Preventing the risk of abuse of a dominant position: a practical guide

By Yasmine EDDAM4 April 2025

Penalties for abuse of a dominant position can ruin a company. Violation of Articles L. 420-2 of the French Commercial Code or 102 of the TFEU can result in fines of up to 10% of worldwide sales. To make the prevention of abuse of a dominant position part of an overall approach to compliance with the principles of fair trading and protection of your business, it is essential to understand the basics of competition and unfair competition law. Companies with a strong position in their market are operating on a minefield. Banal commercial behaviour can become unlawful if it emanates from a dominant company.

Prevention is essential. It involves identifying risks, putting safeguards in place and adapting business strategy. Managers need to incorporate these constraints into their day-to-day governance.

This guide offers practical tools for securing your commercial practices and minimising legal risks.

Assessing your market position: a prerequisite

Dominance indicators to watch out for

Any preventive strategy begins with a diagnosis of your market position. This essential first step in identifying and preventing the risks of abuse of your own position involves assessing the essential definitions of the relevant market and dominant position. Several indicators merit particular attention:

Market shareAccording to case law, a share greater than 50% creates a presumption of a dominant position. Regularly measure your share and that of your competitors.
Market structureA significant gap with your competitors reinforces the likelihood of a dominant position. An asymmetry of 30% or more between you and your leading competitor is a warning sign.
Reputation and brand imageBrand awareness plays a role in assessing dominance. A company perceived as a benchmark in its sector attracts more attention from the authorities.
Entrance barriersControl of essential patents, essential distribution channels or unique infrastructures is an aggravating factor.

These elements are not cumulative. One alone is sometimes enough to establish a dominant position.

Self-assessment: a cautious approach

Self-assessment carries risks. Underestimating your position can lead to illegal practices. Overestimating it can hinder business development.

A few precautions are in order:

Define the relevant market rigorously
Document your analysis with objective data
Consider different ways of defining the market
Seek independent legal advice

This assessment must be updated every year or when major changes occur (acquisition, product launch, regulatory changes).

Risky commercial practices: increased vigilance

Sensitive pricing policies

Pricing practices are the first area of risk for dominant companies. It is therefore crucial to have perfect knowledge of forms of abuse of a dominant position, prohibited practices and their legal risks.

Loyalty discountsDiscounts conditional on exclusivity or the achievement of targets are particularly risky. Linear discounts based on target volumes are preferable.
Low pricesCheck that your prices at least cover your average variable costs. Document the economic justification for any aggressive promotion.
Differentiated pricingAny price differentiation must be based on objective and transparent criteria. Discrimination between customers in comparable situations is punishable by law.
Fixed pricesDon't put pressure on your distributors to respect a resale price. Recommended price mechanisms should remain simple recommendations.

Relations with commercial partners

Contractual clauses deserve particular attention:

Exclusivity clausesThe following points should be borne in mind: Limit their duration and provide for flexible termination conditions. Exclusivity for more than two years attracts the attention of the authorities.
Refusal to sellDocument any refusal decision with objective reasons (solvency, technical qualifications). Never refuse service as a punishment for working with a competitor.
Linked salesDon't make the sale of one product conditional on the purchase of another, unless there is a proven technical need to do so.
Non-competition clausesTo protect your legitimate interests: Limit their geographical and temporal scope to what is strictly necessary.

External communication

Your communication may constitute abuse:

DenigrationAvoid direct criticism of competitors or their products. Concentrate on the objective qualities of your offer.
Use of insider informationDo not use information obtained under a public service remit or legal monopoly to develop your competitive activities.
Misleading referencesDo not suggest that there are no links between your competitive services and your public service activities.

Implementing an effective compliance programme

The essential elements of the programme

A credible competition compliance programme includes:

Management commitment: The visible involvement of managers is essential.
Risk mappingIdentify the areas of vulnerability specific to your business.
Internal proceduresEstablish clear processes for validating sensitive practices.
Training: Make sales and marketing teams aware of the essential rules.
Control and auditCheck compliance with procedures on a regular basis.
Warning system: Set up a system for reporting high-risk situations.

Specific procedures to be put in place

Some practices require dedicated procedures:

Prior legal validation for:
- Any conditional discount
- Exclusivity contracts
- Refusal to sell
- Significant price differentials
Systematic documentation of:
- Economic justification for pricing practices
- Grounds for refusal to enter into commercial relations
- Efficiency gains expected from restrictive practices
Graduated validation circuit depending on the level of risk:
- Simple validation for low risks
- Double validation (legal and management) for high risks

Training operational teams

Sales staff are the first line of defence. Their training must be:

Practice: Give priority to concrete cases rather than theoretical presentations.
TargetedAdapt the content to the specific responsibilities of each team.
Regular: Plan annual reminders and updates after each major change in case law.
DocumentedKeep proof of the training provided.

This training must cover the warning signals and reflexes to adopt when faced with risk situations.

Managing an inspection procedure: preparing your defence

Warning signs of an investigation

Certain clues may indicate that proceedings are being initiated:

Complaint from a competitor or customer to the Authority
Unusually detailed request for information
Articles in the specialist press criticising your practices
Notification of a sector enquiry by the Authority

These signs call for immediate preparation.

Responding appropriately to requests for information

Faced with the demands of the authorities:

Organise a dedicated team.
Centralise all communications with the Authority.
Check the legal basis and exact scope of requests.
Prepare precise, documented answers.
Preserve the confidentiality of sensitive information.
Document all the steps taken.

Strategic options in the event of proceedings

There are several strategies available, depending on the seriousness of the incident:

DisputeIf you believe that the practices are legitimate, prepare a solid defence.
CommitmentsSuggest corrective measures without admitting any offence.
Transaction: Accept certain grievances to benefit from a reduced fine.
ClémenceDenounce a cartel in which you participate to obtain immunity.

Each option has advantages and disadvantages that need to be analysed on a case-by-case basis.

Adapting commercial practices to the company's status

The transition to a dominant position

Acquiring a dominant position requires you to review your commercial strategy:

Audit your existing practices to identify areas of risk.
Reform priority to the most problematic systems.
Formalise your commercial decision-making processes.
Strengthen documentation of economic justification.

This transition must be planned and gradual.

Commercial strategies compatible with a dominant position

Certain practices remain accessible to dominant companies:

Differentiation through innovationInvest in R&D rather than predatory practices.
Competition on the merits: Focus on efficiency gains and improving the offering.
Transparent quantity discountsOffer discounts based on real economies of scale.
Positive communication: Highlight your strengths without denigrating your competitors.

The sectoral approach to risk

Each sector has its own specific characteristics that affect the way risks are perceived:

Regulated industries (telecoms, energy): We need to be vigilant about access to infrastructure and non-discrimination.
Digital economyNetwork effects and the use of personal data are areas of particular concern.
Distribution: Relationships with suppliers and pricing policies are particularly sensitive.
Privatised public services: The boundary between public service activities and competitive activities requires specific attention.

Preventing the risk of abuse of a dominant position requires constant vigilance. It involves striking a delicate balance between commercial dynamism and compliance with competition rules. Our firm assists dominant companies in securing their commercial practices, offering tailor-made legal support to implement a compliance strategy, audit your commercial practices and prevent the risk of abuse of a dominant position to secure your development. For a personalised analysis of your situation and made-to-measure solutionsContact us today.