Cartels & the abuse of a dominant position

European and national competition law aim to promote competition and to protect consumers for example against excessive prices or restricted choice. The underlying principle is that businesses are supposed to determine their market behaviour independently of one another. The Authority for Consumers and Markets (ACM) and the European Commission supervise compliance with the competition rules. Violation of these rules can be costly for any business. Fines of millions of euros can be imposed, while agreements can turn out to be null and void. Companies that have violated competition law are in practice increasingly the target of claims from third parties who themselves have suffered losses as a result of the original violation. The mainstays of competition law are the prohibition on cartels and the prohibition on the abuse of a dominant position.

Prohibition on cartels
Put briefly, the prohibition on cartels bans agreements between enterprises and decisions by sector associations that could represent a limitation of competition. Classic examples include pricing agreements, market sharing agreements and agreements aimed at limiting production capacity. Such agreements between competitors are forbidden in almost all cases. There is also a growing focus on the exchange of competitively sensitive information, which is more and more often seen as restricting competition. Perhaps less well-known is the fact that agreements within distribution agency and franchising agreements are also covered by the prohibition on cartels. This may for example relate to agreements on (area) exclusivity, selectivity, non-competition, zoning plans for a location or shop space, and restrictions relating to Internet sales. In particular, the possibilities for advertising campaigns or price offers via the Internet, using price comparison sites or using social media, are constantly recurring subjects of discussion.

Abuse of a dominant position
Any company with a dominant position has a ‘special’ responsibility to avoid abusing that position. In itself, occupying a dominant position is not forbidden, but it is forbidden to abuse that position. Examples of abuse are: refusal to deliver, the imposition of excessively high or excessively low prices, employing unreasonable or discriminatory contract conditions and tied sale arrangements. In determining whether a company does occupy a dominant position, the essence lies in assessing whether in respect of its competitors, customers and consumers, the company enjoys a considerable degree of independence. A high market share may be an indication for a dominant position, but is not the sole criterion.