AKZO Chemie BV v Commission (1991) C-62/86 is an EU competition law case, concerning monopoly and abuse of a dominant position through predatory pricing.[1]
| AKZO Chemie BV v Commission | |
|---|---|
| Court | Court of Justice of the EU |
| Citation | (1991) C-62/86, [1991] ECR I-3359 |
| Keywords | |
| Abuse, predatory pricing | |
Facts
editAkzo Chemie BV manufactured chemicals, including benzonyl peroxide. This is used for bleaching flour and plastics. A competitor, ECS, originally sold benzonyl peroxide in the flour sector but was expanding into plastics. Akzo did not want it to expand into plastics, and threatened ECS to sell at lower prices to its flour customers, while maintaining a higher price for its regular customers. Internal documents showed Akzo had the intention to undercut their competitors and it did other things too aimed at drawing customers away from ECS, to persuade it to withdraw from plastics. Commission fined €10m fines for violating TFEU art 102. The market was organic peroxides (not Akzo's proposed wider definition), Akzo was dominant presumptively with over 50% and it had remained steady from 1979 to 1982.
Judgment
editECJ held that Akzo had engaged in predatory pricing, and that a market share over 50% created a presumption of dominance.[2]
60 With regard to market shares the Court has held that very large shares are in themselves, and save in exceptional circumstances, evidence of the existence of a dominant position (judgment in Case 85/76 Hoffman-La Roche v Commission [1979] ECR 461, paragraph 41). That is the situation where there is a market share of 50% such as that found to exist in this case.
...
71 Prices below average variable costs (that is to say, those which vary depending on the quantities produced) by means of which a dominant undertaking seeks to eliminate a competitor must be regarded as abusive. A dominant undertaking has no interest in applying such prices except that of eliminating competitors so as to enable it subsequently to raise its prices by taking advantage of its monopolistic position, since each sale generates a loss, namely the total amount of the fixed costs (that is to say, those which remain constant regardless of the quantities produced) and, at least, part of the variable costs relating to the unit produced.
72 Moreover, prices below average total costs, that is to say, fixed costs plus variable costs, but above average variable costs, must be regarded as abusive if they are determined as part of a plan for eliminating a competitor. Such prices can drive from the market undertakings which are perhaps as efficient as the dominant undertaking but which, because of their smaller financial resources, are incapable of withstanding the competition waged against them.