Competition law governs the behaviour of companies in the marketplace to ensure fair and effective competition. Among anti-competitive practices, abuse of a dominant position is particularly closely monitored by the authorities. This complex concept, governed by Article L.420-2 of the French Commercial Code and Article 102 of the Treaty on the Functioning of the European Union (TFEU), needs to be clarified. When do we talk about a dominant position? What practices are considered abusive? What remedies are available to companies that are victims? Our analysis will help you to better understand these key issues.
What is a dominant position in competition law?
A dominant position is a situation in which a company has the economic power to act independently of its competitors, customers and consumers. This situation is not prohibited per se, but it does impose a particular responsibility on the company concerned.
The concept of the relevant market: definition and importance
Before analysing the existence of a dominant position, it is necessary to define the market on which the company operates. This "relevant market" has two dimensions:
- A material dimension (products or services considered to be substitutable)
- A geographical dimension (the area where conditions of competition are homogeneous)
This delimitation is fundamental because it determines the framework within which the company's economic strength will be assessed. The French Competition Authority defines the relevant market as "the place where supply and demand for specific products or services considered by buyers to be substitutable for one another meet". A analysis of the relevant market is therefore the essential first step.
Criteria for establishing a dominant position
There are several indications that a dominant position exists:
- Market share (a share greater than 50% creates a presumption of a dominant position)
- The existence of a legal or de facto monopoly
- Barriers to market entry
- The company's economic strength (financial resources, vertical integration)
- Technological lead or know-how
- The company's reputation
The combined analysis of these factors makes it possible to determine whether a company can act independently of competitive pressure.
Prohibition on abusing a dominant position
The principle: domination is not prohibited, abuse is
Competition law does not prohibit dominance as such. A company can legitimately acquire a dominant position through its merits, innovation or efficiency. Only the abusive exploitation of this position is sanctioned.
The definition of abuse: an objective concept
Abuse of a dominant position is defined as objective behaviour by a dominant undertaking which influences the structure of a market where competition is already weakened, and which hinders the maintenance or development of competition by means other than those governing normal competition.
This definition, established by European case law, focuses on two key elements:
- The anti-competitive effect of the conduct (actual or potential)
- Use of abnormal means of competition
Main forms of abuse of a dominant position
Abuse of a dominant position generally falls into two main categories.
Exclusionary abuse: ousting competitors
These practices are aimed at eliminating competitors or preventing them from entering the market. They include
- Predatory pricing (prices below cost with the aim of eliminating a competitor)
- Loyalty discounts conditional on exclusive supply
- Refusal to sell or supply essential services
- Linked or grouped sales
- Abusive exclusivity agreements
- Denigrating competitors
These practices aimed at excluding competitors can take a variety of sometimes subtle forms, making them difficult to identify.
Exploitative abuse: imposing unfair conditions
These practices consist of exploiting the dependence of customers or suppliers to impose conditions that they would not have accepted in a context of normal competition:
- Excessively high prices
- Unjustified price discrimination
- The unfair trading conditions
Assessing these practices often requires an in-depth economic analysis to determine whether they are abusive.
What are the consequences of abuse of a dominant position?
Administrative sanctions (Competition Authority)
The Autorité de la concurrence can impose several types of penalty:
- Fines of up to 10% of the Group's worldwide turnover
- Injunctions to cease abusive practices
- Structural corrective measures in the most serious cases
In 2023, significant penalties were imposed in a number of emblematic cases, demonstrating the increased vigilance of the authorities.
Possible civil remedies (compensation)
Victims of abuse of a dominant position can also apply:
- Requesting the nullity of unfair contracts or clauses
- Bring a civil liability action to obtain compensation for the loss suffered
- Use of emergency procedures (competition injunction)
These actions, which used to be rare, are gradually developing in France and offer victims additional means of redress.
What should you do if you suspect abuse?
The importance of legal and economic analysis
When faced with a suspicion of abuse of a dominant position, a rigorous preliminary analysis is essential:
- Assessment of the company's position on the relevant market
- Legal classification of practices observed
- Analysis of actual or potential effects on competition
- Examination of any objective justifications
This complex analysis requires both legal and economic skills.
The role of the competition lawyer
An expert competition lawyer can assist you in a number of areas:
- Analysing the situation and establishing the legal status of practices
- Collecting and structuring the necessary evidence
- Define the most appropriate strategy (proceedings before the Competition Authority, legal action, negotiation)
- Representing your interests before the competent authorities
If you are confronted with potentially abusive practices or if you fear that your own behaviour could be construed as an abuse of a dominant position, call a lawyer for a personalised analysis of your situation.
The financial and strategic stakes involved in abuse of a dominant position are considerable. Early intervention and appropriate advice are often decisive in effectively defending your rights or securing your commercial practices. Contact our firm for personalised legal advice in this complex area.
Frequently asked questions
What is an abuse of a dominant position?
It is the exploitation by a company holding a strong position on a market (dominant position) of this power to restrict competition or impose unfair conditions. The dominant position itself is not illegal, only its abuse.
How can you tell if a company is in a dominant position?
The analysis is based on defining the relevant market (products/services and geographic area) and assessing the company's strength using criteria such as a very high market share (often > 50%), a monopoly, barriers to entry, or other competitive advantages.
What are common examples of abuse of a dominant position?
Abuses include exclusionary practices (predatory pricing, refusal to sell, tying, exclusive agreements) or exploitative practices (excessive pricing, discriminatory conditions).
Can abuse of a dominant position be challenged?
Yes, companies that have suffered damage may refer the matter to the Competition Authority in order to obtain sanctions or bring a civil action for compensation for the loss suffered.
What is the role of the lawyer in an abuse of dominant position case?
The lawyer analyses the situation, helps to determine the existence of a dominant position and abuse, advises on strategies (negotiation, litigation) and represents the company before the authorities or the courts.
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