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Judgment of the Court of Justice of the European Union (CJEU) of 12 January 2023 in case C42-21
On 18 November 2020, Lithuanian railway infrastructure manager (IM) and railway undertaking (RU) Lietuvos geležinkeliai AB (LG) was condemned by a judgment of the Court of the European Union for abuse of dominant position due to the abolition of a section of railway track used for the transport of oil products from Lithuanian refineries to Latvian maritime terminals. As this withdrawal prevented a Latvian RU from entering the market for the transport of oil products by rail, or at least made it much more difficult to do so, the Court of Justice of the European Union (CJEU) was able, in its judgment of 12 January 2023, to clarify the criteria applicable to the finding of an abuse of a dominant position and clarify the scope of the Bronner case law (Case C-7/97) resulting from the judgment of 26 November 1998 as regards the criteria for qualifying a refusal of access or supply by an undertaking in a dominant position as an "abusive practice".
The issue in this case was therefore whether Article 102 TFEU[2] imposed an obligation on the Lithuanian IM to grant the Latvian RU access to the infrastructure, i.e. whether or not the IM's behaviour constituted a "refusal to supply"; if it did, the Bronner criteria applied.
It should be noted at the outset that Article 102 TFEU prohibits abuse by one or more undertakings of a dominant position in the internal market, declaring it to be incompatible with the internal market. An undertaking holding a dominant position therefore has a special responsibility not to undermine effective and undistorted competition by its conduct.
According to settled case law, the concept of "abuse of a dominant position", within the meaning of Article 102 TFEU, is based on an objective assessment of the conduct in question. This concept covers conduct by an undertaking in a dominant position which, on a market where (precisely as a result of the presence of the undertaking in question, the degree of competition is already weakened), has the effect of hindering, by recourse to means different from those governing normal competition, the maintenance of the degree of competition still existing on the market or the development of that competition.
In this regard, the Advocate General's Opinion presented on 7 July 2022 suggested that "From that perspective, it rightly recalled, in paragraph 85 of the judgment under appeal, that the list of abusive practices covered by Article 102 TFEU is not exhaustive, with the result that the list of abusive practices contained in that provision does not exhaust the methods of abusing a dominant position which are prohibited by EU law."[3]
The European Court considered that LG had abused its dominant position by removing the railway line, which was likely to produce anti-competitive effects of foreclosing competition on the relevant market between the refinery and the neighbouring marine terminals by raising barriers to entry into the market without there being any objective justification. By removing the entire rail line, LG had used methods other than those governing normal competition. This conclusion was reached based on a set of legal and factual circumstances to which the Judge referred in order to qualify the conduct in question as abusive.
The judgment of 12 January 2023 also adds to the case law relating to infrastructures qualified as "essential facilities"[4], in the sense that they are indispensable for carrying out an activity on a market insofar as there are no real or potential substitutes, and in such a way that refusing access to them may lead to the elimination of all competition. This case law essentially concerns the circumstances in which a "refusal to supply" by a dominant undertaking to competitors is likely to constitute an abuse of a dominant position.
The Court then implicitly treated the removal of the track as an autonomous and different form of abuse, and not as a "refusal of access". However, in the absence of an explicit refusal of access, the question arises as to whether the removal of the track has the characteristics of a "refusal of access". It could be seen as an implicit refusal to provide access, i.e. behaviour that leads de facto to the same result as an explicit refusal of access.
The CJEU made it clear that the removal of the railway line cannot be regarded as a refusal of access within the meaning of the Bronner case law, but must, where appropriate, be regarded as an autonomous form. Thus, the criteria established by the Bronner judgment were not considered applicable in the assessment of the Lithuanian LG's conduct.
The CJEU's judgment of 12 January 2023 thus confirmed the General Court's judgment of 18 November 2020. In rejecting LG's appeal, the CJEU stated that as an IM, in addition to a regulatory obligation to ensure the safety of traffic and a regulatory obligation to minimise disruption and improve the performance of the rail network, LG also had, as a dominant undertaking in the relevant market, a particular responsibility not to impair, by its conduct, effective and undistorted competition. According to the European Court, LG should have taken this into account and avoided eliminating any possibility of placing the railway back in service in the short term by means of a phased reconstruction. By removing the entire track, LG failed to take account of this responsibility under Article 102 TFEU.
[C42-21] The Judgment of the Court of Justice of the European Union in Case C-42/21 P dated 12 January 2023 is available here
[2] Treaty on the Functioning of the European Union - Article 102 (ex Article 82 TEC) available here
[3] Opinion of Advocate General M. Athanasios Rantos delivered on 7 July 2022, recital no. 72 available here
[4] For an overview of the essential facilities doctrine, as originally conceived in U.S. antitrust law, see Opinion of Advocate General Jacobs in the Bronner case (points 45 to 47).
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guillaume.murawa(at)cit-rail.org