Abuse of a Dominant Market Position
An undertaking or a group of undertakings having such a monopoly or other dominant position in a specific commodity market within a country or a specific area that it is able to considerably control the price of goods, the delivery conditions, or in a similar way affect the competition conditions on a stage of production or distribution, is regarded as having a dominant market position.
A clear element of a dominant market position is market power. A monopoly has extreme market power, but even a market share of 40 – 50 per cent has been found to create a presumption of a dominant market position (which may, however, be disproved). In this case the dominant position is based on actual control of the market. A company or companies enjoying a dominant market position may take advantage of their market power without immediately losing market shares to competitors. Companies in this position may in practice e.g. set the level of prices and decide upon the terms and conditions of delivery without regard to reactions of their customers, competitors or suppliers.
A dominant market share itself or efforts to achieve such by way of internal growth of a company is not prohibited through competition law. Companies that achieve a dominant market position are, however, under special abuse supervision. Such a company is not as free to operate with its customers or competitors as companies with nonsignificant market positions.
A company can abuse its dominant position in a situation where the company utilizes solely its economic power in a way that endangers effective competition. A dominant position may be abused in relation to competitors or customers. A dominant company may try to exclude competitive companies from the market or to make their business more difficult. A company in a dominant position may also require that customers accept restrictive terms and conditions or it may charge too high prices.
According to the Competition Act, prohibited abuse of a dominant market position may particularly be:
unreasonable purchase or sale prices or direct or indirect determination of other unreasonable terms and conditions of sale;
restricting the production, markets or technical development to the detriment of consumers;
applying different terms and conditions to different contractual parties in respect of similar performances, thereby setting some parties in a weaker competition position; or
making the contract conditional upon the contracting party accepting additional performances which are, due to their nature or commercial practice, unrelated to the contract.