Large companies often use unfair trading conditions and exclusionary practices, thereby threatening competition. Find out how you can defend yourself under Slovak and European law.
Currently, there is extensive market differentiation, with large companies using certain practices to squeeze out small and, in some cases, even larger companies as their competitors, thereby essentially gaining significant market power, which may ultimately lead to a dominant position or even a monopoly in a particular market.
However, excluding competitors through unfair practices is not the only problem, because if a company gains a dominant position or creates a monopoly through its actions, it can later abuse it against its customers, for example by applying unreasonable business conditions, unreasonable prices, or even applying different conditions to individual customers for identical or comparable services. Such practices are also collectively referred to as exploitative practices, which, unlike exclusionary practices, do not directly result in a change in the competitive structure of the market (exclusion of another entrepreneur from the market), but reduce consumer welfare, which the dominant undertaking unjustifiably appropriates for itself. Exploitative practices, such as charging unreasonably high prices, lead to a direct reduction in consumer welfare, i.e. to the extraction of a "rent" at the expense of consumers, which a non-dominant firm would not be able to obtain.
A dominant position in itself is not prohibited or illegal, but the application of exclusionary and exploitative practices constitutes a serious violation of competition within the meaning of Act No. 187/2021 Coll. on the protection of economic competition and on amendments to certain laws, as well as the Treaty on the Functioning of the European Union.
In accordance with the above, the main prerequisite for a violation of fair competition is the existence of a dominant or monopoly position, whereby the market power of an undertaking is always assessed on the specific relevant market, the purpose of which is to systematically identify the real and immediate competitive pressures faced by the undertakings concerned when offering certain products in a given area. The determination of the relevant market is the first step, and the European Commission, as the authority primarily responsible for enforcing competition rules, has laid down clear rules for identifying the specific relevant market in which the market power of a given undertaking must be assessed. However, market shares in a specific relevant market are not the only indicator of an undertaking's market power, as stated in the European Commission's guidelines, and depending on the specific circumstances of the case, other factors such as market structure, barriers to entry and expansion, as well as countervailing buying power, may also be relevant.
If an undertaking does have a dominant or relevant market, there is a reasonable suspicion that it may, in certain cases, engage in specific forms of abuse of a dominant position in the form of exclusionary or exploitative practices.
The Competition Act and the Treaty on the Functioning of the European Union are based on the following forms of abuse of a dominant position:
Direct or indirect imposition of unreasonable prices or other unreasonable trading conditions
Restricting production, sales, or technical development of goods to the detriment of consumers
Applying different conditions to identical or comparable transactions with individual entrepreneurs, thereby placing them at a competitive disadvantage
Making consent to conclude a contract conditional on the other party accepting additional obligations which, by their nature or according to commercial practice, are not related to the subject matter of the contract.
However, the European Commission regulates more specific forms of abuse of a dominant position in its guidelines, the purpose of which, based on specific Commission decisions, is to ensure greater clarity and predictability as regards the general framework of analysis which the Commission uses to determine whether it should pursue cases involving various forms of abuse of position to exclude competitors from the market, thereby ultimately helping undertakings to better assess whether certain specific conduct may lead to Commission intervention. In this context, the European Commission considers, for example, exclusive purchasing, conditional discounts, tying and bundling, refusal to supply and margin squeezing to be specific examples of abuse of a dominant position.
However, when assessing violations of fair competition, the legitimacy of the dominant undertaking's conduct is also taken into account, as the dominant undertaking may demonstrate that its conduct has a positive impact on efficiency, which may outweigh the adverse anti-competitive effects on consumers. However, in order to prove this, several conditions set out in the European Commission's guidelines must be cumulatively fulfilled.
The issue of abuse of a dominant position is a broad topic and somewhat neglected, as many companies are unaware that it is possible to defend themselves against unreasonable commercial conditions or prices, or unfair practices by large companies, through national and European rules designed to ensure fair competition. In order to ensure fair competition, Directive (EU) 2019/633 of the European Parliament and of the Council of 17 April 2019 on unfair commercial practices in business-to-business relationships in the agricultural and food supply chain.
If you feel that a supplier is imposing unreasonable business conditions or high prices on you and that the supplier in question has no competition in its field, or if your competitors are forcing you out of the market through their practices, please do not hesitate to contact us, as the team at our law firm Hronček & Partners is actively involved in both domestic and European competition law.
