COMPETITION • FRENCH LAW • ABUSE OF DOMINANT POSITION
The Competition Authority frequently uses economic tests to measure the competitive harm of practices implemented by the undertaking in a dominant position, such as the “as efficient competitor” test. However, in order to determine the anticompetitive nature of the practices examined, these tests cannot replace a concrete analysis of their actual or potential object or effect.
The purpose of the as efficient competitor test is to measure the possible harm to competition with a view to maintaining the highest possible degree of competition in a environment where competition is already reduced by the presence of the dominant undertaking, and not with a view to protecting a particular competitor, without regard to the characteristics of the dominant undertaking’s actual competitors.
According to the Paris Court of Appeal, the as-efficient competitor is a theoretical competitor defined exclusively by reference to the costs of the vertically integrated dominant undertaking, i.e. it is examined as if the vertically integrated undertaking were literally placed under the obligation of bearing its own wholesale prices – contrary to its actual situation.
In the specific case of an undertaking charged with a public service mission but at the same time carrying out a commercial activity, the Competition Council specified that the “notion of relevant cost to be taken into consideration to assess whether the price of services offered competitively is abusive is the incremental cost”, i.e. additional expenses due to the exercise of the competitive activity. The fact that the prices charged by the undertaking in a dominant position are lower than the total average costs incurred for the competitive activity concerned but higher than the average incremental costs related to that activity, cannot be considered as abusive unless this pricing policy has, with no objective justification, the result of effectively or potentially ousting its competitors. It must be determined whether the disappearance of competitors results from bad internal management policies or from outside factors or if it can be attributed to the pricing practice put in place by the dominant undertaking, insofar as the competitors in question are regarded as equally as efficient as that undertaking.