Prohibition against abuse of dominant position
According to chapter 2 article 7 of the Swedish Competition Act (2008:579) any abuse by one or more undertakings of a dominant position on the market is prohibited.
Such abuse may, in particular, consist in:
- directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions,
- limiting production, markets or technical development to the prejudice of consumers,
- applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage, or
- making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations, which by their nature or according to commercial usage, have no connection with the subject of such contracts.
For the prohibition to be applicable, an undertaking shall not only have a dominant position on the market, it shall also be abusing its position. Being dominant is not in itself prohibited. A dominant position means a strong economic position making it possible for the undertaking in question to prevent effective competition by acting independently of its competitors and customers and ultimately of its consumers.
A dominant position is based on a number of factors, each of which is not in itself decisive. Examples of important factors are financial strength, barriers to entry on the market,the undertaking’s access to input, patents and industrial property rights as well as technology and other knowledge-oriented advantages. An important factor is the market share of the undertaking on the relevant market. A market share exceeding 40 percent is indication of a dominant position. The undertaking’s market share is however not decisive.
Examples of abuse
Chapter 2 article 7 contains a number of examples of practices that can be regarded as an abuse. The list is not exhaustive.
An example of unfair purchase or selling prices is when excessive prices are set. Another example is where a dominant undertaking applies prices below those that would normally be needed to cover costs and provide a profit and where the aim is to eliminate competitors or make market entry more difficult.
Production and market restrictions may also occur through exclusive dealing agreements and similar practices that tie up suppliers and distribution networks.
Discrimination may occur if the dominant undertaking through prices, discounts and other commercial conditions treats undertakings differently for no legitimate reason. Refusal to supply may also be a form of discrimination.
Tie-in clauses occur for example where a dominant undertaking uses its position to compel a purchaser to purchase an additional product which does not have a natural or reasonable connection with the first product.