Abuse of dominant position is prohibited both on the basis of Section 7 of the Competition Act and Article 102 of the Treaty on the functioning of the European Union. The provisions are similar by content and interpreted in a uniform way, i.e. from the undertaking’s point of view, it makes no difference which set or rules are applied.
Under Section 4 of the Competition Act, a dominant position shall be deemed to be held by one or more business undertakings or an association of business undertakings, who, either within the entire country or within a given region, hold an exclusive right or other dominant position in a specified product market so as to significantly control the price level or terms of delivery of that product, or who, in some other corresponding manner, influence the competitive conditions on a given level of production or distribution.
A dominant position may in some instances be jointly held by more than one undertaking without any of them holding a dominant position individually. In practice, the existence of collective dominance requires that there are financial ties between the undertakings which enable them to adopt the same market behaviour and hold a dominant position in relation to other undertakings. See Case C-497/99 P, Irish Sugar v Commission ( ECR p. I-05333) and Joined cases C-395/96 P and C-396/96 P, CMB, CMBT and Dafra-Lines v Commission ( ECR p. I-1365).
A dominant position manifests itself as a de facto possibility to prevent effective competition on the market and to behave in a manner independent of competitors, customers and suppliers. A dominant undertaking does not encounter a sufficient amount of competitive pressure, and a significant amount of the market power of the undertaking is thus related to the dominant position.
Market power may be defined as the possibility of the undertaking to profitably maintain prices that are higher than the competed level, or to profitably limit production or quality below the competed level. A business undertaking may hence use its market power without directly and significantly loosing its market share to the competitors. A dominant undertaking may also harm the competitive process in other ways, for example by creating entry barriers or slowing down innovations.