Merely having a dominant position is not in itself prohibited, but an undertaking with a dominant position bears a special responsibility not to allow its conduct to impair undistorted competition on the relevant market.
There are two main kinds of abuse: exclusionary abuses and exploitative abuses.
Exclusionary abuses relate to conduct by which dominant undertakings undermine the ability of rival firms to compete, e.g. by preventing competitors from entering into or remaining active on a market. The main examples of exclusionary abuses are:
- Predatory pricing, where prices are set at unfairly low levels with the object of eliminating a competitor;
- Margin squeeze, where a vertically integrated dominant undertaking reduces competitors’ margins in the downstream market by setting the price of the upstream input goods at levels which do not allow the downstream competitors to cover their costs;
- Refusal to supply key products/services, where a vertically integrated dominant undertaking refuses to provide input supplies to a firm in a downstream market which are objectively necessary for them to be able to compete effectively on the downstream market;
- Exclusive dealings, where a dominant undertaking requires a downstream firm to exclusively purchase from them.
Exploitative abuses concern dominant undertakings taking advantage of their position to impose unfair prices or other unfair conditions on consumers. Examples of exploitative abuses are:
- Excessive pricing, where a dominant undertaking sets unfair selling prices which, as a result of the exercise of market power, are above competitive levels;
- Tying and bundling, where a dominant undertaking makes the purchase of one product conditional on the purchase of another separate product;
- Imposing discriminatory conditions, where a dominant undertaking sells the same product to similarly placed buyers at different prices or conditions.