Belgian Competition Authority Opens Abuse of Dominance Proceedings against Acquisition Not Caught by Merger Control Rules

• 23/03/2023
• News

The Belgian Competition Authority (BCA) announced yesterday that it would review the acquisition of Edpnet by telecommunications operator Proximus under the rules prohibiting abusive conduct by dominant companies (see, attached press release). Edpnet supplies broadband communications services and found itself in judicial reorganisation proceedings because of financial difficulties. The enterprise court of Ghent, Dendermonde section, had sanctioned the sale of the activities of Edpnet to Proximus, but this has not prevented the BCA from opening its inquiry.
 
As the BCA pointed out, its move against Proximus on the basis of the “abuse of dominance” rules follows on the heels of the Towercast judgment which the Court of Justice of the European Union (CJEU) handed down a week ago. On 16 March 2023, the CJEU held in case C-449/21, Towercast SASU v. Autorité de la concurrence and others, that a concentration, such as a merger or an acquisition of a business, that does not reach the financial thresholds for review under European Union or national merger control rules may, post-transaction, still be made subject to an abuse of dominance review by a national competition authority pursuant to Article 102 Treaty on the Functioning of the European Union.
 
The standard of review will be whether the transaction substantially impeded competition on a market that is national in scope.
 
The CJEU's judgment in Towercast adds a level of uncertainty for transactions that involve small companies with a significant position on narrowly defined markets and creates a further angle of attack against below-threshold mergers following the 2022 judgment of the CJEU in Illumina Grail which held that the European Commission has jurisdiction to examine Illumina's acquisition of cancer detection test start-up Grail, even though the transaction escapes the European and Member State turnover thresholds for review (case T-227/21, Illumina, Inc. v. European Commission, judgment of 13 July 2022 - see, Van Bael & Bellis Life Sciences News & Insights, 14 July 2022).
 
In Belgium, the BCA has so far been reluctant to apply the “abuse of dominance” rules to below-threshold acquisitions. A few years ago, the BCA refused to grant interim measures to suspend the acquisition of a small brewery, Brouwerij Bosteels, by AB InBev. Competitor Alken-Maes, owned by Heineken, had argued that the below-threshold acquisition was in breach of Article IV.2, Code of Economic Law (the Belgian equivalent of Article 102, TFEU) because it amounted to an abuse of dominant position on the part of AB InBev. The BCA disagreed and rejected the complaint.
 
On appeal, the Markets Court of the Brussels Court of Appeal confirmed the BCA decision and held, in line with what the BCA had said, that an acquisition which creates a concentration which falls outside the scope of the merger control rules does not “as such” amount to an abuse of a dominant position absent “accompanying but decisive conduct” (case 2016/MR/2, judgment of 28 June 2017). The Court went on to say that such conduct must qualify as prima facie abusive, rather than capable of being abusive, and must, significantly, be distinguishable from the actual effect resulting from the concentration. In response to the objections raised by Alken-Maes, the Court specified that this is not a test which is more stringent than the test habitually used for determining an infringement of Article IV.2, Code of Economic Law and Article 102, TFEU. Lastly, the Court also made it clear that the BCA had some room for maneuvering in that it is allowed to make policy choices that fall outside the scrutiny of the Court.
 
It will be interesting to see whether, as regards Edpnet, the BCA will take a more militant approach, abandoning its cautious position in Bosteels (which it is true came in summary proceedings), or whether it has identified facts that point to the “accompanying but decisive conduct” referred to above. In its press release, the BCA certainly cited “serious indications of substantial obstacles to competition”.

The stance of the BCA (and that of the CJEU in Towercast) is particulary relevant for the life sciences sector where acquisitions of small companies with significant market positions occur frequently.