Case C-209/10

Post Danmark A/S

v

Konkurrencerådet

(Reference for a preliminary ruling from the Højesteret)

‛Article 82 EC — Postal undertaking with a dominant position and subject to a universal service obligation with regard to certain addressed mail — Low prices charged to certain former customers of a competitor — No evidence relating to intention — Price discrimination — Selectively low prices — Actual or likely exclusion of a competitor — Effect on competition and, thereby, on consumers — Objective justification’

Summary of the Judgment

1. Competition — Dominant position — Abuse — Exclusionary abuse — Meaning — Price discrimination — Practice that cannot of itself alone suggest that there is exclusionary abuse

2. Competition — Dominant position — Abuse — Objective justification — Conditions — Implications of the burden of proof

   (Art. 82 EC)

3. Competition — Dominant position — Abuse — Price discrimination — Policy of an undertaking applying low prices to certain former customers of a competitor

   (Art. 82 EC)

1.  Article 82 EC covers not only those practices that directly cause harm to consumers but also practices that cause consumers harm by interfering with the free play of competition. It is in the latter sense that the expression ‘exclusionary abuse’ is to be understood.

   The finding that an undertaking has a dominant position is not in itself a ground of criticism of the undertaking concerned. It is in no way the purpose of Article 82 EC to prevent an undertaking from acquiring, on its own merits, the dominant position on a market. Nor does that provision seek to ensure that competitors less efficient than the undertaking with the dominant position should remain on the market. Thus, not every exclusionary effect is necessarily detrimental to competition. Competition on the merits may lead to the departure from the market or the marginalisation of competitors that are less efficient and so less attractive to consumers from the point of view of, among other things, price, choice, quality or innovation.

   Article 82 EC applies, in particular, to the conduct of a dominant undertaking that, through recourse to methods different from those governing normal competition on the basis of the performance of commercial operators, has the effect, to the detriment of consumers, of hindering the maintenance of the degree of competition existing in the market or the growth of that competition. Thus, Article 82 EC prohibits a dominant undertaking from, among other things, adopting pricing practices that have an exclusionary effect on competitors considered to be as efficient as it is itself and strengthening its dominant position by using methods other than those that are part of competition on the merits. Accordingly, in that light, not all competition by means of price may be regarded as legitimate.

   The fact that the practice of a dominant undertaking may be described as ‘price discrimination’, that is to say, charging different customers or different classes of customers different prices for goods or services whose costs are the same or, conversely, charging a single price to customers for whom supply costs differ, cannot of itself suggest that there exists an exclusionary abuse.

   (see paras 20-22, 24, 25, 30)

2.  It is open to a dominant undertaking to provide justification for behaviour that is liable to be caught by the prohibition under Article 82 EC. In particular, such an undertaking may demonstrate, for that purpose, either that its conduct is objectively necessary, or that the exclusionary effect produced may be counterbalanced, outweighed even, by advantages in terms of efficiency that also benefit consumers.

   In that last regard, it is for the dominant undertaking to show that the efficiency gains likely to result from the conduct under consideration counteract any likely negative effects on competition and consumer welfare in the affected markets, that those gains have been, or are likely to be, brought about as a result of that conduct, that such conduct is necessary for the achievement of those gains in efficiency and that it does not eliminate effective competition, by removing all or most existing sources of actual or potential competition.

   (see paras 40-42)

3.  Article 82 EC must be interpreted as meaning that a policy by which a dominant undertaking charges low prices to certain major customers of a competitor may not be considered to amount to an exclusionary abuse merely because the price that undertaking charges one of those customers is lower than the average total costs attributed to the activity concerned, but higher than the average incremental costs pertaining to that activity, defined as those costs destined to disappear in the short or medium term, the undertaking were to give up its business activity. In order to assess the existence of anti-competitive effects in such circumstances, it is necessary to consider whether that pricing policy, without objective justification, produces an actual or likely exclusionary effect, to the detriment of competition and, thereby, of consumers’ interests.

   (see paras 31, 44, operative part)

Case C-209/10

Post Danmark A/S

v

Konkurrencerådet

(Reference for a preliminary ruling from the Højesteret)

‛Article 82 EC — Postal undertaking with a dominant position and subject to a universal service obligation with regard to certain addressed mail — Low prices charged to certain former customers of a competitor — No evidence relating to intention — Price discrimination — Selectively low prices — Actual or likely exclusion of a competitor — Effect on competition and, thereby, on consumers — Objective justification’

Summary of the Judgment

1. Competition — Dominant position — Abuse — Exclusionary abuse — Meaning — Price discrimination — Practice that cannot of itself alone suggest that there is exclusionary abuse

2. Competition — Dominant position — Abuse — Objective justification — Conditions — Implications of the burden of proof

   (Art. 82 EC)

3. Competition — Dominant position — Abuse — Price discrimination — Policy of an undertaking applying low prices to certain former customers of a competitor

   (Art. 82 EC)

1.  Article 82 EC covers not only those practices that directly cause harm to consumers but also practices that cause consumers harm by interfering with the free play of competition. It is in the latter sense that the expression ‘exclusionary abuse’ is to be understood.

   The finding that an undertaking has a dominant position is not in itself a ground of criticism of the undertaking concerned. It is in no way the purpose of Article 82 EC to prevent an undertaking from acquiring, on its own merits, the dominant position on a market. Nor does that provision seek to ensure that competitors less efficient than the undertaking with the dominant position should remain on the market. Thus, not every exclusionary effect is necessarily detrimental to competition. Competition on the merits may lead to the departure from the market or the marginalisation of competitors that are less efficient and so less attractive to consumers from the point of view of, among other things, price, choice, quality or innovation.

   Article 82 EC applies, in particular, to the conduct of a dominant undertaking that, through recourse to methods different from those governing normal competition on the basis of the performance of commercial operators, has the effect, to the detriment of consumers, of hindering the maintenance of the degree of competition existing in the market or the growth of that competition. Thus, Article 82 EC prohibits a dominant undertaking from, among other things, adopting pricing practices that have an exclusionary effect on competitors considered to be as efficient as it is itself and strengthening its dominant position by using methods other than those that are part of competition on the merits. Accordingly, in that light, not all competition by means of price may be regarded as legitimate.

   The fact that the practice of a dominant undertaking may be described as ‘price discrimination’, that is to say, charging different customers or different classes of customers different prices for goods or services whose costs are the same or, conversely, charging a single price to customers for whom supply costs differ, cannot of itself suggest that there exists an exclusionary abuse.

   (see paras 20-22, 24, 25, 30)

2.  It is open to a dominant undertaking to provide justification for behaviour that is liable to be caught by the prohibition under Article 82 EC. In particular, such an undertaking may demonstrate, for that purpose, either that its conduct is objectively necessary, or that the exclusionary effect produced may be counterbalanced, outweighed even, by advantages in terms of efficiency that also benefit consumers.

   In that last regard, it is for the dominant undertaking to show that the efficiency gains likely to result from the conduct under consideration counteract any likely negative effects on competition and consumer welfare in the affected markets, that those gains have been, or are likely to be, brought about as a result of that conduct, that such conduct is necessary for the achievement of those gains in efficiency and that it does not eliminate effective competition, by removing all or most existing sources of actual or potential competition.

   (see paras 40-42)

3.  Article 82 EC must be interpreted as meaning that a policy by which a dominant undertaking charges low prices to certain major customers of a competitor may not be considered to amount to an exclusionary abuse merely because the price that undertaking charges one of those customers is lower than the average total costs attributed to the activity concerned, but higher than the average incremental costs pertaining to that activity, defined as those costs destined to disappear in the short or medium term, the undertaking were to give up its business activity. In order to assess the existence of anti-competitive effects in such circumstances, it is necessary to consider whether that pricing policy, without objective justification, produces an actual or likely exclusionary effect, to the detriment of competition and, thereby, of consumers’ interests.

   (see paras 31, 44, operative part)