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Bronner (ECJ)

Oscar Bronner v Mediaprint, case C-7/97
Preliminary ruling [1998] ECR I-7791
Judgment of 26 November 1998 available online from Eur-Lex
Advocate General's opinion available online from Eur-Lex

Article 82: access to essential facilities; exclusionary abuse
Article numbers refer to the 1997 consolidated version of the EC Treaty.

Scope of judgment

The Court of Justice's judgment was a preliminary ruling requested by an Austrian court in a dispute between Oscar Bronner, the publisher of a newspaper, and Mediaprint, a large newspaper publisher and operator of a home delivery scheme. Oscar Bronner wished to be able to use Mediaprint's distribution scheme. Mediaprint did not consider that it had a duty to provide such access.

The judgment was in Mediaprint's favour, on the principal grounds that the distribution network was not an essential facility: it was not necessary for the likes of Oscar Bronner to have access to a home delivery network in order to be able to offer their product on the market.

Oscar Bronner also made a claim of unfair discrimination but this was not the subject of the reference by the Austrian court to the ECJ: see paragraph 54 of the Advocate General's opinion.

The "eliminate all competition" test

The judgment clarifies that, as in Commercial Solvents, the question was whether the specific person who was not given access to the facility would be unable to compete at all in a relevant downstream market. There is no exclusionary abuse if the facility was not essential to that person's business:

38. Although in Commercial Solvents v Commission and CBEM, cited above, the Court of Justice held the refusal by an undertaking holding a dominant position in a given market to supply an undertaking with which it was in competition in a neighbouring market with raw materials ..., which were indispensable to carrying on the rival's business, to constitute an abuse, it should be noted, first, that the Court did so to the extent that the conduct in question was likely to eliminate all competition on the part of that undertaking. ...

41. Therefore, even if that case law on the exercise of an intellectual property right were applicable to the exercise of any property right whatever, it would still be necessary, for the Magill judgment to be effectively relied upon in order to plead the existence of an abuse within the meaning of Article 82 of the Treaty in a situation such as that which forms the subject matter of the first question, not only that the refusal of the service comprised in home delivery be likely to eliminate all competition in the daily newspaper market on the part of the person requesting the service and that such refusal be incapable of being objectively justified, but also that the service in itself be indispensable to carrying on that person's business, inasmuch as there is no actual or potential substitute in existence for that home delivery scheme."

Paragraph 40 of the judgment refers to the Magill test of whether the refusal to supply excludes all competition in the secondary market. But paragraph 41 above uses the original Commercial Solvents formulation of eliminating all competition on the part of a specific competitor. This may simply reflect the fact that there appeared to have been no existing competitor in Magill.

Thus, if an existing competitor is affected, as was the case in Bronner, then there can be abuse even if the refusal to supply does not eliminate all competition from all competitors in the downstream market.

Advocate General opinion

The Advocate General's opinion is widely quoted as a review of aspects of the case law on essential facilities and other aspects of exclusionary abuse of a dominant position. The following passage in particular has been invoked by dominant firms in various cases:

AG 56. First, it is apparent that the right to choose one's trading partners and freely to dispose of one's property are generally recognised principles in the laws of the Member States, in some cases with constitutional status. Incursions on those rights require careful justification.

AG 57. Secondly, the justification in terms of competition policy for interfering with a dominant undertaking's freedom to contract often requires a careful balancing of conflicting considerations. In the long term it is generally pro-competitive and in the interest of consumers to allow a company to retain for its own use facilities which it has developed for the purpose of its business. For example, if access to a production, purchasing or distribution facility were allowed too easily there would be no incentive for a competitor to develop competing facilities. Thus while competition was increased in the short term it would be reduced in the long term. Moreover, the incentive for a dominant undertaking to invest in efficient facilities would be reduced if its competitors were, upon request, able to share the benefits. Thus the mere fact that by retaining a facility for its own use a dominant undertaking retains an advantage over a competitor cannot justify requiring access to it.

AG 58. Thirdly, in assessing this issue it is important not to lose sight of the fact that the primary purpose of Article 82 is to prevent distortion of competition — and in particular to safeguard the interests of consumers — rather than to protect the position of particular competitors. It may therefore, for example, be unsatisfactory, in a case in which a competitor demands access to a raw material in order to be able to compete with the dominant undertaking on a downstream market in a final product, to focus solely on the latter's market power on the upstream market and conclude that its conduct in reserving to itself the downstream market is automatically an abuse. Such conduct will not have an adverse impact on consumers unless the dominant undertaking's final product is sufficiently insulated from competition to give it market power.

AG 59. It may be noted that in Commercial Solvents Advocate General Warner, in coming to the same result as the Court, also considered the position on the downstream market:

"I do not think that the question whether the market for the raw materials for the production of a particular compound is a relevant market can, logically, be divorced from the question whether the market for that compound is a relevant one. The consumer, after all, is interested only in the end product, and it is detriment to the consumer, whether direct of indirect, with which Article 82 is concerned."

The Advocate General also discussed the interaction with statutory intellectual property rights:

AG 62. [...] particular care is required where the goods or services or facilities to which access is demanded represent the fruit of substantial investment. That may be true in particular in relation to refusal to license intellectual property rights. Where such exclusive rights are granted for a limited period, that in itself involves a balancing of the interest in free competition with that of providing an incentive for research and development and for creativity. It is therefore with good reason that the Court has held that the refusal to license does not of itself, in the absence of other factors, constitute an abuse. [Volvo v Veng]

AG 63. The ruling in Magill can in my view by [sic] explained by the special circumstances of that case which swung the balance in favour of an obligation to license. First, the existing products, namely individual weekly guides for each station, were inadequate, particularly when compared with the guides available to viewers in other countries. The exercise of the copyright therefore prevented a much needed new product from coming on to the market. Secondly, the provision of copyright protection for programme listings was difficult to justify in terms of rewarding or providing an incentive for creative effort. Thirdly, since the useful life of programme guides is relatively short, the exercise of the copyright provided a permanent barrier to the entry of the new product on the market. It may incidentally be noted that national rules on intellectual property themselves impose limits in certain circumstances through rules on compulsory licensing.

AG 64. While generally the exercise of intellectual property rights will restrict competition for a limited period only, a dominant undertaking's monopoly over a product, service or facility may in certain cases lead to permanent exclusion of competition on a related market. In such cases competition can be achieved only by requiring a dominant undertaking to supply the product or service or allow access to the facility. If it is so required the undertaking must however in my view be fully compensated by allowing it to allocate an appropriate proportion of its investment costs to the supply and to make an appropriate return on its investment having regard to the level of risk involved. I leave open the question whether it might in some cases be appropriate to allow the undertaking to retain its monopoly for a limited period.

AG 65. It seems to me that intervention of that kind, whether understood as an application of the essential facilities doctrine or, more traditionally, as a response to a refusal to supply goods or services, can be justified in terms of competition policy only in cases in which the dominant undertaking has a genuine stranglehold on the related market. That might be the case for example where duplication of the facility is impossible or extremely difficult owing to physical, geographical or legal constraints or is highly undesirable for reasons of public policy. It is not sufficient that the undertaking's control over a facility should give it a competitive advantage.

This passage was not endorsed or commented on by the Court in its judgment.

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Last changed by Franck at 1:00 PM on Friday 12 August 2011.

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