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Tomra: Exclusive Dealing and Rebates in the Light (and Shadows) of Dominance

Published online by Cambridge University Press:  20 January 2017

Graciela Miralles
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Extract

The General Court reaffirms its traditional form-based approach to dominance (author's headnote).

Type
Case Notes
Information
European Journal of Risk Regulation , Volume 2 , Issue 1 , March 2011 , pp. 129 - 133
Copyright
Copyright © Cambridge University Press 2011

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References

1 Case COMP/E-1/38.113–Prokent-Tomra [2006] OJ 734.

2 Tomra Systems GmbH in Germany, Tomra Systems BV in the Netherlands, Tomra Leergutsysteme GmbH in Austria, Tomra Systems AB in Sweden and Tomra Butikksystemer AS in Norway.

3 “Guidance on the Commission's Enforcement Priorities in Applying Article 82 EC Treaty to Abusive Exclusionary Conduct by Dominant Undertakings”, Official Journal C 045, 24/02/2009, pp. 7–20, available on the Internet at <http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52009XC0224%2801%29:EN:NOT> (last accessed on 17 December 2010), the ‘Guidance Paper’, at para. 36. Retroactive loyalty rebates are applied to all purchases realised during a given period once the customer reaches the agreed-upon threshold; as opposed to incremental loyalty rebates where the discount is only applied to the units purchased beyond the threshold.

4 Case T-155/06, Tomra Systems ASA and Others v. European Commission [2010], at para. 59 citing Case 85/76 Hoffmann-La Roche v. Commission [1979] ECR 461, at paras. 89–90 and at para. 97.

5 Case T-155/06, Tomra Systems ASA and Others v. European Commission, paras. 68 and 73.

6 Ibid., at paras. 84–86.

7 Ibid., at para. 101.

8 Ibid., at para. 198.

9 Ibid., at para. 204.

10 Ibid., at para. 208.

11 Ibid., at para. 215.

12 Ibid., at para. 219.

13 Ibid., at para. 227.

14 Ibid., at para. 228.

15 Ibid., at paras. 231 and 236: The applicants alleged that the contestable share of the demand was between 30%–50%, well above the minimum viable share that a competitor would need to profitably remain in the market.

16 Ibid., at para. 239.

17 Ibid., at para. 241.

18 Ibid., at paras. 242–245.

19 Ibid., at para. 267.

20 Ibid., at para. 269.

21 Ibid., at paras. 270–271.

22 Ibid., at paras. 289–290.

23 The process of reform of Article 102 TFEU started with the report “An economic approach to Article 82” elaborated by the Economic Advisory Group on Competition Policy, July 2005, available on the Internet at <http://ec.europa.eu/dgs/competition/economist/eagcp.html> (last accessed on 17 December 2010). This was followed in 2005 by DG Competition, “Discussion Paper on the application of Article 82 of the Treaty to exclusionary abuses” (the ‘Discussion Paper’). Finally, after three years of intense debate, the European Commission published in 2009 a considerably shorter version under the title of “Guidance on the Commission's Enforcement Priorities in Applying Article 82 EC Treaty to Abusive Exclusionary Conduct by Dominant Undertakings” (see supra note 3). Both instruments are available on the Internet at <http://ec.europa.eu/competition/antitrust/art82/index.html> (last accessed on 17 December 2010). The contested decision was published after the ‘Discussion Paper’ and before the ‘Guidance Paper’. Thus, although the so-called effect-based approach had not officially to be applied, the Commission carried out an analysis in line with it.

24 ‘Guidance Paper’, at para. 6.

25 The European Convention on Human Rights (ECHR) of the Council of Europe, 4 November 1950, came in force 3 September 1953, available on the Internet at <http://conventions.coe.int/Treaty/en/Treaties/Html/005.htm> (last accessed on 17 December 2010).

26 Case T-155/06, Tomra Systems ASA and Others v. European Commission, at para. 221.

27 See supra note 15.

28 Barry Wright Corp. v. ITT Grinnell Corp., 724 F.2d 227 (1st Cir. 1983) at 236: “virtually every contract to buy ‘forecloses’ or ‘excludes’ alternative sellers from some portion of the market, namely the portion consisting of what was bought.”

29 Tom, Willard K., Balto, David A. and Averitt, Neil, “Anticompetitive Aspects of Market-Share Discounts and Other Incentives to Exclusive Dealing”, 67 Antitrust L. J. (2000), pp. 615, 625–26Google Scholar, offering examples of foreclosure strategies that deny rivals ability to reach minimum viable scale.

30 Daniel A. Crane and Graciela Miralles, “Toward a Unified Theory of Exclusionary Vertical Restraints” (October 7, 2010), Southern California Law Review (Forthcoming); University of Michigan Law & Econ, Empirical Legal Studies Center Paper No. 10-023; University of Michigan Public Law Working Paper No. 218. Available on the Internet at <http://ssrn.com/abstract=1689068>, at pp. 28–37. This paper proposes an assessment of the effects of exclusionary vertical restraints through a two-step test. The first step addresses the existence of foreclosure and, only if it exists, step 2 analyzes if the amount of foreclosure at issue is substantial i.e. can have anticompetitive effects in the relevant market as a whole.

31 See supra note 10.

32 See generally Case T-65/98 Van den Bergh Foods v. Commission [2003] ECR II-4653.

33 Case T-219/99 British Airways v. Commission [2003] ECR II-5917, at paras. 69 and 86.

34 Case T-203/01 Michelin v. Commission (Michelin II) [2003] ECR II-4071, at para. 65: “it may be inferred generally from the caselaw that any loyalty-inducing rebate system applied by an undertaking in a dominant position has foreclosure effects prohibited by Article [102] EC”.

35 Case T-65/98 Van den Bergh Foods v. Commission, at paras. 86 and 104.

36 Areeda, Phillip and Hovenkamp, Herbert, Antitrust law: An Analysis of Antitrust Principles and their Application (Aspen Publishers, 2006)Google Scholar, at para. 768b4; Hovenkamp, Herbert, “Discounts and Exclusions”, 857 Utah Law Review (2006), at p. 844 Google Scholar.

37 “Commission notice – Guidelines on Vertical Restraints”, in Official Journal C 130, 19/05/2010, P. 0001–0046 2010), at paras. 125–144, the Guidelines establish that single branding obligations of up to 80% of a customer's requirements will be lawful if no longer than five years.

38 Case T-155/06 Tomra Systems ASA and Others v. European Commission, at para. 212.

39 This defence has never succeeded as the European Community Courts have consistently considered the cost-related justification put forward by the incumbents as too vague. See Case T-203/01 Michelin v. Commission (Michelin II), at para. 108; Case T-219/99 British Airways v. Commission, at para. 285. See also the analysis of the cost-justification provided by Tomra in the contested decision, Case COMP/E-1/38.113–Prokent – Tomra, at para. 353.

40 Case T-7/89 Hercules Chemicals v. Commission [1991] ECR II-1711, para. 53: “According to settled case-law, the Commission may not depart from rules which it has imposed on itself”.

41 The extent to which the ‘Guidance Paper’ represents a self-limitation for the Commission remains unclear (see paras. 2–3).