Jurisprudence of the ECJ on Margin Squeeze: From Deutsche Telekom to Teliasonera and Beyond… to Telefonica!

Abstract

The latest European Court of Justice Judgment on margin squeeze, its decision on Case C-52/09, of February 2011, giving answer to a preliminary ruling from the Swedish antitrust authority –the Konkurrensverket- provides valuable clarification on one of the more controversial abuse of dominance claims. The judgment is particularly significant as it confirms a much discussed issue, that margin squeeze is a separate form of abuse in its own right, a so-called “stand alone” abuse.

In this paper we provide some background on the TeliaSonera case, and also some relevant insights on the preceding ECJ rulings on margin squeeze in regulated industries: Deutsche Telekom and France Telekom. All these rulings are examined jointly, and conclusions are drawn also regarding one pending ruling, anxiously expected by the Spanish telecom incumbent: Telefonica.

The structure in which we are going to address these issues goes as follows: after this introductory section, we deal in Section 2 with the way in which the abusive practice of margin squeeze has been treated in ECJ’s jurisprudence. It seems clear that two diverging approaches are at stake here: the one considering margin squeeze as an abuse in itself, and the one considering it only as a form of a refusal to deal. In Section 3 we provide with some insights on the TeliaSonera record, namely, the facts behind the proceedings, and the views expressed by AG Mazák in his Opinion. In the next Section the ECJ’s ruling is closely examined, focusing our analysis in the following issues: The anticompetitive effect, the “equally efficient competitor” test, and the debate about whether margin squeeze should be considered as an abusive practice in itself. Finally, in Section 5 we consider some wider implications of the TeliaSonera judgment, regarding the expected ruling on the Telefonica appeal.

Keywords: refusal to supply, margin squeeze, TeliaSonera; Bronner, Telefónica, Deutsche Telekom, abuse of dominance, essential facilities

JEL Classification: K21, K23, K42, L41, L43