that rebate system abusive — Criteria for assessment

    (Art. 102 TFEU)

  5. Competition — Dominant position — Abuse — Retroactive rebates — Whether abusive — Criteria for assessment

    (Art. 102 TFEU)

  6. Competition — Fines — Amount — Determination — Criteria — Gravity of the infringement — Assessment criteria — Raising of the general level of fines — Lawfulness — Conditions

    (Council Regulation No 1/2003, Art. 23(2))

  1.  Abuse of a dominant position prohibited by Article 102 TFEU 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. None the less, the Commission, as part of its examination of the conduct of a dominant undertaking and for the purposes of identifying any abuse of a dominant position, is obliged to consider all the relevant facts surrounding that conduct. In that regard, the Commission is necessarily required to assess the business strategy pursued by that undertaking. For that purpose, it is clearly legitimate for the Commission to refer to subjective factors, namely the motives underlying the business strategy in question.

    Accordingly, the existence of any anti-competitive intent constitutes only one of a number of facts which may be taken into account in order to determine that a dominant position has been abused. However, the Commission is under no obligation to establish the existence of such intent on the part of the dominant undertaking in order to render Article 82 EC applicable.

    (see paras 17-21)

  2.  As regards the level of domination of a specific market by the undertaking concerned necessary to establish the existence of abuse by that undertaking, 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 and its customers. Moreover, Article 102 TFEU does not envisage any variation in form or degree in the concept of a dominant position. Where an undertaking has an economic strength such as that required by Article 102 TFEU to establish that it holds a dominant position in a particular market, its conduct must be assessed in the light of that provision. None the less, 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.

    The foreclosure by a dominant undertaking of a substantial part of the market cannot be justified by showing that the contestable part of the market is still sufficient to accommodate a limited number of competitors. First, the customers on the foreclosed part of the market should have the opportunity to benefit from whatever degree of competition is possible on the market and competitors should be able to compete on the merits for the entire market and not just for a part of it. Second, it is not the role of the dominant undertaking to dictate how many viable competitors will be allowed to compete for the remaining contestable portion of demand.

    Further, only an analysis of the circumstances of the case may make it possible to establish whether the practices of an undertaking in a dominant position are capable of excluding competition. It would, however, be artificial to establish without prior analysis the portion of the tied market beyond which the practices of a dominant undertaking may have an exclusionary effect on competitors.

    Accordingly, the determination of a precise threshold of foreclosure of the market beyond which the practices at issue had to be regarded as abusive is not required for the purposes of applying Article 102 TFEU.

    (see paras 38, 39, 42, 43, 46)

  3.  For the purposes of proving an abuse of a dominant position within the meaning of Article 102 TFEU, it is sufficient to show that the abusive conduct of the undertaking in a dominant position tends to restrict competition or that the conduct is capable of having that effect.

    Accordingly, where there is a system of retroactive rebates which establishes a loyalty mechanism whereby a supplier drives out its competitors by means of the suction to itself of the contestable part of demand, it is unnecessary to undertake an analyse of the actual effects of the rebates on competition given that, for the purposes of establishing an infringement of Article 102 TFEU, it is sufficient to demonstrate that the conduct at issue is capable of having an effect on competition.

    (see paras 68, 79)

  4.  As regards rebates granted by a dominant undertaking to its customers, those may infringe Article 102 TFEU, even where they do not correspond to any of the examples mentioned in the second paragraph of that Article 102. In the event that an undertaking in a dominant position makes use of a system of rebates, that undertaking abuses that position where, without tying the purchasers by a formal obligation, it applies, either under the terms of agreements concluded with these purchasers or unilaterally, a system of loyalty rebates, that is to say, discounts conditional on the customer’s obtaining — whether the quantity of its purchases is large or small — all or most of its requirements from the undertaking in a dominant position. In that regard, it is necessary to consider all the circumstances, particularly the criteria and rules governing the grant of the rebate, and to investigate whether, in providing an advantage not based on any economic service justifying it, the rebates tend to remove or restrict the buyer’s freedom to choose his sources of supply, to bar competitors from access to the market, or to strengthen the dominant position by distorting competition.

    Consequently, a rebate system must be regarded as infringing Article 102 TFEU if it tends to prevent customers of the dominant undertaking from obtaining their supplies from competing producers.

    (see paras 69-72)

  5.  As regards the assessment of whether a retroactive rebates scheme operated by a dominant undertaking is abusive, the invoicing of ‘negative prices’, in other words prices below cost prices, to customers is not a prerequisite of a finding that such a rebate scheme is abusive.

    The General Court is correct to hold that such a rebate scheme is anti-competitive where, in the first place, the incentive to obtain supplies exclusively or almost exclusively from certain undertakings is particularly strong when thresholds are combined with a system whereby the achievement of the bonus threshold or, as the case may be, a more advantageous threshold benefited all the purchases made by the customer during the reference period and not exclusively the purchasing volume exceeding the threshold concerned. Secondly, the combination of a rebate scheme individual to each customer and thresholds established on the basis of the customer’s estimated requirements and/or past purchasing volumes therefore represents a strong incentive for buying all or almost all the equipment needed from that undertaking and artificially raises the costs of switching to a different supplier, even for a small number of units. Thirdly, the retroactive rebates often apply to some of the largest customers of that undertaking with the aim of ensuring their loyalty. Lastly, their conduct is not objectively justified or it does not generate significant efficiency gains which outweigh the anti-competitive effects on consumers.

    Further, the exclusionary mechanism represented by retroactive rebates does not require the dominant undertaking to sacrifice profits, since the cost of the rebate is spread across a large number of units. If retroactive rebates are given, the average price obtained by the dominant undertaking may well be far above costs and ensure a high average profit margin. However, retroactive rebate schemes ensure that, from the point of view of the customer, the effective price for the last units is very low because of the suction effect.

    (see paras 73, 75, 78)

  6.  The gravity of infringements has to be determined by reference to numerous factors, such as the particular circumstances of the case, its context and the dissuasive effect of fines, and no binding or exhaustive list of the criteria which must be applied has been drawn up.

    Further, the Commission’s practice in previous decisions does not serve as a legal framework for the fines imposed in competition matters and decisions in other cases are only indicative. Accordingly the fact that the Commission has, in the past, imposed fines set at a specific level for certain categories of infringements cannot prevent it from setting fines at a higher level, if raising of penalties is deemed necessary in order to ensure the implementation of European Union competition policy, that policy continuing to be defined solely by Regulation No 1/2003. The implementation of that policy requires that the Commission may adjust the level of fines to the needs of that policy.

    (see paras 104-107)

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Case C-549/10 P

Tomra Systems ASA and Others

v

European Commission

‛Appeal — Competition — Dominant position — Abuse — Market for machines for the collection of used beverage containers — Decision finding an infringement of Article 82 EC and Article 54 of the EEA Agreement — Exclusivity agreements, quantity commitments and loyalty rebates’

Summary of the Judgment

  1. Competition — Dominant position — Abuse — Meaning — Objective concept relating to conduct likely to affect the structure of the market and having the effect of hindering the maintenance or the growth of competition — Not necessary to establish anti-competitive intent — None

    (Art. 102 TFEU)

  2. Competition — Dominant position — Abuse — Meaning — Foreclosure of a substantial part of the market by a dominant undertaking — Degree of domination of the market concerned — No effect — Not necessary to determine a precise threshold of market foreclosure — None

    (Art. 102 TFEU)

  3. Competition — Dominant position — Abuse — Meaning — Conduct having either the effect or the object of hindering the maintenance or development of competition — Retroactive rebates

    (Art. 102 TFEU)

  4. Competition — Dominant position — Abuse — Exclusive supply contracts — Loyalty discounts — Whether that rebate system abusive — Criteria for assessment

    (Art. 102 TFEU)

  5. Competition — Dominant position — Abuse — Retroactive rebates — Whether abusive — Criteria for assessment

    (Art. 102 TFEU)

  6. Competition — Fines — Amount — Determination — Criteria — Gravity of the infringement — Assessment criteria — Raising of the general level of fines — Lawfulness — Conditions

    (Council Regulation No 1/2003, Art. 23(2))

  1.  Abuse of a dominant position prohibited by Article 102 TFEU 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. None the less, the Commission, as part of its examination of the conduct of a dominant undertaking and for the purposes of identifying any abuse of a dominant position, is obliged to consider all the relevant facts surrounding that conduct. In that regard, the Commission is necessarily required to assess the business strategy pursued by that undertaking. For that purpose, it is clearly legitimate for the Commission to refer to subjective factors, namely the motives underlying the business strategy in question.

    Accordingly, the existence of any anti-competitive intent constitutes only one of a number of facts which may be taken into account in order to determine that a dominant position has been abused. However, the Commission is under no obligation to establish the existence of such intent on the part of the dominant undertaking in order to render Article 82 EC applicable.

    (see paras 17-21)

  2.  As regards the level of domination of a specific market by the undertaking concerned necessary to establish the existence of abuse by that undertaking, 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 and its customers. Moreover, Article 102 TFEU does not envisage any variation in form or degree in the concept of a dominant position. Where an undertaking has an economic strength such as that required by Article 102 TFEU to establish that it holds a dominant position in a particular market, its conduct must be assessed in the light of that provision. None the less, 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.

    The foreclosure by a dominant undertaking of a substantial part of the market cannot be justified by showing that the contestable part of the market is still sufficient to accommodate a limited number of competitors. First, the customers on the foreclosed part of the market should have the opportunity to benefit from whatever degree of competition is possible on the market and competitors should be able to compete on the merits for the entire market and not just for a part of it. Second, it is not the role of the dominant undertaking to dictate how many viable competitors will be allowed to compete for the remaining contestable portion of demand.

    Further, only an analysis of the circumstances of the case may make it possible to establish whether the practices of an undertaking in a dominant position are capable of excluding competition. It would, however, be artificial to establish without prior analysis the portion of the tied market beyond which the practices of a dominant undertaking may have an exclusionary effect on competitors.

    Accordingly, the determination of a precise threshold of foreclosure of the market beyond which the practices at issue had to be regarded as abusive is not required for the purposes of applying Article 102 TFEU.

    (see paras 38, 39, 42, 43, 46)

  3.  For the purposes of proving an abuse of a dominant position within the meaning of Article 102 TFEU, it is sufficient to show that the abusive conduct of the undertaking in a dominant position tends to restrict competition or that the conduct is capable of having that effect.

    Accordingly, where there is a system of retroactive rebates which establishes a loyalty mechanism whereby a supplier drives out its competitors by means of the suction to itself of the contestable part of demand, it is unnecessary to undertake an analyse of the actual effects of the rebates on competition given that, for the purposes of establishing an infringement of Article 102 TFEU, it is sufficient to demonstrate that the conduct at issue is capable of having an effect on competition.

    (see paras 68, 79)

  4.  As regards rebates granted by a dominant undertaking to its customers, those may infringe Article 102 TFEU, even where they do not correspond to any of the examples mentioned in the second paragraph of that Article 102. In the event that an undertaking in a dominant position makes use of a system of rebates, that undertaking abuses that position where, without tying the purchasers by a formal obligation, it applies, either under the terms of agreements concluded with these purchasers or unilaterally, a system of loyalty rebates, that is to say, discounts conditional on the customer’s obtaining — whether the quantity of its purchases is large or small — all or most of its requirements from the undertaking in a dominant position. In that regard, it is necessary to consider all the circumstances, particularly the criteria and rules governing the grant of the rebate, and to investigate whether, in providing an advantage not based on any economic service justifying it, the rebates tend to remove or restrict the buyer’s freedom to choose his sources of supply, to bar competitors from access to the market, or to strengthen the dominant position by distorting competition.

    Consequently, a rebate system must be regarded as infringing Article 102 TFEU if it tends to prevent customers of the dominant undertaking from obtaining their supplies from competing producers.

    (see paras 69-72)

  5.  As regards the assessment of whether a retroactive rebates scheme operated by a dominant undertaking is abusive, the invoicing of ‘negative prices’, in other words prices below cost prices, to customers is not a prerequisite of a finding that such a rebate scheme is abusive.

    The General Court is correct to hold that such a rebate scheme is anti-competitive where, in the first place, the incentive to obtain supplies exclusively or almost exclusively from certain undertakings is particularly strong when thresholds are combined with a system whereby the achievement of the bonus threshold or, as the case may be, a more advantageous threshold benefited all the purchases made by the customer during the reference period and not exclusively the purchasing volume exceeding the threshold concerned. Secondly, the combination of a rebate scheme individual to each customer and thresholds established on the basis of the customer’s estimated requirements and/or past purchasing volumes therefore represents a strong incentive for buying all or almost all the equipment needed from that undertaking and artificially raises the costs of switching to a different supplier, even for a small number of units. Thirdly, the retroactive rebates often apply to some of the largest customers of that undertaking with the aim of ensuring their loyalty. Lastly, their conduct is not objectively justified or it does not generate significant efficiency gains which outweigh the anti-competitive effects on consumers.

    Further, the exclusionary mechanism represented by retroactive rebates does not require the dominant undertaking to sacrifice profits, since the cost of the rebate is spread across a large number of units. If retroactive rebates are given, the average price obtained by the dominant undertaking may well be far above costs and ensure a high average profit margin. However, retroactive rebate schemes ensure that, from the point of view of the customer, the effective price for the last units is very low because of the suction effect.

    (see paras 73, 75, 78)

  6.  The gravity of infringements has to be determined by reference to numerous factors, such as the particular circumstances of the case, its context and the dissuasive effect of fines, and no binding or exhaustive list of the criteria which must be applied has been drawn up.

    Further, the Commission’s practice in previous decisions does not serve as a legal framework for the fines imposed in competition matters and decisions in other cases are only indicative. Accordingly the fact that the Commission has, in the past, imposed fines set at a specific level for certain categories of infringements cannot prevent it from setting fines at a higher level, if raising of penalties is deemed necessary in order to ensure the implementation of European Union competition policy, that policy continuing to be defined solely by Regulation No 1/2003. The implementation of that policy requires that the Commission may adjust the level of fines to the needs of that policy.

    (see paras 104-107)

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