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Belgium - Ban on Abuse of Economic Dependency Enters into Force on 22 August 2020

  • 14/08/2020
  • News

On 12 August 2020, the Belgian Official Journal (Belgisch Staatsblad / Moniteur belge) published a Royal Decree of 31 July 2020 which incorporates the ban on abuse of economic dependency in the Code of Economic Law (Wetboek van Economisch Recht / Code de droit économique – the CEL) and fixes the date of entry into force of the ban at 22 August 2020 (Koninklijk Besluit van 31 juli 2020 tot wijziging van de boeken I en IV van het Wetboek van economisch recht met betrekking tot misbruiken van economische afhankelijkheid / Arrêté royal du 31 juillet 2020 modifiant les livres Ier et IV du Code de droit économique en ce qui concerne les abus de dépendance économique – see, attachment).

The new provisions prevent companies from abusing the economic dependency of other companies where competition on the Belgian market, or a substantial part thereof, is likely to be affected. The infringement is added to the existing abuse of a dominant position, provided for in Article IV.2 CEL.

Situation of Economic Dependency

The existence of a situation of economic dependency is assessed on the basis of two criteria: (i) the absence of a reasonable and equivalent alternative available within a reasonable time period and under reasonable conditions and costs, and (ii) the possibility for a company to impose terms and conditions that would not prevail in normal circumstances. Hence, it is only necessary to show that a business finds itself in a position of “relative” dominance (vis-à-vis certain companies) but not that it holds an “absolute” dominant position on the market, as opposed to what is required for the prohibition of abuses of a dominant position.

Such a situation of economic dependency may result from various factors such as (i) the market power of the company, (ii) the significant share of the company in the turnover of the allegedly dependent company, (iii) the technology or know-how controlled by the company, (iv) the reputation of the brand, the scarcity or perishable nature of the product, or a loyal consumer buying behaviour, (v) access to essential resources or facilities, (vi) the fear of serious economic harm, retaliation or termination of contractual relationship, (vii) the regular application of exceptional conditions (which are not granted to similar companies), and (viii) the deliberate or constrained choice to opt for such a situation of economic dependency.

Abusive Conduct

A violation of the ban on abuse of economic dependency may be found where a company:

  • refuses to sell, buy or apply other transactional conditions;
  • directly or indirectly imposes unreasonable purchase or sales prices or other unreasonable contractual conditions;
  • limits production, distribution or technical development;
  • applies different conditions to equivalent services affecting the competitive position of the other party;
  • ties certain performances to the conclusion of agreements which are not connected thereto according to their nature or market practices.

These examples are non-exhaustive and other practices may be deemed to fall within the scope of the prohibition.

The Belgian Competition Authority is responsible for investigating and prosecuting abuses of economic dependency. It will receive and handle complaints relating to this infringement and has the power to impose fines of up to 2% of the company’s annual turnover on the Belgian market. In addition, the scope of institutional and procedural rules on penalties currently applicable in the context of Belgian competition law enforcement is extended to abuses of economic dependency.

With the introduction of the new rules, Belgium joins the ranks of other countries which already have rules in place governing abuse of economic dependency such as France and Germany. It remains to be seen how the new legal concept will be applied and enforced in practice. In France, for instance, the ban on abuse of economic dependency has rarely been enforced.

 

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