In the EU the Court of Justice Rules (Again) on Margin Squeeze

Gianni De Stefano, Javier Ruiz Calzado, Jul 14, 2011

On February 17, 2011, the Court of Justice handed down a judgment on a series of questions referred from the Stockholm District Court on the interpretation of Article 102 TFEU in relation to an alleged abuse of dominance in the form of a margin squeeze (the TeliaSonera judgment). The Court gave guidance on the factors that are a condition or relevant and on those that are not to determine whether a margin squeeze occurred, including the absence of any regulatory obligation on the undertaking concerned to supply ADSL services on the wholesale market in which it holds a dominant position. Further, the Court elaborated on the necessity to demonstrate that the practice produces an anticompetitive effect, at least potentially, on the retail market, and that the practice is not in any way economically justified.

In this regard, the Court clarified that the indispensability of the product offered upstream by the dominant operator is a factor for assessment of the effects and not a necessary condition of the abuse, thus differentiating the margin squeeze abuse from the refusal to supply abuse. In the TeliaSonera judgment, the Court of Justice complements and develops its previous findings in the Deutsche Telekom judgment of a few months earlier. This case law shows that the prize squeeze practices are more likely to be considered abusive and anticompetitive in the European Union (“EU”) than in the United States.