On March 25, 2021,[1] the Court of Justice ruled that to demonstrate abuse, where a dominant undertaking has already offered access to its infrastructure but on unfair terms, it is not necessary to show that access to the infrastructure is indispensable within the meaning of the Court of Justice’s Bronner essential facilities doctrine.
Background
Slovak Telekom, the incumbent telecoms operator in Slovakia and a former legal monopolist, offers retail broadband internet services through its own metallic pair network. In 2005, the Slovak telecoms regulator found that Slovak Telecom had “significant power” on the wholesale market for access to the local loop[2] network. As a result, it obliged Slovak Telekom inter alia to offer its competitors on the retail broadband market access to its local loop under transparent, fair, and non-discriminatory terms.[3]
In 2014, the Commission found that Slovak Telekom had abused its dominant position from 2005 to 2010, by setting unfair terms and conditions for the access to its network and for margin squeeze. The Commission imposed a joint fine of €38.8 million on Slovak Telekom and its 51% shareholder, Deutsche Telekom, and an additional fine of €31 million on Deutsche Telekom on account of recidivism[4] and high annual turnover.
In 2018, the General Court upheld the Commission’s findings concerning the abuse of a dominant position.[5] Slovak Telekom appealed, arguing that the General Court had failed to require the Commission to prove that access to the local loop was indispensable within the meaning of the Bronner essential facilities doctrine.[6]
The Bronner essential facilities doctrine
In Bronner, the Court of Justice laid down the conditions under which a dominant undertaking’s refusal to offer its competitors access to its infrastructure could constitute an abuse of dominance. The refusal must be likely to eliminate all competition on the market, without objective justification, and access must be indispensable to the business of the competing undertaking requesting access.[7]
The Court of Justice’s assessment
In Slovak Telekom, the Court of Justice underlined that the specific circumstances of the Bronner case justified the conditions it had set for refusal to be abusive.[8] Forcing a company to contract with a competitor is “especially detrimental to the freedom of contract and the right to property of the dominant undertaking” and if access to a dominant undertaking’s network were allowed too easily, “there would be no incentive for competitors to develop competing facilities.”[9]
The Court of Justice then ruled that, absent an outright refusal to access infrastructure, the Bronner conditions, and indispensability of access in particular, did not apply.[10] In that regard, practices such as conditioning access to infrastructure on unfair terms, while capable of constituting an abuse, could not be equated to the practice at issue in Bronner.[11]
Because the practices at issue in Slovak Telekom did not constitute refusal of access but related to terms of access, the Bronner conditions did not apply, and the Commission was not required to demonstrate indispensability of access to establish an abuse of dominance.[12]
Slovak Telekom distinguishes refusal to offer access to infrastructure on the one hand from subjecting access to infrastructure under unfair conditions on the other. While both practices can be abusive, they require distinct standards of proof. Refusal to grant access requires the higher indispensability of access standard set out in Bronner, because remedying this practice (forced access) is especially detrimental to freedom of contract. By contrast, where a dominant company has already offered access to its infrastructure, demonstrating indispensability of access is not required to prove an abuse of dominance in the form of unfair access terms.
The Court of Justice did not deal with (and implicitly rejected) the Commission’s position that offering access only at unfair conditions constituted a “constructive refusal to supply.” In the future, the abuse question in such cases will be limited to whether access terms are unfair and abusive. It will not matter whether the terms have the effect of discouraging access.
[1] Deutsche Telekom AG v. European Commission (Case C-152/19 P) EU:C:2021:238; and Slovak Telekom a.s. v. European Commission (Case C-165/19 P) EU:C:2021:239.
[2] The portion of the metallic pair network connecting the subscriber’s telephone jack with the main distribution frame of the fixed telephone network.
[3] In accordance with the EU regulatory framework, including Regulation (EC) No 2887/2000 of the European Parliament and of the Council of 18 December 2000 on unbundled access to the local loop (OJ 2000 L 336, p. 4) and Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive) (OJ 2002 L 108, p. 33).
[4] The Commission had already fined Deutsche Telekom in 2003 for operating a margin squeeze in the German broadband market. See Deutsche Telekom AG (Case COMP/C-1/37.451, 37.578, 37.579), Commission decision of May 21, 2003.
[5] Deutsche Telekom v. Commission (Case T-827/14) EU:T:2018:930; and Slovak Telekom v. Commission (Case T-851/14) EU:T:2018:929. The General Court however reduced the fines to €38 million for the joint fine and to €19 million for the additional fine imposed on Deutsche Telekom, considering that its high annual turnover did not justify the original penalty.
[6] Oscar Bronner GmbH & Co. KG v. Mediaprint Zeitungs- und Zeitschriftenverlag GmbH & Co. KG, Mediaprint Zeitungsvertriebsgesellschaft mbH & Co. KG and Mediaprint Anzeigengesellschaft mbH & Co. KG (Case C-7/97) EU:C:1998:569. In Bronner, the owner of a newspaper and of Austria’s only nationwide newspaper home-delivery scheme refused to allow a rival newspaper to access its home-delivery scheme.
[7] Ibid., para. 41.
[8] Slovak Telekom a.s. v. European Commission (Case C-165/19 P) EU:C:2021:239, para. 45.
[9] Ibid., para. 47.
[10] Ibid., para. 50.
[11] Ibid., paras. 51– 52.
[12] Ibid., paras. 60–61.