Discriminatory pricing as an abuse is a little-deployed area of EU antitrust law and there has been no recent enforcement at the European Commission level. The few existing cases concern extreme facts, involving natural or statutory monopolies such as airports or copyright collecting societies.
In theory, the requirement in Article 102(2)(c) of the Treaty on the Functioning of the European Union (TFEU) that no dominant firm discriminate sets an impossible bar. For example, it is difficult to think of even the most powerful company being able to stand firm against any price concessions for:
- strong buyers;
- customers in special circumstances (eg, fare concessions for the elderly or junior travellers); or
- different use applications (eg, public sector versus commercial applications).
Further, given the development of the Intel case law around loyalty rebates (which involve inherently discriminatory pricing based on subjective volume targets), it would be invidious to find a company's rebate scheme to be legal under the Intel foreclosure standard but unlawfully discriminatory under Article 102(2)(c).
The European Court of Justice's (ECJ's) judgment in MEO v Autoridade da Concorrência therefore offers welcome clarification of the case law. It starts with the premise that not all price differences are illegal – the key question is whether they cause material harm by competitively disadvantaging one company in contrast to its rivals.
Whether a competitive disadvantage exists requires a contextual analysis to determine:
- whether the customer has countervailing negotiating power;
- the conditions and arrangements for charging prices;
- the duration and level of prices;
- the effects of prices on customers' costs and profits;
- whether there is a regulatory remedy for allegedly unfair prices; and
- whether the dominant company could have a strategy to foreclose a customer.
This article was first published in International Law Office.