European Court Ruling May Reinvigorate Enforcement Against Excessive Pricing

In Short

The Ruling: The European Court of Justice recently provided widely anticipated guidance on the concept of excessive pricing, clarifying the use of key legal criteria in identifying an excessive pricing abuse under Article 102 TFEU.

The Result: The ECJ confirmed the methodology adopted by the Latvian Competition Council in a national excessive pricing case, establishing that the only condition for a finding of excessive pricing is that the rate difference must be significant and persistent.

Looking Ahead: The ruling will be of significant value in various ongoing EU and national excessive pricing investigations, and it lays the groundwork for future investigations. In September 2017, the European Court of Justice ("ECJ") issued its long-awaited preliminary ruling in case C-177/16 AKKA/LAA. The ruling provides guidance on the concept of excessive pricing and clarifies key legal criteria used to determine whether prices are "excessive." The ruling is of particular interest given the renewed attention of EU competition authorities to the issue of excessive pricing.

Under EU competition law, dominant undertakings are prohibited from charging a price that is deemed excessive. Until this ECJ ruling, EU competition law provided only vague guidance on determining whether a price is excessive. The European Commission ("EC") has appeared reluctant to open excessive pricing investigations, which could lead to its playing the role of a price regulator.

Recently, the EC appears to have changed course. In May 2017, the EC launched its first excessive pricing investigation in decades in relation to a major pharmaceutical company, Aspen Pharma. Moreover, the EU competition commissioner, Margrethe Vestager, has repeatedly hinted that the EC is considering the continued pursuit of excessive pricing allegations. National competition authorities, including the CMA (British Competition Authority) and the Italian Competition Authority, also have grown particularly active in this field.

This case relates to the Latvian Competition Council's ("LCC") finding of an abuse of dominant position by the Copyright and Communication Consulting Agency/Latvian Authors Association ("AKKA/LAA"), a collective management organization that handles copyrights for musical works. In Latvia, only AKKA/LAA is authorized to collect the fees used to remunerate Latvian and foreign copyright holders.

The LCC concluded that AKKA/LAA charged excessive fees, after comparing its...

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