ARTICLE 82 OF THE EC TREATY

Every act of a dominant firm is laden with risk, in particular when even commercial behaviour regarded as normal may constitute abuse within the meaning of Article 82 [of the EC Treaty].



Every act of a dominant firm is laden with risk, in particular when even commercial behaviour regarded as normal may constitute abuse within the meaning of Article 82 [of the EC Treaty].

Introduction

The Commission has put forward radical proposals to change the rule set controlling the implementation of Article 81 and 82 EC in anti-trust matters (COM, 2000a). The outcome, if successful, will be decentralisation on an unheard of scale, with national competition authorities and national courts having a much-enhanced role under this new architecture. Indeed, the Commission's sought after decentralisation of these competition instruments will mean that the bulk of community anti-trust cases will be vetted at the national level, not by the Commission. Thus, it is important for business to understand this new architecture and the changes in regulatory procedures that it will put in place. (Jones, 2007, 54)

Article 82 of the EC Treaty

United Brands is a frequently cited precedent in EC competition law. It covers, amongst other things, issues of market definition, the concept of a dominant position, and several types of abuse under Article 82. The case relates to alleged abuses a dominant position by United Brands Company, the importer of the Chiquita brand of Latin American bananas. United Brands supplied these bananas unripe and in bulk to distributor/ripeners operating in various EC countries. The distributors would buy them while still green, ripen them using their own facilities and distribute them to retailers across their national markets.

The European Commission found in 1975 that United Brands had infringed Article 82 (then known as Article 86; references below have been amended to reflect the new numbering). United Brands challenged the decision, arguing that it did not have a dominant position and (in the alternative) disputing the basis of the findings of abuse. The Court of Justice (there was no Court of First Instance at the time) upheld the Commission decision on dominant position, on the restrictive conditions abuse, the refusal to supply abuse and the discriminatory pricing abuse. It quashed the Commission decision on exploitative abuse for lack of reasoning and analysis. The Court confirmed the Commission's definition of a relevant market as the retail market for the sale of fresh bananas to consumers. It also confirmed that United Brands had a dominant position in respect of its trade with distributors, and it is the terms of supply to distributors rather than any activity in the retail market as such that were considered abusive.

Paragraph 65 of the judgment is often quoted as a characterisation of a dominant position:

65. The dominant position referred to in Article 82 relates to a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition in being maintained on the relevant market by giving it the power to behave to an appreciable ...