HP-2020-000016 - [2025] EWHC 1451 (Ch)

Case 85/76 Hoffmann-La Roche v Commission EU:C:1979:36, §91 sets out what is now the established formulation of the concept of an abuse of a dominant position:

“The concept of abuse is an objective concept relating to the behaviour of an undertaking in a dominant position which is such as to influence the structure of a market where, as a result of the very presence of the undertaking in question, the degree of competition is weakened and which, through recourse to methods different from those which condition 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.”

Specific examples of abuse are given in the Chapter II prohibition and Article 102 TFEU. The statutory examples are not, however, exhaustive and the courts have deprecated attempts to treat those examples as “pigeon-holes into which one must fit a case”: see e.g. Purple Parking v Heathrow Airport [2011] EWHC 987 (Ch), §79. Rather, the case-law recognises that a range of practices may be regarded as abusive, where the effect is to impair competition on the market.

In particular, a paradigm form of abuse is the exclusion of competitors by a dominant undertaking. In Case C-307/18 Generics (UK) Ltd v CMA EU:C:2020:52 the CJEU referred at §§151–152 to conduct “intended to deprive parties demonstrated to be potential competitors of effective access to a market” as an example of an abuse of a dominant position, noting that even if the intention is to protect the commercial position of the dominant undertaking, that “does not justify resorting to practices that fall outside the scope of competition on the merits”.

Where exclusionary abuse is alleged, it is in general necessary to demonstrate that the impugned conduct is capable of having exclusionary effects. In relation to certain types of conduct, however, an anticompetitive effect may be inferred. The Article 102 guidance gives at §22 various examples of conduct designed to exclude competitors, for which that is the case:

“If it appears that the conduct can only raise obstacles to competition and that it creates no efficiencies, its anti-competitive effect may be inferred. This could be the case, for instance, if the dominant undertaking prevents its customers from testing the products of competitors or provides financial incentives to its customers on condition that they do not test such products, or pays a distributor or a customer to delay the introduction of a competitor’s product.”

In similar vein, the Commission’s draft guidelines on the application of Article 102 TFEU to abusive exclusionary conduct by dominant undertakings (draft Article 102 guidelines), published for consultation in August 2024, refer at §60(c) to “naked restrictions” in the following terms:

“Naked restrictions: certain types of conduct by a dominant undertaking have no economic interest for that undertaking, other than that of restricting competition. These types of conduct are by their very nature capable of restricting competition. Only in very exceptional cases will a dominant undertaking be able to prove that in the specific circumstances of the case the conduct was not capable of having exclusionary effects. Examples of naked restrictions are: (i) payments by the dominant undertaking to customers that are conditional on the customers postponing or cancelling the launch of products that are based on products offered by the dominant undertaking’s competitors; (ii) the dominant undertaking agreeing with its distributors that they will swap a competing product with its own under the threat of withdrawing discounts benefiting the distributors; or (iii) the dominant undertaking actively dismantling the infrastructure used by a competitor.

While it is in principle open to the dominant undertaking to seek to show that the naked restriction is justified on the basis of an objective justification, it is highly unlikely that such behaviour can be justified in this way”.

In relation to the refusal to supply an existing customer which promotes the products of a competing brand, the court made clear in the United Brands case that an undertaking in a dominant position “cannot stop supplying a long standing customer who abides by regular commercial practice, if the orders placed by this customer are in no way out of the ordinary,” since such a refusal to sell would limit markets to the prejudice of consumers, and would risk eliminating a trading party from the relevant market (§§182–183). The court continued:

“189.

Although it is true … that the fact that an undertaking is in a dominant position cannot disentitle it from protecting its own commercial interests if they are attacked, and that such an undertaking must be conceded the right to take such reasonable steps as it deems appropriate to protect its said interest, such behaviour cannot be countenanced if its actual purpose is to strengthen this dominant position and abuse it.

190.

Even if the possibility of a counterattack is acceptable that attack must still be proportionate to the threat taking into account the economic strength of the undertakings confronting each other.

191.

The sanction consisting of a refusal to supply by an undertaking in a dominant position was in excess of what might, if such a situation were to arise, reasonably be contemplated as a sanction for conduct similar to that for which UBC blamed Olesen.

192.

In fact UBC could not be unaware of the fact that by acting in this way it would discourage its other ripener/distributors from supporting the advertising of other brand names and that the deterrent effect of the sanction imposed upon one of them would make its position of strength on the relevant market that much more effective.

193.

Such a course of conduct amounts therefore to a serious interference with the independence of small and medium sized firms in their commercial relations with the undertaking in a dominant position and this independence implies the right to give preference to competitors’ goods.”

A dominant undertaking is therefore entitled to compete on the merits to protect its commercial interests. It cannot, however, refuse to supply an existing customer whose conduct in promoting the products of a competitor is consistent with “regular commercial practice”. A similar point was made by the Commission in its decision in the Boosey & Hawkes case, [1987] OJ L286/36. After noting at §19 that it was well established that a refusal of supplies by a dominant producer to an established customer without objective justification may constitute an abuse, referring to the United Brands case, the Commission stated that:

“The injury to competition would be aggravated where (as is alleged here) the stated purpose of the action is indirectly to prevent the entry into the market of a potential competitor to the dominant producer.

A dominant undertaking may always take reasonable steps to protect its commercial interests, but such measures must be fair and proportional to the threat. The fact that a customer of a dominant producer becomes associated with a competitor or a potential competitor of that manufacturer does not normally entitle the dominant producer to withdraw all supplies immediately or to take reprisals against that customer.

There is no obligation placed on a dominant producer to subsidise competition to itself. In the case where a customer transfers its central activity to the promotion of a competing brand it may be that even a dominant producer is entitled to review its commercial relations with that customer and on giving adequate notice terminate any special relationship. However, the refusal of all supplies to GHH and RCH, and the other actions B&H has taken against them as part of its reaction to the perceived threat of BBI, would appear in the circumstances of the present case to go beyond the legitimate defence of B&H’s commercial interests.”

Cabo also relied on the principle that an abuse of a dominant position may arise where a dominant undertaking brings litigation which cannot reasonably be considered as an attempt to establish its rights, and can therefore only serve to harass the other party, and where that litigation pursues a plan to eliminate competition: Case T-111/96 ITT Promedia v Commission EU:T:1998:183, §30. In addition, Cabo referred to a line of decisions of the French Competition Authority on unjustified disparagement of a competitor’s products, including Decision No. 13-D-11 of 14 May 2013 Sanofi Aventis. For the reasons set out below, I do not consider it necessary apply either of these lines of authority in the present case.