Monopolies

What is a monopoly?

A monopoly is a market in which a single undertaking holds 100 percent of the market share. In this sense, a monopoly is an extreme form of market dominance. The notion of dominance has been defined by the CJEU as a position of economic strength which enables the undertaking to behave in an appreciable extent independently of its competitors, customers and ultimately of its consumers (Case 27/76, United Brands v. Commission). It follows, therefore, that while the concept of dominance implies the existence of competitive forces of some degree, a pure monopolist is effectively unconstrained in limiting its output, setting its prices above the competitive level, or reducing the quality of its products.

Monopolies can be either natural or statutory. A natural monopoly emerges in a market which cannot sustain the operations of more than one undertakings on a lasting basis. A statutory monopoly, on the other hand, is conferred on a firm by means of State action. In markets where neither of these two conditions is satisfied, and in the absence of other forms of barriers to entry, the emergence of monopolies is rather unlikely, and is limited to situations where a single firm enjoys a first-mover advantage in a new market or where an undertaking is so much more efficient than its competitors that the latter are forced to exit the market. In both situations however, the monopoly’s position is likely to be short-lived, as the prospect of high profits is bound to eventually attract new entries.

Finally, a monopoly may be created through a series of mergers in a given market. Such an outcome will be prevented, however, through merger control, whereby the competition authority will block any concentration which could result in the creation or strengthening of a dominant position in that market.

Are monopolies illegal?

No. It is not illegal for an undertaking to enjoy a monopoly position in the marketplace, insofar as it does not abuse its monopoly power to the detriment of the competitive process and, ultimately, consumers. It is only such conduct that will trigger the application of Article 2 of Law 3959/2011 prohibiting the abuse of dominance. Article 2 mirrors the respective provision of Article 102 of the Treaty on the Functioning of the European Union (“TFEU”) and is interpreted in light of the European Courts’ case law.

What is the legal framework for monopolies in Greece?

The prohibition of the abuse of dominance is established by Article 2 of Law 3959/2011 on the Protection of Free Competition. This provision, modeled on Article 102 TFEU, prohibits “[a]ny abuse by one […] [undertaking] of a dominant provision within the Greek marketor part thereof”. Paragraph 2 gives examples of unlawful abuse of dominance: “Such abuse may, in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other 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, including in particular the unjustified refusal to sell, purchase or deal in any other way, thereby placing such parties 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”.

What are the types of prohibited abusive conduct?

There are two categories of prohibited abusive conduct: “exploitative” abuses and “exclusionary” abuses. Exploitative abuses allow the dominant undertaking to exploit its market power by causing direct harm on consumers. Excessive pricing is the most obvious form of exploitation. On the other hand, the concept of exclusionary abuses refers to types of conduct whereby the dominant seeks to establish and possibly extend its market power by excluding actual or potential competitors from the market. Types of conduct that can lead to anti-competitive foreclosure include predatory pricing, margin squeeze, tying and bundling, refusal to deal, single branding agreements, etc.

Does the fact that a monopoly is state-owned absolve it of antitrust liability?

No. Competition law applies to undertakings, defined by the case law of the CJEU as “any entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed” (Case C-41/90, Höfner and Elser v. Macrotron). An economic activity on the other hand is one which consists in “offering goods and services on a given market” (Case C-35/96, Commission v. Italy). This functional approach to the concept of “undertaking” entails that the mere fact that an entity is a public body or has obtained its monopoly position by statutory means does not necessarily exclude it from the scope of Article 2.

Having said that, a public entity performing acts in the exercise of official authority – which are, in this sense, non-economic in nature – does not constitute an undertaking and is therefore immune from the competition rules. The same applies to services offered on the basis of the principle of solidarity.

What is the approach taken to statutory monopolies and public undertakings in general under EU law?

The treatment under EU law of public undertakings and undertakings enjoying special or exclusive rights is regulated by Article 106 TFEU. Article 106(1) prevents Member States from enacting or maintaining in force any measures benefiting such undertakings, in breach of the Treaty provisions, including in particular the competition rules.

Article 106(2) introduces a derogation from the application of competition law to public undertakings. More specifically, Article 106(2) confirms that undertakings entrusted with the operation of services of general economic interest or having the character of a revenueproducing monopoly remain subject to the European competition rules, unless such rules have the effect of obstructing the performance of the specific tasks assigned to the aforementioned undertakings.

Finally, as far as the competitive appraisal under Article 102 TFEU of an alleged abuse is concerned, it is important to note that, in liberalized markets, the fact that a dominant undertaking is a former state-owned monopolist may also be a relevant consideration in the context of the assessment by the competition authority. As the CJEU noted in Post Denmark (Case C-209/10), when the existence of a dominant position has its origins in a former legal monopoly, that fact has to be taken into account.

What are the main duties and powers of the Hellenic Competition Commission?

The Hellenic Competition Commission is an independent authority responsible for the enforcement of Law 3959/2011 and Articles 101 and 102 TFEU. It is also authorized to prohibit any concentration which would significantly impede effective competition, in particular through the creation or strengthening of a dominant position.

In enforcing the antitrust rules prohibiting collusive agreements and the abuse of dominance, the Commission may act on its own initiative or on a complaint or upon request by the Minister of Economy. In fulfilling its mission, the Commission has broad investigative powers, allowing it to require undertakings to provide all necessary information, conduct inspections, and carry out investigations into sectors of the economy. If an infringement is established, the Commission issues a decision whereby it may, either cumulatively or alternatively: (a) address recommendations to the parties concerned; (b) require that the infringement be brought to an end; (c) impose interim measures, either behavioral or structural; (d) impose fines. Moreover, in cases where the Commission has reasons to believe\ that an infringement has been committed and the undertakings concerned offer commitments to meet the Commission’s concerns, the Commission may by decision make those commitments binding on the undertakings.

How is the effectiveness of competition in recently liberalized sectors monitored?

In the electronic communications markets and energy markets, two sectors of the economy which were until fairly recently dominated by state-owned monopolies, effective competition post-liberalization is ensured by the monitoring powers of the relevant regulatory authorities: the Hellenic Telecommunications and Post Commission and the Regulatory Authority for Energy, respectively.

The Hellenic Telecommunications and Post Commission (“EETT”) is the independent authority responsible for the supervision and regulation of the electronic communications markets and the postal services markets in Greece. By virtue of Article 12 of Law 4070/2012, EETT is entrusted with monitoring the effectiveness of competition in the relevant markets, as well as with the application of Law 3959/2011, Articles 101 and 102 TFEU and Regulation (EU) 1/2003 with regard to the activities of electronic communications enterprises. To this purpose, EETT has the power to impose the administrative sanctions provided in Law 3959/2011. In fulfilling this mission, EETT has investigative powers equivalent to those of the Hellenic Competition Commission.

In order to identify the presence of dominant (or collectively dominant) undertakings in a given market, EETT may issue a decision defining the relevant market and, subsequently, scrutinize the market with the purpose of assessing the effectiveness of competition in that market. Once the market has been found to be inadequately competitive, EETT imposes the appropriate obligations on the dominant undertaking or the jointly dominant undertakings. Already existing obligations may be maintained or amended.

As far as the energy markets are concerned, they are subject to supervision by the Regulatory Authority for Energy (“RAE”). The duties and powers of RAE are provided in Law 4001/2011, which stipulates that the agency is entrusted with monitoring the degree and effectiveness of competition in energy markets, at both wholesale and retail level. RAE has broad investigative powers. Pursuant to Article 26 of Law 4001/2011, should the investigations conducted by RAE give rise to competition concerns, RAE may recommend to the Hellenic Competition Commission that the latter take action in order to establish whether an infringement of competition law has been committed.

Finally, as far as the media sector is concerned, Article 3 of Law 3592/2007 prohibits the abuse of dominance in the relevant market, as well as any concentrations that may lead to the creation or maintenance of a dominant position. For the purposes of Law 3592/2007, a position of dominance is established where a natural or legal person’s market share exceeds 35 percent in the relevant market.

What are the sanctions for conduct that constitutes abuse of dominance?

The sanctions for breach of Greek and EU competition law are mainly administrative in nature. Once an infringement of Article 2 of Law 3959/2011 or Article 102 TFEU has been established, the Hellenic Competition Commission (or EETT) may adopt a decision requiring that the infringement be brought to an end and impose on the monopolist a fine which may not exceed 10 percent of its total turnover in the preceding business year.

Article 44(2) of Law 3959/2011 also provides for criminal penalties in case of an abuse of dominance. Any (natural) person having engaged in actions which constitute abuse of dominance faces a criminal fine between € 30,000 and 300,000. To this day, no such sanctions for a breach of the Article 2 prohibition have been imposed by criminal courts.

Is it possible for injured parties to claim compensation for a breach of Article 2 of Law 3959/2011 or Article 102 TFEU?

Yes. Law 4529/2018 transposing into Greek legislation Directive 2014/104/EU sets out the framework for antitrust damages claims, allowing every injured party to claim full compensation which includes actual loss, loss of profit and full compensation. Anyone who suffered harm may seek compensation, irrespective of whether they are direct or indirect purchasers from the infringer. Damages claims are subject to a five-year limitation period, which begins to run once the injured party has known, or can reasonably be expected to know, of the infringement, the harm caused, and the infringer’s identity. In any event, the claims are subject to a twenty-year limitation period, which begins to run after the infringement has ceased.