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Abuse of a dominant position

Some businesses have a dominant position. They are not allowed to abuse such a position, for example by forcing a retailer to sell only their products, or by refusing to supply products to certain buyers. Read more to find out how to recognize the most common types of abuse.

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Businesses with dominant positions

Businesses are allowed to have dominant positions. A business may have become so big simply by having competed well. And if a business produces large volumes of goods, it can lead to lower prices for consumers. Therefore, dominant positions in and of themselves are not a problem.

Special responsibility

Businesses with dominant positions have few or no competitors. They can do what other businesses cannot, such as charging very high prices, since customers cannot easily go to another company for those products. That is why such dominant businesses have a special responsibility.

Businesses with dominant positions can compete with others just like any other business. However, they cannot reduce the remaining competition or impede new competitors in ways that go beyond normal competitive practices. Otherwise, consumers would ultimately have less choice, and the business in question would become even more dominant.

Enforcing compliance with the prohibition on abuse of dominance

The Netherlands Authority for Consumers and Markets (ACM) enforces compliance with the prohibition on abuse of dominant positions. You can report to us any suspicions of abuse of dominant positions.

Some businesses have (or can have) dominant positions as a result of a specific law or as a result of the natural competitive process. In most cases, there are special rules that apply to such businesses, for example to businesses such as PostNL, KPN, Schiphol, ProRail, NS, system operators, and heat suppliers.

Special rules apply to online platforms and search engines. Do you, as a business owner, sell products and/or services on an online platform, or are you listed in a search engine? Find out more about your rights.

Has your business been harmed by abuse of a dominant position? Read our tips for claiming damages.

Very high prices

The following situations may involve abuse of dominance as a result of very high and unfair prices being charged:

  • a business with a dominant position makes its products much more expensive, not because production costs have increased, but because it wants to earn more profit.
  • The prices of the business are unfair and very high.
  • Competitors have a hard time offering products on the same market (or are completely unable to do so).

Example: very high prices charged by Leadiant

Pharmaceutical company Leadiant charged too high a price for its prescription drug CDCA-Leadiant. Patients with a rare inherited metabolic disease need to take this drug their entire lives. This drug had already been available under different names and at much lower prices for years. Leadiant acquired the drug from another manufacturer, made a small investment, stopped selling the lower-priced variant, and subsequently charged a much higher price. ACM imposed a fine of 17 million euros on Leadiant for these practices. Leadiant still has the opportunity to file an appeal with a higher court.

Predatory pricing

The following situations may involve abuse of dominance as a result of predatory pricing:

  • A business with a dominant position offers a product at below cost price.
  • The business does so in order to reduce competition or to prevent competitors from entering the market.
  • In the short term, the business suffers a loss, but, in the longer term, it strengthens its dominant position, since fewer competitors are active in the market.

Example: predatory pricing involving Qualcomm chips

Qualcomm had a dominant position as a supplier of a specific type of chip. These chips were essential for connecting devices such as mobile phones to mobile networks. Qualcomm wished to forge closer ties with certain manufacturers of these devices. The company therefore sold a number of chips to these manufacturers at below cost price. With this strategy, Qualcomm sought to prevent a small yet growing competitor from entering the market. The European Commission imposed a fine of 242 million euros on the company for this violation. Qualcomm did not agree with this decision, but the EU courts upheld the decision against Qualcomm. Qualcomm subsequently filed an appeal with a higher court.

Refusal to supply

The following situation may involve abuse of dominance as a result of a refusal to supply:

  • a business with a dominant position refuses, for no good reason, to sell its products to certain buyers, or refuses, for no good reason, to provide certain information.
  • And, as a result thereof, less competition is possible.

Examples of a refusal to supply include:

  • The business refuses to license intellectual property;
  • The business refuses to grant access to infrastructure that is needed for production or to provide a service; and
  • The terms and conditions of the business are so unreasonable that they practically amount to a refusal to supply.

Example: refusal to supply by Microsoft

Most desktop computers run on Microsoft’s operating system Windows. Microsoft’s competitors that produce networking software thus need information about Windows. However, Microsoft refused to share that information. As a result, many computers on networks using software of Microsoft’s competitors did not work as well as computers on networks with Microsoft’s networking software. Microsoft made it much more difficult to bring competitor products to market as well as to keep them on the market. The European Commission found that, with such practices, Microsoft abused its dominant position on the market for PC operating systems, and imposed a fine of almost 500 million euros on Microsoft.

Tying

The following situation may involve abuse of dominance as a result of tying:

  • A business offers two products: A and B.
  • The business is a particularly important provider of product A. It therefore has a dominant position with regard to product A.
  • With regard to product B, more providers are active on the market.
  • The business sells product A only to buyser if they also buy product B. In that way, the business seeks to gain a dominant position with regard to product B too.
  • In this way, the business obstructs other competitors selling product B.

Tying is not prohibited in the following situations:

  • A business does not have a dominant position. In that case, it can sell two products together.
  • Two businesses sell products together. Businesses are allowed to enter into these kinds of agreements.

Example: prohibited tying and the Google Play Store

The Google Play Store is an essential app on all Android smartphones. Google made arrangements with manufacturers of such smartphones that they could only install the app on their devices if they also installed other Google apps. In that way, Google tied the Google Play Store app to its apps for search queries (Google Search) and internet browsing (Chrome). As a consequence, consumers used these apps instead of apps for search queries and browsing developed by Google’s competitors. The European Commission found that, with these practices, Google abused its dominant position. The Commission imposed a fine of over 4 billion euros on Google for these and other practices. Google did not agree with this decision, but the EU courts upheld the decision .

Exclusive dealing

The following situation may involve abuse of dominance as a result of exclusive dealing:

  • a business with a dominant position ensures that customers only buy its products, for example through an contractual obligation or a rebate scheme,
  • With this strategy, it seeks to prevent competitors from being able to sell their products.

Examples of exclusive dealing include:

  • A business threatens to stop supplying customers if these customers also purchase products from other businesses.
  • A business offers additional discounts if customers only buy products from that business.

In some situations, suppliers are allowed to ask retailers to only sell its products. Read the rules for suppliers and customers (in Dutch).

Example: exclusive dealing and Van den Bergh Foods

Van den Bergh Foods (VdBF) was the leading producer of ice cream in Ireland, with a market share of 75 percent. It gave sellers of its ice cream a freezer-cabinet either for free or almost for free. The freezer-cabinet could only be stocked with ice creams produced by VdBF, and not with those of its competitors. Sellers thus had to install a second freezer-cabinet for ice creams produced by other companies. This was often not really possible because of limited space in the stores. VdBF thus raised hurdles for its competitors. This abuse led to consumers having fewer types of ice cream to choose from. According to the European Commission, excluding ice creams of competitors from VdBF’s freezer-cabinets amounted to an abuse of its dominant position. The Commission thus ordered the company to end this practice .

Preferential treatment of platforms’ own services

The following situation may involve abuse of dominance if an online platform gives preferential treatment to its own services or products:

  • in search results, the platform displays its own products more prominently than its competitors’ products.
  • As consumers usually click on links that are displayed prominently, they often end up clicking on the platform’s product.
  • As a result, competitors’ products have less of a chance.

Next to the general prohibition on abuse of dominance, special rules apply to online platforms and search engines. Do you, as a business, sell products and/or services on an online platform, or are you listed in a search engine? Find out more about your rights.

Example: preferential treatment of Google’s own services on Google Shopping

Google presented its own product comparison tool as the first search result. In addition, the link to that tool looked more appealing. As a result, consumers were more likely to click on Google’s comparison tool than on product comparison tools of competitors. The European Commission found that Google abused its dominant position, and imposed a fine of 2.4 billion euros. Google filed an appeal against this decision, but the Court of Justice of the European Union, which is the highest court, upheld the decision of the European Commission.

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