Assessment of a Margin Squeeze as an Abuse of Dominant Position under EU Competition Law

Abstract: It is not illegal for an undertaking to have dominant position under EU competition law but such undertakings have a special responsibility to ensure that its conduct does not distort competition. Margins squeeze is one of the many different measures that can be construed as an abuse of an undertakings dominant position under Article 102 TFEU. Margin squeeze can be implemented by a vertically-integrated undertaking with a dominant position on the upstream level (wholesale) that supplies a key input to downstream operators (retail), and also competes on the downstream level in providing services to end users. The dominant undertaking can abuse its position by a margin squeeze by setting its upstream operations wholesale price and its downstream operations retail price at such a level that the margin spread between these two prices will be insufficient for an equally efficient competitor to profitably trade on the downstream market. This abuse has an exclusionary effect on the downstream market since competitors won’t be able stay profitable as a result of the vertically-integrated dominant undertakings pricing practice. The EU case-law concerning the assessment of margin squeeze as an abuse of dominant position is relatively newly developed and has been the subject of lively academic debates and some controversy. The objective of this thesis is to analyze how margin squeeze has been assessed as an abuse of dominance by the EU judicature and the Commission and whether margin squeeze should be assessed under same requirements as refusal to deal when the dominant undertaking has voluntarily decided to deal with its downstream competitors.