Global Competition Law is primarly a practitioner's guide presenting the most salient aspects of the major competition laws country by country, giving an overview of their structure and most charasteristic elements.
Global Competition Law also provides insight into possible future developments in the field.

Global Competition Law

Article L. 420-5 CC deals with abusively low pricing, which is comparable to predatory pricing, and has traditionally been prohibited when it constitutes an abuse of a dominant position. It prohibits retail price offers to consumers that are abusively low in relation to production, processing and marketing costs. However, the pricing policy must have as its object or potential effect the eliminati …

Abusively low pricing

Only the actual abuse of a dominant position on a market or a substantial part thereof is prohibited (Article L. 420-2(1) CC). Thus, dominance in itself is not prohibited. Moreover, the abuse must have as its object or effect the restriction of competition. The law however fails to define what a dominant position is. According to the Competition Authority, “a dominant position is the situation in which an undertaking is able to evade the conditions of the market and can, to a significant extent, act without taking account of the behavior and reaction of its competitors” (Competition Council decision No 06-D-12, 6 June 2006, LawLex200600001371JBJ, pt. 25). Abundant case law provides the necessary indications of how to determine if an undertaking is dominant or not. Market share, although important, may not be sufficient in every case to determine dominance. Other elements, such as market structure, the height of entry barriers or the maturity of the relevant market, are also taken into account. Generally speaking, a market share of 50% is considered sufficient to establish dominance in a relevant market, where other corroborating evidence exists.

A dominant position can be held by one undertaking or by a group of undertakings, in which case we talk about a collective dominant position. Traditionally, the competition authorities would require, for several undertakings on the same market to be considered as being in a collective dominant position, that there be structural and behavioral links between those undertakings (Competition Council decision No 93-D-42, 19 October 1993, LawLex200200002459JBJ). The Competition Authority now would appear to take a more flexible approach as it accepts that under certain conditions a collective dominant position may be inferred solely from the fact that the market is oligopolistic in nature even where there is no structural link between the undertakings (Competition Council decision No 07-D-08, 12 March 2007, LawLex200700000313JBJ).

The CC provides a non-exhaustive list of abuses: refusals to sell, tying arrangements, discriminatory conditions or wrongful termination of commercial relations. However, case law has added many other examples such as predatory pricing, margin squeezes, abuse of essential facilities, exclusive dealing, etc.

Abuse of a dominant position

As under German law, French law has established a prohibition on the abuse of economic dependency (Article L. 420-2(2) CC). Dependency occurs when one undertaking is dependent on another where the latter is an important customer or supplier of a particular product or service and where no equivalent client or supplier  exists. The undertaking benefiting from the dependency does not need to be dominant on the market in question. Several cumulative criteria have been established by case law as regards the definition of a situation of dependency: the share of the dominant undertaking in the turnover of its partners, the established nature of its brand or retail banner, the existence of alternative solutions and the reason behind the economic dependency (Court of Appeal of Paris, 12 July 1990, LawLex200200002634JBJ). When the dependency results from a deliberate choice of an undertaking, the prohibition does not apply (Court of Cassation, 3 March 2004, LawLex200400000604JBJ). The list of abuses set out in the CC also refers to economic dependency. In general, abuse may result from any behavior that would not have been adopted by an undertaking had it not had a dependent partner. Only a few cases have been submitted to the authorities and only a few have ended up with the imposition of fines as the proof of the absence of alternatives is difficult to establish (Court of Cassation 12 January 1999, LawLex200200002660JBJ and 11 January 2000, LawLex200200003163JBJ). The NRE Law slightly changed Article L. 420-2, 2º by removing the need to prove that the abuse of economic dependency has an effect on the market. It also removed the requirement that the dependent undertaking must prove that it had no equivalent solution. However, the Competition Authority continues to insist on the condition relative to the absence of alternative solutions (Competition Council decision No 03-D-42, 18 August 2003, LawLex200300003459JBJ; 04-D-36, 23 July 2004, LawLex200400001940JBJ).

Abuse of economic dependency

Article L. 420-5 CC deals with abusively low pricing, which is comparable to predatory pricing, and has traditionally been prohibited when it constitutes an abuse of a dominant position. It prohibits retail price offers to consumers that are abusively low in relation to production, processing and marketing costs. However, the pricing policy must have as its object or potential effect the elimination of an undertaking or one of its products from a market or preventing an undertaking or product from entering the market. This provision is to be distinguished from the provision on abuse of a dominant position, because such a position is not required, and from the provision on below-cost sales, which is referred to in another Article and which does not apply to processed products. It has been invoked several times before the Competition Authority, without success, as it is difficult to establish the anticompetitive object or effect on the market as is required under the law. The “consumer” has been judged as being a private person or a company without experience in the field concerned, contracting for their personal use (Competition Council opinion No 03-A-14, 25 July 2003, LawLex200300004214JBJ). To determine if a price is abusively low, the production, processing and marketing costs must be taken into account.

  The exemptions set out in Article L. 420-4 CC apply to the abuse of a dominant position or of economic dependence, but not to abusively low pricing.

Global Competition Law

271. Abusively low pricing

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271. Abusively low pricing

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise