Art. 102 TFEU - specific abusive conducts - abusive discrimination

Abusive discrimination is a category of unlawful practice as specified in subparagraph c, Article 102 of the Treaty on the Functioning of the European Union (“TFEU”). According to Article 102 (c), abusive discrimination is defined as: “Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States. Such abuse may, in particular, consist in:… … (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;……”

To be held as abusive discrimination in practice and case law, the dominant firm must handle equivalent transactions with dissimilar conditions, and hence results in the competitive disadvantage.[1]

1. Equivalent Transactions

Equivalent transactions may be found through the overall examinations of all circumstances of the transactions, including physical compositions of each product, the functions and performance, the physical appearance, the fungibility, and the characterization of each transaction. For a finding for the existence of equivalent transactions based on the similarity of functions and performance of service provided, Aéroports de Paris v Commission of the European Communities[2] would be an example, where the cleaning, catering, mail handing service provided by the airport operator and those provided by the carriers are held as equivalent transactions, for the reason that the benefits brought to the end users by the two providers are of the same nature. 

On the other hand, the European Court affirms in Deutsche Bahn v. Commission[3] that fungiblity of products supports the findings of equivalent transactions. In Deutsche Bahn, a higher tariff for the same distance was imposed on the containers carried by sea via Belgian or Dutch ports, as compared to those carried through Germany ports only. However, according to the Maritime Container Network agreement entered into by Deutsche Bahn’s subsidiary and other rail carriers in Netherlands and Belgium, a fixed fee based on distance is charged from or to ports of Belgium, Netherlands and Germany. While the distance of carriage via Belgian or Dutch ports are the same with that via Germany ports, it is concluded in the case, these carriages are held as interchangeable and hence the element of equivalent transactions is found.

2. Dissimilar Conditions

Dissimilar conditions exist when the equivalent transactions produce a differential rate of return for the dominant firm arising out of dominant firm’s discrimination.[4] In Italy v. Commission[5], it is explicitly held that “…Discrimination in substance would consist in treating either similar situations differently or different situations identically.” Hence, even though the dominant firm deployed the same conditions in the case, such practice may also be found discriminatory wherever it is “treating different situations identically.” 

3. Competitive disadvantage

In her opinion on British Airway v. Commission[6], General Advocate Kokott has raised the two-stage test to establish competitive disadvantage.[7] This two-stage test requires: First, a competitive relationship between the dominant company’s trading parties should be established. Secondly, a negative impact on these trading parties’ competitive position deriving from the discriminatory conduct should be determined.[8] However, in practice the Commission and the Court skips or briefly addresses on the assessment in the actual or potential competitive status among the trading parties, but assesses in detail the unlawful practice’s impact on the trading parties’ market positions.[9]