Belgian rules on abuse of economic dependence enter into force
Belgian rules on abuse of economic dependence will enter into force on 22 August 2020 following publication of Royal Decree.
As a result of the official publication of the Royal Decree of 31 July 2020 (Belgian State Gazette, 12 August 2020), the prohibition to abuse economic dependence will apply as from 22 August 2020.
Belgian Parliament already adopted the new provisions on 21 March 2019 - see our article of 29 March 2019. The new prohibition is part of the Belgian Competition Act, which now contains three anti-trust prohibitions, ie the new prohibition to abuse economic dependence in addition to the existing prohibitions on anti-competitive agreements and abuse of a dominant position.
The new prohibition is a novelty under Belgian law and is rather unusual in mainstream competition laws, notable exceptions being Germany and France. The new rules will apply to conduct taking place as from 22 August 2020. For the prohibition to apply, the three following conditions have to be met.
The existence of economic dependence
The law defines 'economic dependence' as a position of subjection of an undertaking towards one or more other undertakings which is characterised by the absence of a reasonably equivalent alternative available within a reasonable time limit, on reasonable terms and at reasonable cost, enabling the latter undertaking(s) to impose services or conditions which could not be obtained under normal market circumstances.
It concerns a relative dominance vis-à-vis suppliers and/or customers - irrespective of whether these are SMEs or not - as opposed to a dominant position which affects the market as a whole.
The existence of an economic dependence will be assessed in concreto, taking into account specific business relations and the overall context. Several elements can be relevant in this respect, such as the comparison of market shares with those of the customer/supplier concerned, the importance of the share of turnover (for suppliers) or of costs (for customers), know-how/technology owned, reputation, scarcity of the product and its perishable nature, customer loyalty, access to resources and essential infrastructure, fear of serious economic disadvantage or retributions, unusual commercial conditions (eg discounts that are not granted to other suppliers), the possibility for suppliers/customers to switch, etc.
Economic dependence out of own choice (eg as a result of an exclusivity clause) is, however, excluded.
The abuse of this economic dependence
The abuse of economic dependence can be expected to be interpreted in the same way as the abuse of a dominant position. Considering that the concept relates to economic dependence, it can be expected that it will mainly concern so-called exploitative abuses (eg excessive prices).
However, in principle, the new prohibition also covers exclusionary abuses (eg an online platform imposing loyalty obligations upon its users). In our view, this implies the possibility for actions by third parties, eg competitors complaining about the behaviour of the undertaking in an economically strong position (in the above example competing platform providers claiming that an online platform commits an abuse of economic dependence).
An actual or potential effect on competition in Belgium or a substantial part thereof
The new provision requires a (potential) anticompetitive effect. This may reintroduce an element of market assessment (definition of the market, market shares, etc.) which is characteristic for the assessment of abuse of dominance.
Enforcement
As is the case with the two existing prohibitions, the new prohibition can be enforced by the Belgian Competition Authority and by courts. All the usual antitrust enforcement powers of the Belgian Competition Authority equally apply in this new area of enforcement, ie it can conduct investigations, on its own initiative or on the basis of a complaint, it has extensive search powers (requests for information and/or dawn raids), can impose fines (of no more than 2% of the consolidated turnover of the undertaking that has committed the abuse), there is the option of settlement, the possibility of preliminary measures, etc. Appeals against the decisions of the Belgian Competition Authority come before the Brussels Market Court.
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