Abuse of a dominant position A case study on shelf labels in snus coolers

Transcription

1 Abuse of a dominant position A case study on shelf labels in snus coolers Judge Daniel Severinsson Patent and Market Court Sweden 1

2 Article 102 Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States. Such abuse may, in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) limiting production, markets or technical development to the prejudice of consumers; (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (d) 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. 2

3 Background Snus (snuff): Tobacco for oral use. Sold from snus coolers Swedish Match British American Tobacco (BAT) Japan Tobacco (JTI) Strict rules on the marketing of tobacco in Sweden 3

4 Conduct Swedish Match launched a template for snus cooler labels in June 2012 Competitors complained SCA started investigating Swedish Match abandoned their labelling system in March 2013 In December 2014 the SCA took the case to court and requested a fine of approximately 3,5 million euro 4

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6 Article 102 relevant product market Low demand side substitution between snus and cigarettes High demand side substitution between price segments and between different types of snus Conclusion: The market for selling snus to retailers 6

7 Article 102 relevant geographical market Tobacco markets are generally regulated by national laws Selling snus is not allowed in most membes states Market conditions relatively consistent throughout Sweden Conclusion: Sweden relevant geographical market 7

8 Article 102 dominant position Swedish Match market shares High, approximately 80 %, but falling trend for many years Still over 95 % in profitable premium segment Snus costumers very brand loyal Many Swedish Match products must have unavoidable trading partner Swedish Match owned most of the snus coolers in stores Strict rules on the marketing of tobacco Only limited countervailing buyer power Conclusion: Swedish Match had a dominant position 8

9 Article 102 abuse Non-exhaustive list of examples in article 102 Labelling system new exclusionary abuse Shelf labels important for marketing snus Specific market conditions Witnesses representing retailers and competitors Expert witnesses Swedish Match internal documents Restriction of competition? Not competition on the merits to introduce rules for competitors price and brand communication No proof of actual effect But labelling system tended to restrict price and brand competition 9

10 Article 102 objective justification Swedish Match interest to keep coolers tidy Less intrusive means available Swedish Tobacco regulation restricts marketing Patent and Market Court ruled that it was not for Swedish Match to ensure that requirements in Swedish Tobacco Act was met (T-30/89 Hilti) E.g. possible to contact relevant authorities Labelling system part of anti competitive strategy Fine approximately 3,5 million euro Patent and Market Court of Appeals ruled that Swedish Match was allowed to stop labels in its coolers that did not comply with the Swedish Tobacco Act. Thus the labelling system was objectively justified 10

11 Discussion Questions or comments? Thanks 11

12 Further reading Guidance on the Commission's enforcement priorities in applying Article [102] of the EC Treaty to abusive exclusionary conduct by dominant undertakings (2009/C 45/02) Case C-209/10, Post Danmark I, EU:C:2012:172 Case C-457/10, AstraZeneca, EU:C:2012:770 12