Abuse of Dominant Position

§3 of the Act prohibits the abuse of dominant position by one or more undertakings.

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Dominant Position

Dominant position or significant market power of an undertaking in a relevant market is deemed to exist if undertaking(s) (individually or collectively) can behave to an appreciable extent independently of their competitors, customers, consumers, or suppliers and when competitive constraints imposed by other firms are relatively ineffective.

Moreover, any business is presumed to be dominant if its share in the relevant market exceeds 40%. Although market share is an important consideration, this does not on its own determine whether a business is dominant. The law does not rule out dominance at lower levels of market share.

A dominant position, per se, is not prohibited under the Act as certain businesses can become market leaders because of their products and services, innovation, and astute business management.

Abuse of Dominance

One or more businesses with a dominant position will have abused their dominance (individually or collectively) if they engage in practices that prevent, restrict, reduce, or distort competition in the relevant market. Abusive practices may be categorised primarily into exploitative, exclusionary, or discriminatory abuses.

i. Exploitative abuses

Exploitative abuses are often concerned with consumer harm as they encompass practices by dominant undertaking(s) that result in direct loss of consumer welfare. Such abuses include, among other things, charging excessive prices, tie-ins and bundling of goods and/or services, selling goods or providing services conditional to purchasing other goods or services, or degrading the quality of goods or services.

ii. Exclusionary abuses

Exclusionary abuses refer to practices by dominant undertakings that harm competition by hindering their competitors’ ability to compete effectively in the market and cover behaviours affecting market structure, which ultimately harms consumers. Refusal to deal or supply, predatory pricing (setting prices below cost to drive competitors out of the market), and preventing new entry in the market are common examples of exclusionary abuses.

iii. Discriminatory practices

Discriminatory practices could be charging different prices for the same goods or services or applying dissimilar conditions to equivalent transactions with other parties that places them at a competitive disadvantage.