ECJ rejects appeal in Slovak Telekom case

On 25 March 2021, the European Court of Justice ("ECJ") dismissed the appeal lodged by Slovak Telekom ("ST") and Deutsche Telekom ("DT") against the ruling given by the General Court ("GC") in 2018 which rejected the appeal against the Commission's decision fining both ST and DT for a margin squeeze in breach of Article 102 TFEU.

Until 2000, ST enjoyed a legal monopoly on the Slovak telecommunications market. As a result, it owned the entire Slovakian cable network (local loop). Following the adoption of Regulation (EC) No 2887/2000 on unbundled access to the local loop and Slovakia's accession to the EU, ST was required as of 2005 to unbundle its local loop to new operators and to allow new entrants to use its infrastructure.

In 2014, the Commission imposed a fine on ST (and its 51% parent company DT) for having abused its dominant position by imposing unfair terms and conditions (including unfair tariffs) regarding the access to the local loop (upstream market) thereby preventing effective competition on the downstream market (this is called a margin squeeze).

In appeal, DT argued among others that the Commission had failed to examine the essential facilities requirements set out in the ECJ's case-law (in particular the Bronner-case). According to this case-law, Article 102 TFEU considers the refusal to grant access to a service or a facility abusive, (i) if such refusal is likely to eliminate all competition on the concerned market, (ii) if such refusal is unjustified and (iii) if it concerns a service or facility that is indispensable in order to compete. This argument was rejected by the GC which ruled that the indispensability requirement of the Bronner case-law concerned the issue of access in the absence of any regulatory obligation to that end. In  this case, the mandatory access was based on Regulation (EC) No 2887/2000 on unbundled access to the local loop. There was therefore no need for the Commission to demonstrate indispensability. 

The GC's Judgment was appealed by DT and the same argument therefore had to be treated by the ECJ. The ECJ confirmed the GC's reasoning, ruling that where a dominant undertaking has given access to its networks but makes that access subject to unfair conditions, the Bronner's conditions are not relevant to determine whether the conditions of access are abusive or not.

The ECJ also dismissed DT's arguments regarding its parental liability for ST's behaviour. In particular, the ECJ ruled that it is not necessary to demonstrate that DT had actually exercised decisive influence of ST but that it is sufficient to demonstrate that it had the possibility to do so. The ECJ considered in this respect that the GC had rightly concluded that DT was in a position to possibly exercise decisive influence of ST because (i) DT held 51% of ST's capital, (ii) a manager of DT was a member of ST's board of directors, (iii) this manager audited ST's accounts with a view to their consolidation at the level of DT and (iv) this manager was involved in the development of the financial planning and the investment policy of ST, with a view to ensuring their consistency with DT's objectives and he reviewed whether ST had attained its own financial goals in each reference period.

This Judgment clearly delineates the application of the Bronner-criteria vis-à-vis possible abuses not relating to access to infrastructure. In addition, it provides another example of parental liability being based on the possibility to exercise decisive influence (similar to the control-concept in the context of merger control - see in this respect also our article on the recent Goldman Sachs case).

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