Refusal to Deal within EU Competition Law

Liyang Hou*

[Abstract] Refusal to deal is in principle not prohibited under the EU competition law. Only
in exceptional circumstances dominant undertaking would be charged with an obligation to
deal with a client. In order to approach the analytical framework for refusal to deal in the EU,
this article investigates in total 21 cases of refusal to deal taking place at the European level,
from the earliest Case Commercial Solvents to the latest Case Microsoft. Those cases are first
divided into five groups: (1) refusal to deal with non-competitors while serving others; (2)
refusal to deal with competitors while serving others; (3) discontinuing the supply to all third
parties; (4) refusal to deal a product/service that is always reserved for own use; and (4)
refusal to grant IP licenses. With the examination of every cases in each group, it is found that,
first, the approaches remain the same for the first and the second group of cases; secondly, the
analyses are also equivalent for the third and fourth group of cases, though a difference may
exist as to defining the requested product as a separate market; and thirdly, the last group
cases are dealt with under a different framework which nevertheless contains many
inconsistencies. In the end, a general approach to analysing refusal-to-deal cases is provided.
[Keywords] Refusal to Deal, Essential Facilities, Abuse of a Dominance Position, EU
Competition Law

1. Introduction
This article defines refusal to deal as one undertaking denies supplying another undertaking
with its product or service. It includes not only blatant refusal, but also subtle refusal which
conditions the supply on unreasonable conditions, such as unacceptably high prices. Moreover,
it comprises both discriminatory refusal to deal (some undertakings are supplied and some are
not to deal) and non-discriminatory refusal to deal (no third parties are supplied).
Consequently, this definition is slightly broader than refusal to deal in relation to essential
facilities discussed in other literatures.1
Since competition law enshrines free competition that is then nourished significantly under
two principles, i.e. freedom of contract and exclusivity of ownership, refusal to deal, even if it
is an act of a dominant undertaking, is in general compatible with competition law.
Nevertheless, it is undeniable that refusal to deal may be misused by dominant undertakings
to pursue unjustified competitive advantages. Therefore, in all jurisdictions a certain extent of
exception is always given to competition authorities to oblige dominant undertakings to
satisfy denied requests. This article attempts to examine the related practice in the field of EU
competition law, more specifically Article 102.

Legal researcher and PhD candidate at the Interdisciplinary Centre for Law and ICT, Katholieke Universiteit
Leuven, Belgium. ICRI is part of the Interdisciplinary Institute for Broadband Technology.
1
See, for example, Temple Lang, J. (2000). "The Principle of Essential Facilities in European Community
Competition Law The Position Since Bronner." Journal of Network Industries 1: 375-405.

Electronic copy available at: http://ssrn.com/abstract=1623784

Before exploring the EU experience, a preliminary analysis is carried out in order to speculate
the possible approach concerning refusal to deal. Two possible thoughts are presumed. First,
it is likely more difficult to require a dominant undertaking to supply others with a
product/service reserved for own use than one already available on the market. Requiring a
dominant undertaking to externalise a reserved product alters not only that undertakings
commercial policy but also the current market structure (by generating a new market), and
thus may cause unexpected regulatory failure. By contrast, the same decision would affect to
a lesser extent markets where the refused product is already provided to others. Consequently,
it is likely that obliging to supply a product/service that is intended for internal use should be
subject to stricter rules than compulsory provision of a product/service that is already on the
market. Secondly, it is also likely more burdensome for an undertaking to be obliged to serve
a competitor than a non-competitor. Competition means to diminish competitors, and there
accordingly should be no obligation to subsidise competitors. In comparison, supplying a noncompetitor normally does not affect the market position of dominant undertakings. Therefore,
the rules to oblige an undertaking to supply its competitors are anticipated stricter than those
related to non-competitors.
Base on the first speculation, cases of refusal to deal can be broken up into two general groups:
(i) refusal to supply a product/service available on the market, (ii) refusal to supply a
product/service unavailable on the market. When the second speculation is taken into account,
the first group can be further divided into (1) refusal to supply non-competitors with a
product/service available on the market and (2) refusal to supply competitors with a
product/service available on the market. The second speculation does not really apply to the
second group of cases since externalising a product/service reserved for internal use would
usually turn the requestor into an actual or potential competitor. However, it can be conceived
that the unavailability may be caused by two reasons: first, a dominant undertaking decides to
discontinue the supply of a product in order to reserve it for own use; and secondly, a
dominant undertaking has never externalised a product/service. Consequently, the second
group may include two sub-groups: (1) discontinue the supply to third parties, and (2) refusal
to supply a product/service that has never been available on the market. In addition, an
additional sub-group can also be separated when intellectual properties (IP) license becomes
the subject matter due to a fact the European authorities treat intellectual property different
from tangible properties. Consequently, there are in total five groups of refusal to deal:
(1) refusal to supply non-competitors with a product/service available on the market;
(2) refusal to supply competitors with a product/service available on the market;
(3) discontinue to supply third parties;
(4) refusal to supply a product/service that has never been available on the market; and
(5) refusal to grant IP license.
The article examines in total twenty-one cases, including judgements of the European court
and/or decisions of the Commission, of refusal to deal. All of those cases are classified into
the above five groups. The subsequent five parts are dedicated to the five groups of cases
respectively. Cases will be discussed first individually, and then collectively with others in the
same group, with a purpose to identify the common practice for that group as a whole. There
are in average four cases elaborated in every category. With the discussion progressing from
one group to another, comparison with practice in previous group(s) will be made at the end

Electronic copy available at: http://ssrn.com/abstract=1623784

of every part. If no difference will be discovered between those groups, the groups concerned
will be merged. The last part first revisits those newly merged categories, and then proposes a
generic analytical framework for all cases of refusal to deal.
2. The first group: refusal to supply non-competitors with a product/service available on
the market
In this scenario, the refused undertaking and the requested dominant undertaking have a
simple client/seller relationship. It usually happens to wholesalers and retailers. Since there is
in general no conflict of interest with a simple client/seller model, a dominant supplier usually
has no incentive to decline the request of some clients in this case. An obvious deterrent is the
decrease of sales. Nevertheless, the dominant undertakings in certain circumstances may be
reluctant to supply its clients. Sometimes the refusal may be based on legitimate reasons, for
example excluding unqualified distributors. Nevertheless, in other cases it can be used to
abuse a dominant position, for example to exclude a client that has a connection with its
competitors. While the former may generate consumer welfare, the latter can stifle
competition and thus raise competition concerns.
Since the dominant undertaking in this scenario is still supplying others at the same time, the
refuse is a prima facie case of discrimination. Article 102 explicitly prohibits dominant
undertakings from applying dissimilar conditions to equivalent transactions with other trading
parties, thereby placing the latter at a competitive disadvantage. Nevertheless, that provision
is not lack of ambiguities. Two of them are of particularly relevance here. First, it is not very
clear what is meant by placing the latter at a competitive disadvantage. It may be
interpreted as resulting into damages. However, a further question is the extent of those
damages. Secondly, although the wording of Article 102 does not equip the defendant with
the right to provide justification, it is widely recognised that Article 102 is not per se but rule
of reason. Accordingly, what are the legitimate justifications that can be provided by that
dominant undertaking? Hereinafter three cases will be explored in order to seek for answers
from the European authorities.
2.1 Case United Brands
The first case here confronted by the ECJ is United Brands2 in 1978. It concerned a dominant
banana wholesaler, United Brands Continentaal (UBC), which decided to discontinue the
supply to a long-standing retailer, Olesen, in Denmark. One of the reasons was that Olesen
was also an exclusive distributor of UBCs competitor and took part in an advertising
campaign for the latter in Denmark. This refusal resulted into substantial damage on Olesen
that, for example, lost one significant customer that accounted for 50% of its sales.3 In view of
this, the ECJ established its seminal statement to qualify this type of refusal to deal that
an undertaking in a dominant position for the purpose of marketing a product []
cannot stop supplying a long-standing customer who abides by regular commercial
practice, if the orders placed by that customer are in no way out of the ordinary4 []
since the refusal to sell would limit markets to the prejudice of consumers and would

Case C-27/76, United Brands vs Commission [1978] ECR 207, [1978] 1 CMLR 429.
Ibid, para.166.
4
Ibid, para.182.
3

amount to discrimination which might in the end eliminate a trading party from the
relevant market.5
According to this statement, it is obvious that UBCs refusal was an abuse of a dominant
position.
Subsequently, the ECJ went directly to examine whether there was justification for the refusal.
UBC claimed that the refusal was to protect its commercial interests. Nevertheless, the ECJ
held that that although a refusal to deal may be justified as a response to protect its
commercial interests if they are under attack, such behaviour could not be countenanced if its
actual purpose was to strengthen the dominant position and abuse it;6 and that it must be
proportionate to the threat taking into account the economic strength of the undertakings
confronting each other.7 In this case the discontinuance of supply was not appropriate since it
could discourage other downstream operators from supporting the advertising of other brand
names and that the deterrent effect of the sanction imposed upon one of them would
effectively strengthen its market position on the relevant market.8
2.2 Case GSK AEVE
In Case United Brands the ECJ implied that a dominant supplier could refuse to meet the
orders placed by its long-standing customer that were out of the ordinary.9 Nevertheless, it did
not define the out of ordinary orders. In a more recent setting in 2008 the ECJ revisited that
term in Case GSK AEVE.10
The defendant, GSK AEVE, held the exclusive rights to market several medicinal products in
Greece. The refused undertakings were all contractual retailers of GSK AEVE for a number
of years. In 2000, GSK AEVE decided to significantly reduce the amount supplied to those
clients. One of the main reasons was that the defendant believed that a substantial part of the
orders of its clients were in fact used for parallel trade to Member States where there were
higher prices than those in Greece; and this cutting off of orders was intended to prevent
parallel exporting. Although the judgement does not mention how much damage received by
each of those clients, the significant reduction in meeting orders must have resulted into
considerable damage. With regard to the question whether the reduction is abusive, the ECJ
repeated its statement in Case United Brands that a dominant undertaking could not stop
supplying a long-standing customer, unless the orders placed by that customer are out of the
ordinary. Most importantly, it suggested that out of ordinary orders could be the cases
where

Ibid, para.183.
Ibid, para.189
7
Ibid, para.190.
8
Ibid, para.192.
9
Ibid, para.182.
10
Jointed Cases C-468-478/06, Sot. Lelos kai Sia EE and others vs. GSK AEVE, 16 September 2008, ECR [2008]
I-7139. As a matter of fact, this case was already reviewed by the ECJ earlier in 2005 in Case Syfait and other. In
that case, the ECJ nevertheless did not admit its jurisdiction because it was a preliminary ruling raised by Greek
competition authority and the ECJ maintained that a preliminary ruling can only be relied upon by national
judicial systems and therefore did not judge on the merits. However, it may be interesting to see that in this case
Advocate General Jacobs gave a favourite opinion to GSK AEVE, which is exactly opposite to the ECJs
judgement in the case discussed in the main text. See, Case C-53/03, Syfait and others vs. GSK AEVE, 31 May
2005, Rec.2005,p.I-4609.
6

in a given Member State, if certain wholesalers order from that producer medicines
in quantities which are out of all proportion to those previously sold by the same
wholesalers to meet the needs of the market in that Member State.11
Subsequently, the court rejected the prevention of parallel trade as an objective justification
for the refusal.12 Since GSK AEVE could not justify the refusal to deal, its behaviour was
considered abusive.
2.3 Case BP
The two cases in the above only comment on the interest of long-standing customers, and
envisage that a dominant undertaking is not allowed to stop supplying its long-standing
customers without justification. Then, a question can be raised on the situation of an
occasional customer in similar cases. This question had to be decided by the court in Case
BP.13
This case took place between an oil wholesaler and a retailer in the oil crisis in 1970s. Due to
shortage of oil, BP (Benzine en Petroleum handelsmaatschappij, British Petroleum
Raffinaderij Nederland and British Petroleum Maatschappij Nederland) substantially reduced
the supply to one of its clients, ABG (Aardolie Belangen Gemeenschap), while other clients
supplies were guaranteed. It should be noted that although ABG suffered considerable
damage by this refusal it did overcome the crisis by obtaining supplies, though limited, from
other suppliers.14 Accordingly, the subject matter of this case is whether an undertaking can
refuse to supply part of its clients in order to guarantee the supply of others in a period of
shortage. This case was first investigated by the Commission and then appealed to the ECJ.
The Commission in its decision alleged that it was an abuse of dominant position since
within the meaning of article 86 (now Article 102) of the treaty an (dominant) undertaking in
such a position must distribute fairly the quantities available amongst all its customers.15
However, in the appeal the ECJ held that a distinction could be made between occasional
customers and contractual customers, and a preferential treatment over the latter in such a
shortage may be justified.16 As ABG was an occasional customer, it could not accuse BP of
applying during the crisis less favourable treatment than what were reserved for long-standing
customers.
2.4 Review
All the aforementioned cases indicate a clear attitude of the European authorities that, unless
it is justified, a dominant undertaking should not refuse to supply part of its existing clients
who are not competitors. In particular, dominant undertakings should particularly protect the
interest of long-standing customers. A prime facie case of abusing dominant position can be
demonstrated once a refusal to deal of this kind results into substantial damage to those clients.
It should be noted that there is no need of eliminating all competition from refused
undertakings. For example, in Case United Brands the refused client, though suffering
11

Ibid, para.76.
Case GSK AEVE, ibid, para.57.
13
Case 77/77, Benzine en Petroleum Handelsmaatschappij BV and others v Commission of the European
Communities, 29 June 1978, ECR 1513.
14
Ibid, para.42.
15
Ibid, para.21.
16
Ibid, para.32.
12

considerably from the refusal, could indeed get supply from the competitor of United Brands.
It is the case in BP.
Subsequently, with regard to the justifications the ECJ made three implications. First, a
dominant undertaking may refuse an order that is out of ordinary. Secondly, it may also refuse
to deal with an occasional customer in order to secure the supply for its long-standing
customers in case of a shortage. Last but not least, the ECJ also implies that a refusal to deal
may be justified as a response to protect its commercial interests under attack, which
nevertheless must be proportionate. This point has not been fully developed by the European
authority. However, it has been held that it is not appropriate for a dominant operator to cut
off the supply to its long-standing customers simply because the latter have a connection with
a competitor, or for the reason of preventing parallel trade.
In addition, all those three cases concerned only refusal to deal with existing customers, with
no regard to new customers. Can new customers obtain similar treatment as existing
customers? The answer in principle should be affirmative because Article 102 does not make
a distinction between new customers and existing customers.17 Nevertheless, since the ECJ
has established that a preferential treatment could be given to long-standing customers in case
of shortage, it may be argued that a dominant undertaking can refuse to supply new customers
in order to guarantee the interests of existing customers, including both land-standing
customer and occasional ones, if their interest will be harmed by fulfilling the request of new
customers, for example in case of shortage.
3. The second group: refusal to supply competitors with a product/service available on
the market
While it is easy to conclude that a dominant undertaking should not, without justification,
disrupt the supply for a long-standing customer that is not a competitor, it seems difficult to
reach the same conclusion when a customer is at the same time a competitor on the other
market(s). It is difficult to imagine that a reasonable dominant undertaking would reverse its
hostile attitude to an opponent on a competing market when the two sit together on another
non-competing market. Cases of this group share such a common fact that the dominant
undertaking refuses to supply a competitor while it is still serving others. Since there are still
other clients being served, it is also a prima facie case of discrimination. The following
paragraphs examine four cases. Since this scenario involves a prima facie case of
discrimination, the discussion of those cases also pinpoints two issues: (i) the extent of
damage and (ii) justifications. At the end of discussion, a comparison will be made with the
first group of cases.
3.1 Case BBI/B&H
This case was an order of interim measure taken by the Commission in 1987.18 B&H (Boosey
& Hawkes) was a dominant undertaking to manufacture and sell British-style brass band
instruments. BBI was a new competitor of B&H on that market, and was co-founded by two
other companies, GHH and RCN. The former was a major retailer of B&H (70% sales were
B&Hs products) and the latter was a repairer of brass band instruments, including B&Hs
products. Both were clients of B&H. After having been aware of the fact that GHH and RCN
17

This view is held by other scholars. See, Romano Subiotto, Defining the scope of the duty of dominant firms to
deal with existing customers under Article 82 EC, E.C.L.R. 2003, 24(12), 683-694.
18
87/500/EEC: Commission Decision of 29 July 1987 relating to a proceeding under Article 86 of the EEC
Treaty (IV/32.279 - BBI/Boosey & Hawkes: Interim measures), OJ L 286/36, 09/10/1987.

were the parent companies of BBI, B&H disrupted the supply of its products and spare parts
to the two clients. Furthermore, B&H apparently had no intention to reserve the resale and
repairing service to itself. The Commission referred to the statement of the ECJ in Case
United Brands that refusal of supplies by a dominant producer to an established customer
without objective justification may constitute an abuse under Article 102. After finding there
was a substantial likelihood of their (GHH and RCN) going out of business as a result of the
withholding of supplies,19 the Commission came to a conclusion that the disruption was an
abuse of dominant position.
With regard to justifications, the Commission acknowledged that a dominant undertaking may
take reasonable steps to protect its commercial interests under threat. In particular, in cases
where a customer transfers its central activity to the promotion of a competing brand, a
dominant producer is entitled to review its commercial relations with that customer and on
giving adequate notice terminate any special relationship. Nevertheless, the Commission
maintained that
[t]he fact that a customer of a dominant producer becomes associated with a
competitor or a potential competitor of that manufacturer does not normally entitle the
dominant producer to withdraw all supplies immediately or to take reprisals against
that customer.20
Since an immediate disruption of supply is not proportionate, the Commission required B&H
to meet any reasonable order placed by GHH and RCN.
3.2 Case London European/Sabena
The second case, Case London European/Sabena, was also decided by the Commission.21
Sabena was the former Belgian flag carrier, and at the same time it owned the Saphir system
which streamlined the procedure of travel agents to consult flight schedules, fares and seat
availability of airlines included in the system, and to make reservations. 22 Sabena was
dominant on the market related to the Saphir system. 23 London European, a company
operating flights between Luton and Brussels and Luton and Amsterdam, requested to have
access to the Saphir system. London European was a potential competitor of Sabena that
operated flights between Brussels and London. As a matter of fact, Sabenas London airports
were only about 50 kilometres away from Luton, and London Europeans fares ex Belgium
were half those of Sabena. Being concerned with the competition exerted by London
European on traffic ex Belgium,24 Sabena proposed not to grant access to London European,
unless the latter would fix a higher level of fares or delegate the ground handling contract for
aircraft to Sabena.25 It is not very clear the extent of damages received by London European
after this refusal because, on the one hand, it was a new customer, and on the other hand,
there were five other equivalent systems on the relevant market that in total accounted for
55% market shares.26 In addition, similar as the first case, Sabena still served other clients.
19

Ibid, para.19.
Ibid.
21
88/589/EEC: Commission Decision of 4 November 1988 relating to a proceeding under Article 86 of the EEC
Treaty (IV/32.318, London European - Sabena), OJ L 317/47, 24/11/1988.
22
Ibid, para 6.
23
Ibid, para 24.
24
Ibid, para 9.
25
Ibid, para.29-31.
26
Ibid, para.24.
20

The analysis of the Commission focused on those two additional conditions added by Sabena.
Neither was considered by the Commission as justifiable.27 The refusal to deal was thus an
abuse of dominant position and the Commission ordered Sabena to grant London European
access to the Saphir system.
3.3 Case British Midland
Four year later Case British Midland, also taking place in the airline sector, was sent to the
Commission. 28 British Midland was a newcomer in the airline sector and operated flights
between within the United Kingdom and to the neighbouring Member States. The opposite
party, Aer Lingus, was the national airline of Ireland. The two companies were competitors on
the London-Dublin route where Aer Lingus was dominant. The service requested by British
Midland and refused by Aer Lingus was interlinking, which was a reciprocal agreement
concluded between airline companies and allowed clients of one airline company to enjoy the
service of partner airline companies.
It is also difficult to determine the damage suffered by British Midland since on the one hand
it was a new client and on the other hand it even obtained a significant market share after the
refusal. However, the Commission suggested that if Aer Lingus had continued to accept
interlining British Midland would have done better.29
The Commission found that interlinking had become accepted industry practice between all
airline companies, and that it hardly refused requests of interlinking, with the exception where
currency convertibility or the financial stability of the requester could not be assured.30 Aer
Lingus held interlinking agreements with other airline companies. In view of all the benefits
of interlinking, the Commission considered that this refusal to deal was an unusual move, and
thus constituted a prima facie case of abusing dominant position. 31 With regard to
justifications, it is of surprise to notice that the Commission did not accept the argument of
Aer Lingus that interlining with British Midland would make itself losing market shares.
Furthermore, the Commission affirmed that the only purpose of this refusal to deal was to
restrict competition on the relevant market, and therefore it was an abuse of dominant
position.32 Aer Lingus was in the end required to grant British Midland interlinking for two
years.
3.4 Case Clearstream
The fourth case, Case Clearstream appearing in the security sector, was first brought before
the Commission33 in 2004 and then reviewed by the General Court (GC, formerly Court of
First Instance) in 200934. This case involved two company groups, the Clearstream Group and
the Euroclear Group. Both of them provided clearing, settlement and custody services in
relation to securities. One subsidiary of the Clearstream Group, Clearstream Banking AG
(CBF), was super-dominant in Germany in providing clearing and settlement services.
27

Ibid, para.34
92/213/EEC: Commission Decision of 26 February 1992 relating to a procedure pursuant to Articles 85 and 86
of the EEC Treaty (IV/33.544, British Midland v. Aer Lingus), OJ L 096/34, 10/04/1992.
29
Ibid, para.29.
30
Ibid, para.3.
31
Ibid, para.25.
32
Ibid, para.32.
33
Commission Decision relating to a proceeding under Article 82 of the EC Treaty (Case COMP/38.096
Clearstream), 2 June 2004.
34
Case T-301/04, Clearstream vs. Commission, Judgment of 09/09/2009, not yet reported.
28

Euroclear Bank (EB), a subsidiary of Euroclear Group, sent several requests to CBF for
obtaining those services, which were either refused, or substantially delayed compared with
other comparable customers in equivalent situations. One of the main reasons for the refusal
and the delay disclosed in the judgement was that Euroclear France, another subsidiary of the
Euroclear Group, rejected CBFs request for similar services, and CBF now took revenge.35
The damage caused by this refusal was not particularly analysed. Nevertheless, it must be
substantial as EB could not enter the market without obtaining the requested service. However,
it should be noted that there was no absolute elimination of competition from EB. As a matter
of fact, there were alternatives to CBFs services that accounted for 10% of all transactions.36
Furthermore, at the same time CBF was still accepting new clients.
In the judgment, the GC referred to the ECJs argument in Case United Brands that a
dominant undertaking was allowed to take reasonable step to protect their interests when
under attack, so long as the purpose was not to strengthen the dominant position and thereby
abuse it.37 Subsequently, it added that
in specific circumstances, undertakings in a dominant position may be deprived of the
right to adopt a course of conduct or take measures which are not in themselves abuses
and which would even be unobjectionable if adopted or taken by non-dominant
undertakings.38
Consequently, the GC held that CBF, as a dominant undertaking, could not justify the refusal
to deal with EB by invoking the rejection of its request to Euroclear France, and accordingly it
abused its dominant position.
3.5 Comparison with the first group cases
In conclusion, the examination of the four cases suggests that the analysis of refusal to supply
competitors with products/services already available to others is comparable to the refusal to
deal with non-competitors.
The most direct evidence is that United Brand, a case in the first group, was frequently quoted
in the second group of cases. Moreover, similarity also exists in three other aspects. First, the
cases of the second group cover both new customs and existing customers. Preferential
treatment is not found to give to any of them. It corresponds to the conclusion made in the
second part that Article 102 does not differentiate existing customers from new customers.
Secondly, there is no requirement to eliminate all competition from the refused undertakings
in order for the refusal to be abusive, albeit that the refusal indeed places those undertakings
under competitive disadvantages. For example, in Case B&H the two refused client could get
supply from their co-founded undertaking, BBI, or from other competitors. In Case Sabena,
there were five other alternative products that in total had 55% market shares. In Case British
Midland, the refused undertaking even won significant market shares after being refused to
deal. In Case Clearstream, there were alternative sources for the requested undertakings
service. This does not either present any difference from the conclusion in the last part.
Thirdly, the judgements in the first group, in particular United Brands, were frequent quoted

35

Ibid, para.84.
Ibid, para.18.
37
Ibid, para.132.
38
Ibid, para.134.
36

and relied upon in cases of this part. Since no heterogeneity is observed, the two groups of
cases can be merged.
Consequently, the European authorities deal with all cases of refusal to supply a
product/service that is provided to others at the same time under the non-discrimination
provision of Article 102. Apart from identifying the existence of equivalent transactions on
the relevant market, two conditions are particularly relevant. First, the refusal to deal has
resulted into substantial damage to the refused party. Nevertheless, there is no requirement of
eliminating all competition. Secondly, there are no objective justifications for the refusal. The
authorities in principle do not differentiate new customers from existing customers, though a
refusal to deal with new customers or occasional customers may be justified to protect the
interests of long-standing customers in case of shortage of supply. Neither do they make a
distinction between pure customers and customers that may compete on another market
(competitors).
4. The third group: discontinuing supply to all third parties
In this group of cases, a dominant undertaking withdraws all the external supply in order to
reserve the downstream market to itself. Those cases are not comparable with previous cases
in that disrupting the supply to all external clients implies no discrimination among third
parties. Moreover, this move represents a vertical integration of dominant undertakings. An
absolute prohibition against dominant undertakings from making a vertical integration seems
at odds with free competition. Nevertheless, it may also be abused to foreclose markets. This
part explores four cases in order to examine how the European authorities have weighed the
balance and obliged that dominant undertaking to resume disrupted supply.
4.1 Case Commercial Solvents
The groundbreaking case was Case Commercial Solvents. 39 Commercial Solvents was a
quasi-monopoly in the market for aminobutanol that was purchased by Zoja as a raw material
for the manufacture of ethambutol. At the beginning of 1970, Commercial Solvents decided to
restructure itself as a manufacturer of finished products. In order to facilitate its own access to
the markets for derivatives, it immediately disrupted almost all the previous supply to third
parties.
Based on those facts, the ECJ delivered its seminal interpretation concerning Article 102 that
an undertaking which has a dominant position in the market in raw materials and
which, with the object of reserving such raw material for manufacturing its own
derivatives, refuses to supply a customer, which is itself a manufacturer of these
derivatives, and therefore risks eliminating all competition on the part of this customer,
is abusing its dominant position.40
Accordingly, two conditions may be fulfilled in order to panelise abusive discontinuance of
supply: (1) the requested product is raw material and (2) the refusal risks eliminating all
competition from the request parties. In addition, a third condition can also be observed that,
as a general principle of Article 102, the dominant undertaking in question should be allowed

39

Jointed Cases C-6-7/73, Istituto Chemioterapico Italiano S.p.A. and Commercial Solvents Corporation v
Commission of the European Communities, [1974] ECR 223.
40
ibid, para.25.

to justify its refusal. Since Commercial Solvents could not provide any valid justification, its
refusal to deal was considered abusive.
4.2 Case Telemarketing
The second and also equally important case was Case Telemarketing. 41 This was a
preliminary ruling case asked by a Belgian court to the ECJ. The main proceeding took place
between Compagnie Luxembourgeoise and Centre Belge. The former run the RTL television
station and was a statute monopoly for TV advertisement. Centre Belge bought advertising
minutes to provide the then pioneer telemarketing service. After maintaining contracts for
about two years, Compagnie Luxembourgeoise decided to reserve all TV advertisement for its
own. Therefore, it was reluctant to renew the contract unless Centre Belge accepted to put into
its telemarketing the telephone number of Information Publicite, RTLs exclusive advertising
agent. Here comes out the core of the dispute whether it constituted an abuse of a dominant
position if a dominant undertaking reserved to itself or for a subsidiary under its control, in
order to exclude any other undertakings, an ancillary activity which could be carried out by a
third undertaking.
The ECJ first referred to the three conditions established in Case Commercial Solvents, i.e. (i)
raw material, (ii) eliminating all competition and (iii) objective justification. More importantly,
raw material was for the first time developed into a product/service which is indispensible
for the activities of another undertaking on another market. It is worth noting that in this case
the court explicitly required to define two separate markets for the indispensability test: one
market for the requested product/service (hereinafter: primary market) and the other market
for the business of the refused undertaking (derivative, or secondary, market). The primary
product is indispensible to the derivative product. In fact Case Commercial Solvents already
implied the concept of two markets, i.e. raw material and its derivatives. Nevertheless, that
court did not make it clear that the raw material and its derivatives must be on two separate
markets.
Subsequently, the ECJ observed that telemarketing activities constituted a separate market
from TV broadcasting, and the latter was indispensible to the former. Moreover, since the
telemarketing activities mainly consisted in making available telephone lines, it amounted in
practice to a refusal to supply to subject to the sale of broadcasting time to the condition of
using the telephone line of an exclusive subsidiary. There was no other substitute due to the
monopoly held by the requested undertaking.42 It was therefore of little doubt that that refusal
could eliminate all the competition from the requested undertaking. With regard to
justification, the ECJ admitted that a refusal to deal could be justified by technical or
commercial requirements relating to the nature of the service provided. However, that did not
appear in the present case. Since the purpose of that refusal could only be to exclude the
refused undertaking,43 it was an abuse of a dominant position.
4.3 Case Filtrona /Tabacalera

41

Case 311/84, Centre belge d'tudes de march - Tlmarketing (CBEM) v SA Compagnie luxembourgeoise de
tldiffusion (CLT) and Information publicit Benelux (IPB), [1985] ECR 3261.
42
Although there are several French channels that could be received in Belgium, their aimed rarely or not at all
at the Belgian public. ibid, para.6.
43
ibid, para.26.

In Case Filtrona/Tabacalera, 44 Tabacalera was the tobacco monopoly in Spain. The

derivative product in this case was ordinary cigarette filters. Tabacalera used to outsource
56% of its needs on ordinary cigarette filters to third parties, such as Filtrona. The dispute was
raised after Tabacalera decided to increase its own production to 100% of its own
requirements, thus stopping the outsourcing. Filtrona brought the case before the Commission
and accused Tabacalera of abusing its dominant position. The Commission pointed out that a
companys production of its own requirements is not in itself an abnormal act of competition.
Accordingly, only under exceptional circumstances a company could be obliged to outsource
its requirements. Although the Commission did not explicitly refer to Case Commercial
Solvents or Case Telemarketing, it examined whether Tabacalera was indispensible to Filtrona.
The conclusion was negative because Filtrona also exported its filters to other markets and
could also change its production from ordinary filters to special filters. Consequently, the
Commission rejected the complaint.
4.4 Case Liptons/Hugin
Case Liptons/Hugin45 concerned a manufacturer of cash registers, Hugin, which refused to
supply spare parts (the primary product) to all clients, including Liptons, on the market for
maintaining and repairing its cash registers (the secondary product) in order to foreclose the
latter market. The Commission considered Hugins leveraging behaviour as an abuse of its
dominant position because, first, Hugin was a monopoly in supplying spare parts for its cash
registers; secondly, spare parts were indispensible for the maintenance and repair services as
spare parts between different brands were not compatible; thirdly, it would eliminate all
competition from Liptons; and fourthly, there were no justifications. The ECJ agreed with the
Commission on the monopoly position of Hugin over its spare parts due to the
indispensability between cash registers and the spare part, despite that the primary market for
cash registers was competitive. However, the ECJ finally overruled the Commission decision
due to lack of Community jurisdiction. 46 Thus, it did not judge on the Commissions
qualification of abusive refusal to deal.
4.5 Conclusions
The above cases manifest the different approaches between cases of discontinuing supply to
all third parties and cases of refusal to supply part of clients. In the latter scenario, there is no
requirement of indispensability; neither is the requirement of eliminating all competition from
the refused undertakings. Nevertheless, in the current type of refusal to deal, two
products/services should be first differentiated: one is the requested product/service (the
primary product) and the other is the product/service provided by the refused undertaking (the
derivative product). The requested undertaking must be dominant on the primary
products/services. In order for the refusal to be abusive, the primary product/service must be
indispensible to the secondary or derivative product/service. Furthermore, the refusal to deal
must be able to eliminate all the competition from the requesting company.47 In addition, once
the two conditions have been fulfilled, the dominant undertaking in question should bear the
44

Commission 19th Report on Competition Policy, 1990, pp.77.

Case 22/78, Hugin Kassaregister AB and Hugin Cash Registers Ltd v Commission of the European
Communities, [1979] ECR 1869.
46
Ibid, para.19. The main reason was that the centre of Liptions activities was in London region, which did not
suffice the behaviour of Hugin to affect trade between Member States.
47
In practice, it is very difficult to differentiate the indispensability test from the test of eliminating all
competition. Therefore, some scholar claimed that they are the same analysis. However, this argument is never
confirmed by any European authorities. See,
45

burden of proof to justify the discontinuance of supply. The European authorities have
elaborated little on possible justifications. Only Case Telemarketing implies that the
reservation could be justified by technical or commercial requirements relating to the nature
of the primary service provided. However, it may be in practice difficult, if not possible, to
prove the existence of technical or commercial obstacles when the products/services have
been provided to others for long time, unless the dominant undertaking lately dramatically
changed the technology to deliver the service concerned.
5. The fourth group: refusal to supply a product/service that has never been available on
the market
The requested products/services, or the primary product, in this scenario is different from
those in previous cases. In this scenario, the requested undertaking has always reserved the
requested market to itself. Since the European authorities differentiate tangible properties
from intellectual properties, abusive refusal to supply (more accurately, license) IP rights is
subject to different rules. The distinction will be deliberated on in the next part. This part only
focuses on tangible products/services.
A product/service that has never been provided for external use simply means there has been
no separate market for that product/service. Obliging to supply that product/service is nothing
more than to create a new market. It is the very difference between this group of cases and the
previous groups of cases where markets for the requested products/services have already
existed for some time, even in cases where a dominant undertaking discontinues supply to all
its clients. A decision of obliging dominant undertakings to externalise a product affects not
only the commercial strategies of the requested dominant undertakings, but also the current
market structure. A perceivable regulatory risk could be that an obligation to deal may create
an intermediate market with no genuine consumer demand. It is accordingly expectable that
all competition authorities would not easily grant permission to every refusal to deal as such.
The following paragraphs observe the European authorities practice in four cases.
5.1 Case Bronner
The milestone case of this type was Case Bronner48, which was a preliminary ruling case
referred to by an Austrian court. Bronner was a marginal competitor on Austrian daily
newspaper market together with the requested company, Mediaprint. Mediaprint owned a
nationwide home-delivery scheme which could deliver newspaper directly to subscribers in
early morning. This advantage was desired by Bronner, and thus was requested by the latter.
Mediaprint denied Bronners request for access as it always reserved its delivery scheme for
its own newspaper and for an affiliated newspaper.49 The ECJ was asked whether it was an
abuse of a dominant position.
In all cases of refusal to deal, only a dominant undertaking may be obliged to deal under
exceptional circumstances. Therefore, the first question needs to be answered was whether
Mediaprint was dominant on the primary market where the requested home-delivery system
stood. Nevertheless, the ECJ replied that it was for the national court to determine whether the
48

Case C-7/97, Oscar Bronner vs. Mediaprint, [1998] ECR I-7791.

Mediaprint claimed that it was entrusted by the publisher of the newspaper with printing and the whole of
distribution, including sale in kiosks, so that home-delivery constituted only part of a package of services. Since
it was different from the single request to access the home-delivery system from Bronner, both Mediaprint and
the Commission, as a third party in this proceeding, submitted that it was not discrimination. The ECJ did not
rule on this point, which may suggest it accepted this argument.

49

requested home-delivery system constituted a separate market and whether Mediaprint was
dominant there. It advanced directly to examine whether there was an abuse of a dominant
position. However, it should be noted that the subsequent analysis of the ECJ was based on an
assumption that Mediaprint was dominant on the primary market.
With regard to the question whether the refusal to deal constituted abusing a dominant
position, the ECJ established three conditions (i) the refusal should be likely to eliminate all
competition from Bronner in the daily newspaper market; (ii) the service of the home-delivery
system should be indispensable to carrying on the business on the daily newspaper market.
Furthermore, the indispensability test requires no actual or potential substitute in existence for
that home-delivery scheme; and (iii) such refusal cannot be objectively justified.50
After defining the three conditions, the subsequent analysis of the court focused on the
indispensability test. The ECJ considered that the indispensability test was not met in this case
for two reasons: (1) there were other methods of distributing daily newspapers, such as by
post or though sale in shops and at kiosks, though they may be less advantageous;51 (2) there
were no technical, legal or even economic obstacles to make it impossible, or even
unreasonably difficult, to establish, along or in cooperation with other publishers, another
nationwide home-delivery scheme. 52 Concerning the economic difficulties to establish a
potential alternative, it should be noted that the ECJ referred not to the possibility as to a
small company, such as Bronner, but a hypothetical company with a comparable size of the
company being requested.53 The ECJ held that the indispensability test was not met, and thus
the refusal was not an abuse of a dominant position, should Mediaprint have.
In this case, the Court not only solidly established three conditions for analysing whether a
refusal to deal with a product/service that has never been externalised constitutes an abuse of
a dominant position, but also developed further the indispensability test. However, the Court
left open the question how an intermediate product/service that has never been externally
provided could constitute a market separated from the market for the finished derivative
product/service. The question is without doubt related to the general principles of defining
relevant product market.54 However, there are still uncertainties as to the application of those
principles to a product/service that in fact does not exist. The European courts, after Case
Bronner, have never been given another opportunity to clear that doubt. Despite no answer
from the European courts, the Commission was confronted by that question under similar
situations in the subsequent three cases. The following will focus its attention, on the one
hand, on the analysis of the three conditions, and on the other hand, on the definition of a
separate product that never existed.
5.2 Case FAG and Case GVG/FS
The first case that challenged the Commission was a refusal to open airport facilities in Case
FAG.55 FAG (Flughafen Frankfurt/Main AG) owned and operated Frankfurt airport. At the
time when the case was raised, FAG reserved to itself all the services within the Frankfurt
50

ibid, para.41.
ibid, para.43.
52
ibid, para.44.
53
ibid, para.45-46.
54
Commission Notice on the definition of relevant market of the purpose of Community competition law, 97/C
372/03, OJ C 372/5, 09 December 1997.
55
Commission Decision of 14 January 1998 relating to a proceeding under Article 86 of the EC Treaty
(IV/34.801 FAG/Flughafen Frankfurt/Main AG), OJ L 72/30, 11/03/1998.
51

airport. This case was filed as abusing a dominant position by third parties that were denied to
provide ground-handling services on the ramp56 in the Frankfurt airport by FAG. The groundhandling services on the ramp was always provided by FAG itself and bundled with the
provision of airport facilities for the landing and take-off of aircraft.
Based on Bronner, the first question that must be answered by the Commission was whether
those requested services, ground-handling services, constituted a separated market from the
bundled service of providing airport facilities for the landing and take-off of aircraft as a
whole. FAG claimed that the two types of services were complementary and should not be
provided separately. However, the Commission considered that they constituted separate
markets mainly for three reasons: (1) from demand side, airport customers were usually
charged two separate charges for the two bundled services, which implied that it was not
necessary for customers to purchase the two services, though complementary, from the same
supplier; (2) from supply side, that ground-handling services could be provided by third
parties, despite that the provision of airport facilities for the landing and take-off of aircraft
was natural monopoly and could not be provided by third parties; 57 and (3) ground-handling
services had been provided by independent third parties in other airports. 58 Then the
Commission reached the conclusion that FAG was a monopoly on both markets.59
Subsequently, since the duplication of another airport in Frankfurt was not possible, the
indispensability was clear to the extent to which third parties could not provide groundhandling service without FAGs permission to access the Frankfurt airport. It is also logic that
FAG would eliminate all competition from third parties by reserving ground-handling
services to itself based on its monopolistic position.60 Lastly, the Commission denied all the
justifications claimed by FAG, such as capacity limits, exclusivity of property right, freedom
of business strategy, and historical rights that resulted into the reservation.61 Consequently,
FAG was obliged to allow third parties to access its airport facilities and to provide groundhandling services there.
Another case of refusal to deal, Case GVG/FS,62 also happened in the transportation industry.
GVG (Georg Verkehrsorganisation GmbH) was a new Germany railway undertaking and FS
(Ferrovie dello Stato SpA) was the Italian national railway carrier. FS was complained by
GVG of refusing the latter to access the Italian railway infrastructure to provide an
international rail passenger service from various points in Germany via Basle to Milan. FS
had not granted such an access to any independent third parties.
First, in the transportation sector it had been established to define relevant products based on
the point-of-origin/point-of-destination pairs approach. According to this special feature the
Commission immediately reached a conclusion that the railway routes requested by GVG to
56

They consisted of provision and operation of equipment for the embarkation and disembarkation of passengers,
transport of passengers between the terminal and the aircraft position and vice versa, crew transport, loading and
unloading of baggage, cargo and mail, transport, sorting and transfer of baggage, transport of cargo and mail on
the ramp, cabin cleaning, toilet and water services, push-back/towing of aircraft, provision and operation of
equipment to carry out the above activities, fuelling of aircraft, and the transport of catering supplies to and from
the aircraft. Ibid, para.20.
57
ibid, para.65.
58
ibid, para.66.
59
ibid, para.69.
60
ibid, para.72.
61
ibid, para.74-98
62
Commission Decision of 27 August 2003 relating to a proceeding pursuant to Article 82 of the EC Treaty of
(COMP/37.685 GVG/FS), OJ L 11/17, 16.1.2004.

access constituted separate markets from the railway services in general provided by FS. 63
Since the Italian railway industry had not been liberalised, it is of no surprise that FS was a
monopoly on all markets.
Then the Commission analysed whether the refusal was abusive. At that time, an undertaking,
in order to provide rail passenger services in another Member State, must form an
international group with a railway undertaking established in the hosting Member State.64 FS
was the only choice for GVG in Italy, and thus the infrastructures owned and services
provided by FS were undoubtedly indispensible to the request of GVG. Furthermore, because
of such indispensability a refusal would result into elimination of all competition from
GVG.65 At last, the Commission found no justification from FS with respect of lack of spare
capacity, safety reasons, no adequate remuneration, and public service obligations. 66
Therefore, the Commission concluded that the refusal of FS was abusive.
As a matter of fact, in the above two cases both airport infrastructures and railway
infrastructures present strong features of natural monopoly, thus being called by the
Commission as essential facilities, a word that the European court has never really put into
own use. This fact may reduce the difficulties to fulfil the criteria established by Case
Bronner. Furthermore, both types of infrastructures were invested from governmental budget
and inherited by the previous statute monopolies long before liberalisation. In addition, the
separation of the requested service into a new market within Case FAG and Case GVG/FS
may be, to some extent, affected by the liberalisation policy promoted on those markets at that
time. In Case FAG, Council Directive 96/67/EC of 15 October 1996 promoted access to the
ground-handling market at Community airports 67 ; in Case GVG/FS, Council Directive
91/440/EEC of 29 July 1991 was adopted to push forward international railway cooperation.68
Although those directives did not impose an open-access obligation upon the formermonopolists to all third parties, it may influence the Commissions analysis of refusal to deal
in those cases.
This point became clearer in later Case Telefnica69 where Telefnica, the Spanish Telecom
incumbent, was involved in a price squeeze. Telefnica claimed that the price squeeze could
amount to a refusal to deal, and thus should be dealt with under the criteria established by
Case Bronner. However, the Commission alleged that Telefnica was under an obligation to
serve all the other electronic communications operators under the regulatory framework
concerning electronic communications, which could be relied upon under EU competition law.
Accordingly, the mechanism established by Case Bronner was not applicable to that case.70 In
addition, some literature also considered that the incentive to liberalise those markets may
account for the difference between those cases and Case Bronner where the home-delivery
mechanism was established and reserved for own use by a private company.71
63

ibid, para.59.
ibid, para.69-70
65
ibid, para.120, 145, and 149.
66
ibid, para.135-138.
67
OJ L 272, 25. 10. 1996, p. 36.
68
OJ L 237, 24.8.1991, p. 25. Directive as last amended by Directive 2001/12/EC (OJ L 75, 15.3.2001, p. 1),
which had to be implemented by 15 March 2003.
69
Commission Decision of 04.07.2007 relating to a proceedings under Article 82 of the EC Treaty (Case
COMP/38.784 Wanadoo Espaa vs. Telefnica), not yet published???
70
ibid, para.300-303.
71
Paul Nihoul and Peter Rodford, EU Electronic communications Law: competition and regulation in the
European telecommunications market, Oxford University Press: Oxford, 2004, pp.482-483.
64

5.3 Case Info-Lab/Ricoh

In Case Info-Lab/Ricoh 72 the Commission was confronted with a refusal to deal with a
product manufactured by a private company. Info-Lad, a manufacturer of toner for
photocopiers, filed a complaint against Ricoh, a photocopier manufacturer, of abusing the
dominant position by refusing to supply empty toner cartridges. It claimed that the supply
would enable it to compete with Ricoh in the sale of filled toner cartridges. Moreover, the
complainant also explained that it was not possible to duplicate Ricohs toner cartridge which
was protected under IP rights. Nevertheless, Info-Lad did not ask to access those IP rights,
which is different from the cases discussed in the next part.
According to Case Bronner, there must be a separate market for the requested product/service.
Since Ricoh only sold filled cartridges and never provided empty ones, the Commission first
examined whether there could be a separate market for Ricohs empty cartridges. It concluded
that there was no such a separate market for empty cartridges because there was no consumer
demand, and that a matter of fact all manufactures only sold filled cartridges. Consequently,
all consumables for Ricohs products constituted a single product. The Commission
furthermore examined whether Ricoh had a dominance position on the market for its
consumables. It observed that although those consumables were not interchangeable between
different brands of photocopiers no dominance could be held by Ricoh because the market
was transparent and consumer faced no difficulties to switch to other providers of
photocopiers. The refusal thus could not be abusive because no dominance could be
established.
It is noteworthy to compare this case with case Liptons/Hugin73 discussed in the above. These
two cases share some features. First, Ricoh was not dominant on the upstream market for
photocopiers; and neither was Hugin dominant on the upstream market for cash registers.
Secondly, the requested products in both cases were consumables for the main products:
empty cartridges in Case Info-Lab/Ricoh, and spare parts for maintenance and repair in Case
Liptons/Hugin, both of which were not interchangeable with other brands. In addition, both
cases involved no natural monopolies, different from Case FAG and GVG/FS.
Nevertheless, the conclusions in the two cases were different: Ricoh was not dominant in the
market for its cartridges whereas Hugin was dominant for its spare parts. In Case
Liptons/Hugin, the Courts conclusion was based on two facts: on the one hand there was
demand from end-users for those spare parts; and on the other hand, there was also demand
from independent undertakings which had specialised in the maintenance and repair of
Hugins cash registers. By comparison, in Case Info-Lab/Ricoh the Commission discovered
no separate market for empty cartridges since there was no consumer demand, no other
undertakings ever provided empty cartridges, and it remained only Info-Lads interest to
request empty cartridges.
However, one of the explanations for this difference may be that Hugin initially did not
reserve to itself the market for maintenance and repair of its products and thus sold spare parts
to third parties, while Ricoh had always reserved the market for consumables and hence
provided no empty cartridges to others. Since there were already third party undertakings that
purchased only spare parts for some time, it would be difficult to deny that there was no
separate market for spare parts. By contrast, in Case Info-Lab/Ricoh Ricoh never provided
72
73

Competition Policy Newsletter 1999, Number 1, February, pp.35-37

See, note 45, above.

empty cartridges for others to produce third-party consumables for its products. As having
been proved by the Commission decision, it was difficult to establish that empty cartridges
could be a separate product. The Commission concluded that there was no consumer demand
for empty cartridges. Nevertheless, it did not analyse whether this was in fact the result of
Ricohs reservation. Furthermore, the Commission asserted that the provision of filled
cartridges satisfied a recognised consumer need and reduces costs. However, it did not
investigate further whether Info-Lab could more efficiently offer the consumables when
obtaining empty cartridges. More importantly, when the requested product/service cannot be
proved to be a separate market, it must be in the same market with other products. The
broader market definition may result into difficulties to establish the dominance of the
requested undertaking, which was observed in Case Info-Lab/Ricoh. In that regard, it could be
argued that it is more difficult to oblige a dominant undertaking to supply a product always
reserved for self use than a product suddenly discontinued to supply.
5.4 Summing-up: similarity and difference between the third and fourth groups
To wrap up, with regard to cases of refusing to supply a product/service that has never been
provided to others, the ECJ established a framework in Case Bronner. This framework
comprises the following steps: first, it must be analysed whether the requested product/service
could constitute a separate market; second, the requested undertaking must be dominant on
that market; thirdly, a refusal to deal with the requested product/service could be abusive only
when (i) the requested product/service is indispensible to the business of the requesting
undertaking, (ii) a refusal to deal would risk of eliminating all the competition from the
requesting undertaking, and (iii) the requested undertaking cannot provide justification for the
denial.
Compared with the previous group of cases of discontinuing supply to all third parties, it is
worth noting that the three conditions to qualify an abusive refusal to deal within the two
groups are analogous from three perspectives. Firstly, they are presented in principle in the
same way. Secondly, the analysis on the elimination of all competition is aligned with the
indispensability test in the current group of cases, which is also witnessed in cases of
discontinuance supply to all third parties. Thirdly, the indispensability test in both groups of
cases is attached to a rather high standard of proof. Although it is not clear whether the burden
of proof for the indispensability test is same for the two groups, so far all cases of the previous
group, for example Case Commercial Solvents and Telemarketing, can also fulfil the
indispensability test established by Case Bronner. Since there is evidence to the contrary, it is
believed that they are based on the same extent of standard of proof. Consequently, it is
argued that the two groups of cases share the same set of conditions to qualify an abusive
refusal to deal.
However, it does not mean that there is no difference at all between the two groups. As
discussed earlier, it is more difficult to prove that the requested product/service that is always
reserved for own use could constitute a separate market. A separate market comprising only
the requested product/service means that product/service can be provided separately. If the
requested product is considered not as a separate product from the current bundle, it is
difficult to prove the indispensability test. On the other hand, a separate market for the
requested product/service can lead to a narrower market definition and hence a greater
opportunity to find a dominant position of the requested undertaking. In some cases the effect
may be not significant. For example, in Case FAG and Case GVG/FS, any market definition
may impossibly affect the requested undertakings market position as monopoly. However, in
other cases, such as Case Info-Lab/Ricoh, the result could be completely different if it could

have been proved that there could be a separate market for the requested service/product. It
seems that the Commission relied to some extent on the common practice on the market in
question. In Case FAG one of the Commissions justifications was that the requested service
had been separately provided in other airports. In comparison, in Case Info-Lab/Ricoh the
Commission noticed that no printing companies ever provided empty cartages. Furthermore,
in cases of discontinuing external supply it is relatively easier to prove that the
product/service that is discontinued to supply can constitute a separate market. As a matter of
fact, in most of those cases that question was never raised simply because of the existence of
complaint against the discontinuance, or in other words previous demand, which makes it
meaningless to deny the existence of such a separate market. This may represent a difference
between the approach to deal with this type of refusal to deal and that with regard to
disruption of all supplies to all third parties. However, this difference does not affect the
similarity with respect of the three conditions.
6. The fifth group: refusal to grant IP license
A debate has always been raised whether intellectual properties should receive more
protection than tangible property. However, the European courts have closed the discussion in
relation to cases of refusal to deal and maintained that IP rights should obtain more care. One
of the reasons may be found in Advocate General Jacobs opinion in Case Bronner:
[i]n assessing such conflicting interests particular care is required where the goods
or services or facilities to which access is demanded represent the fruit of substantial
investment. That may be true in particular in relation to refusal to license intellectual
property rights. Where such exclusive rights are granted for a limited period, that in
itself involves a balancing of the interest in free competition with that of providing an
incentive for research and development and for creativity. It is therefore with good
reason that the Court has held that the refusal to license does not of itself, in the
absence of other factors, constitute an abuse.74
This part examines six cases of refusal to grant IP license. Before exploring each of those
cases, it should be pointed out at the outset that although consistency largely remains in the
approaches to solve previous groups of cases, inconsistency is frequently found in cases of
refusal to grant IP license. In some cases, the European authorities even suggested
contradictory implications. Consequently, the following analysis is more to describe the
evolution of those inconsistencies than to search for answers.
6.1 Case CICRA/Renault and Case Volvo/Veng
Although the analytical framework to approach abusive refusal to grant IP license was not
established until 1990s, the European courts had formed the fundamental attitude to this group
of cases several years earlier.
In Case CICRA/Renault75 the ECJ held that the authority of an owner of IP rights to oppose
the manufacture by third parties without its consent constituted the substance of that exclusive
right,76 and therefore the mere fact of obtaining IP rights did not constitute an abuse of a

74

Opinion of Case Bronner, para.62, supra note 48.

Case 53/87, Consorzio italiano della componentistica di ricambio per autoveicoli and Maxicar v Rgie
nationale des usines Renault, [1988] ECR 6039.
76
ibid, para.11.
75

dominant position. 77 Nonetheless, the Court also suggested that the exercise of such an
exclusive right may be prohibited by Article 102 if it involved certain abusive conduct, such
as the arbitrary refusal to supply spare parts to independent repairers.
In Case Volvo/Veng,78 the ECJ was asked a question whether it was abusive if a dominant
proprietor of registered design refused to license others those rights, even where the latter
were willing to pay a reasonable royalty. The ECJ maintained the refusal by that proprietor to
grant to third parties, even in return for reasonable royalties, a licence for the supply of parts
incorporating the design could not in itself be regarded as an abuse of a dominant position,79
unless it involved certain abusive conduct, such as the arbitrary refusal to supply spare parts
to independent repairers.80
6.2 Case Magill
Within the above two cases, the ECJ did not specify the situations where a refusal to licence
IP rights can constitute abusive conduct. This question was kept unanswered until the seminal
case Magill.81
This case concerned the copyright protection in North Ireland granted upon TV guides. Due to
those copyrights each TV station traditionally only published a weekly television guide
covering its own programmes. They allowed third-party publishing mediums to publish in
principle only their daily or two-day TV guides so that there was no comprehensive weekly
TV guide including programmes of all channels in North Ireland in the substantial time of the
case. This was different from other Member States. Magill attempted to publish a
comprehensive weekly TV guide covering all major TV channels in North Ireland, but was
refused to obtain the license of copyrights by the then three major TV stations. This cases was
first brought before the Commission, later appealed to the then CFI, and finally reviewed by
the ECJ. Since only part of CFIs argument was appealed and were all accepted by the ECJ
without reservation, the discussion of Case Magill here is based on the judgment of CFI in
order for a comprehensive view.
First of all, relevant markets must be defined in order to process Article 102 cases. The TV
stations claimed that the product market in question should be information on television
programmes in general, including daily TV guides and weekly TV guides. Given the
considerable number of third-party medium publishing daily TV guides, this argument could
have led to no dominance of any TV stations.82 Nevertheless, the CFI did not accept this
argument. It defined a new and separate market for TV magazines publishing comprehensive
weekly programme listings. The CFIs reasons were mainly two: first, daily TV guides were
only to a limited extent substitutable for weekly TV guides since only weekly television
guides could enable users to decide in advance which programmes they wished to follow and
arrange any leisure activities for the week accordingly; secondly, weekly TV guides
successfully existed in the United Kingdom and Ireland, as well as in continental Europe.83
77

ibid, para.18
Case C-238/87, AB Volvo v Erik Veng (UK) Ltd, [1988] ECR-6211.
79
ibid, para.11.
80
ibid, para.9.
81
Joined cases C-241/91 P and C-242/91 P, Radio Telefis Eireann (RTE) and Independent Television
Publications Ltd (ITP) v Commission of the European Communities, [1995] ECR I-00743. It was an appeal to
Case T-69/89, Radio Telefis Eireann v Commission of the European Communities, [1991] ECR II-00485.
82
Case T-69/89, para.30, ibid.
83
Ibid, para.62; see also, Joined cases C-241/91 P and C-242/91 P, para.47, supra note 81.
78

This new market is the derivative market of this case, and the primary product was
information on weekly programmes. As a matter of fact, a third product was also defined, i.e.
TV magazines publishing individual weekly programme listing, where each TV station
enjoyed monopoly. To conclude, the CFI held that each TV station was monopoly on the
primary market, as well as on the market for publishing individual listing.
Then the CFI went to the question whether the refusal to license in this case could be abusive.
Four conditions were discussed for that analysis: (i) the primary product, weekly TV guides,
was indispensible with the derivative product, television magazines, and was moreover not
substitutable for daily TV guides; (ii) the refusal could eliminate all the competition and
secured a monopoly in the derivative market of comprehensive weekly TV guides; (iii) the
refusal also prevented the production and marketing of a new product/market, i.e.
comprehensive weekly TV guides; and (iv) there was no objective justification.84 Finally, the
court concluded that the refusal to license the copyrights in question was abusive.
Compared with cases of refusal to deal with tangible facilities that are always reserved for self
use, for example Case Bronner, it is observed that three conditions are shared between the two
scenarios: (i) the indispensability test, (ii) elimination of all competition, and (iii) no objective
justification. However, one more condition was inserted in Case Magill that the refusal must
be able to stifle the emergence of a new market, which was in that case comprehensive
weekly TV guides. By contrast, there was no such requirement in Case Bronner. However,
Case Magill did not clarify whether the prevention of emergence a new product was
additional to the criteria of Case Bronner, or whether it was alternative to the indispensability
test. This question will be answered by subsequently cases. Nevertheless, it should be kept
into mind that this is the first controversial area in relation to refusal to license.
Apart from that uncertainty, Case Magill also presented a problematic analysis of the
dominance in the primary market. The primary market was defined as information for weekly
TV programmes while the derivative market covered TV magazines publishing
comprehensively weekly TV guides. A second consideration would result into an impression
that the primary market did not correspond to the derivative market. The primary products
included only the weekly TV programme information provided by each of the three TV
station. By contrast, the derivative market comprised the TV guides of all the three TV
stations. In other words, Magill needed three sources of raw material in order to produce the
derivative product. This represents a difference from any of the previous cases where there
was always one source of raw material. Although every TV station held monopoly over its
own TV programmes, it is untenable to argue that information of TV programmes of a single
TV station was indispensible to a comprehensive TV guide.85 This may be comparable to an
argument that a book of collective work is dependent on the contribution of a certain author.
6.3 Case Ladbroke
The next case that appeared before the European courts was Case Ladbroke86. Ladbroke, the
refused undertaking in this case, was a Belgian company making a book on betting horse
races abroad. The Pari Mutuel group, the requested company, included several French
companies that owned the rights on televised pictures of and information on horse races
organized in France. The Pari Mutuel group already sold this right to a Germany company in
84

Ibid, para.73-74; see also, Joined cases C-241/91 P and C-242/91 P, para.52-56, supra note 81.
Despite no individual dominance, the courts may prove that it was a case of collective dominance.
Nevertheless, it is beyond the discussion here.
86
Case T-504/93, Tierc Ladbroke SA v Commission of the European Communities, [1997] ECR II-923.
85

Germany, but no one in Belgium before the dispute of this case. Ladbroke requested the Pari
Mutuel group to grant the right to broadcast those horse races in Belgium, which was refused
by the latter.
Two product markets were defined: the broadcasting horse races and the taking of bets. In
view of the national limitations on gambles and on broadcasting, the court defined the
geographic market as Belgium where the Pari Mutuel group run no business. The effect of
this geographic market definition was significant. Since the requested undertakings was
present in neither markets, the court immediately held that the Pari Mutuel group had no
intention to exclude Ladbroke, and accordingly the approaches in Case London
European/Sabena could not apply. 87
Moreover, when considering whether it could be a case similar to Case Magill, the court
concluded that the indispensability test was not fulfilled in this case, as the televised
broadcasting of horse races, although constituting an additional, and indeed suitable, service
for bettors, was not in itself indispensable to the exercise of Ladbrokes main activity, namely
the taking of bets.88 Consequently, the court did not examine other conditions established by
Case Magill and came to the conclusion that the refusal was not an abuse of a dominant
position.
Nevertheless, the interest of this case lies not in the analysis of indispensability, but in the
answer to the question left by Case Magill, i.e. whether the prevention of emergence of a new
product is additional or alternative to the indispensability test. It was the first answer provided
by the European justice. The then CFI interpreted that
[t]he refusal to supply the applicant could not fall within the prohibition laid down by
Article 86 (now Article 102) unless it concerned a product or service which was either
essential for the exercise of the activity in question, in that there was no real or
potential substitute, or was a new product whose introduction might be prevented,
despite specific, constant and regular potential demand on the part of consumers.89
(emphasis added)
The CFI in this case apparently suggested that the prevention of introduction of a new product
was not an additional condition, but an alternative to the indispensability test. Nevertheless, as
will be observed in later cases, this argument will not be supported by other judgements.
6.4 Case IMS Health
The third case reviewed by the European authorities was Case IMS Health. IMS was the
worlds number one supplier of information to the pharmaceutical and healthcare industry. In
order to facilitate the provision of information about medicine sales in Germany, it developed
a so called 1860 brick structure to represent the geographical model of analysis of the
German market, which was under the protection of German copyright rules. Since IMS faced
no competition for a long time, the 1860 brick structure was accepted by all pharmaceutical
companies and became a de facto industry standard. About one year before the substantial
dispute witnessed the entrance of the complainer, NDC, as well as another newcomer, AzyX.
At the beginning, both alternative companies experienced difficulties to persuade their clients
to use other standards than the 1860 brick structure. Therefore, each of them developed a
87

Ibid, para.133.
Ibid, para.132.
89
Ibid, para.131.
88

similar structure as the 1860 brick structure, which was nevertheless suspended by a
Germany court for possibly infringing IMSs copyright. After the preliminary injunction,
NDC requested IMS for a license, but was refused. The compliant of refusing to license was
sent to the Commission and the Commission granted an interim measure to require IMS to
license its copyright.90 IMS appealed to the CFI and the CFI ordered to suspend that interim
measure, not because there were obvious errors in the analysis of refusal to licence, but
because it was not urgent to impose an interim measure.91 NDC sought to set aside the CFI
order before the ECJ, but was not successful.92 Afterwards the Commission withdrew the
interim measure,93 and finally the CFI withdrew its jurisdiction over that case.94
A quick reading of the Commission decision would give an impression that the Commission
made some controversial interpretations to previous cases.95 However, it should be noted that
this was only a case of interim measure that aimed to establish a prima facie case of abusive
refusal to deal. The standard of proof presented in this case was certainly lower than
judgements or decisions. Therefore, a comparison of this case with others generates little
academic value, though both the CFI and the ECJ held that a prima facie case of an abusive
refusal to license had been successfully established. Nevertheless, special attention may be
paid to two comments made by the CFI.
First, the CFI observed that there was no exclusion of emergence of a new market in this case.
It anticipated that at first sight NDC and AzyX, once obtaining the license, would operate on
the same market, serve the same potential clients, and differ only as to detail from the service
offered by IMS. Therefore, the court maintained that new variations of the same service on
the same market as the dominant undertaking cannot be considered as a new product in the
sense of Case Magill.96 This interpretation is still consistent with Magill. However, it should
be kept into mind that this represents the second controversy with regard to refusal to license,
as that interpretation will be opposed by the later Microsoft.

90

Commission Decision of 3 July 2001 relating to a proceeding pursuant to Article 82 of the EC Treaty (Case
COMP D3/38.044 NDC Health/IMS HEALTH: Interim measures), not yet published.
91
T-184/01, IMS Health vs Commission, order of 26 October 2001, ECR [2001] II-3193.
92
Case C-481/01 P(R), IMS Healthy vs Commission,[2002] ECR, I-3401
93
Commission Decision of 13 August 2003 relating to a proceeding under Article 82 of the EC Treaty (Case
COMP D3/38.044 NDC Health/IMS Health: Interim measures), 18.10.2003, L 268/69. In this decision, the
Commission indicated that A German high court made a new interpretation to its copyright rules over this case
that NDC and AzyX could develop a brick structure that was similarly based on a breakdown by district, urban
district and post-code district and for that reason comprise more or less the same number of bricks. After that
national judgement, NDC established its own structure and successfully competed against IMS. See, recital 10
and 14 of that decision.
94
Case T-184/01, IMS Health vs. Commission, Order of 10/03/2005, ECR [2005] II-817.
95
For example, with regard to the relevant market, the Commission defined only one market, i.e. pharmacies
regional sales data in Germany where IMS was a quasi-monopoly: Case COMP D3/38.044, para.51, 55, 58,
supra note 90. This represents a deviation from Case Magill where TV stations were obliged to license its
copyrights to Magill, a TV magazine publishing weekly TV guides (the derivative product), because they were
monopoly on providing information about weekly TV programmes (the primary product). In the current decision,
the Commission did not define a primary market that included the 1860 brick structure. The only product market
defined in that case, pharmacies regional sales data in Germany, is in effect the derivative product from the 1860
brick structure, as it requires the input of the latter. However, the Commission required IMS to license the 1860
brick structure (the primary product) to undertakings proving regional sales data (the derivative product) without
analysing whether IMSs dominance on the primary market, though IMS may indisputably enjoy dominance or
even monopoly there. It seems that the Commission relied on IMSs dominance on the derivative market to
require it to supply a product on the primary market.
96
T-184/01, para.101, supra note 91.

Secondly, since there was no emergence of a new market it would not be an abusive refusal to
license if the prevention of the emergence of a new product is a cumulative condition. In its
decision the Commission referred to the interpretation of Case Ladbroke, and contended that
there was no requirement for a refusal to supply to prevent the emergence of a new product in
order to be abusive.97 Nevertheless, the CFI cast doubt on that interpretation (though it did not
immediately reject it either), but it considered that this doubt was nevertheless sufficient to
establish a prima facie case for an interim measure.98 Although IMS did not directly reject the
interpretation of Ladbroke, the smell of gunpowder can already be sensed. The trigger will be
pulled in the next case Microsoft.
6.5 Case Microsoft
Then it comes to the last case of refusal to deal to date, Case Microsoft.99 The CFI judgement
presents the most deviations from the precedents from many aspects. Those deviations not
only touch upon the two controversies indicated in the above, but also extend the uncertainties
around refusal to license to other areas.
Microsoft was a well-known company in providing operating systems (OS) for personal
computers. It also offered OS for work group servers in competition with Sun, the
complainant in this case. For many reasons OS for work group servers needs to be
interoperable with OS for personal computers. Sun requested such interoperability from
Microsoft but was refused, and thus brought this case to the Commission. The Commission
gave Sun a favourable decision. Subsequently, Microsoft appealed to the CFI that supported
the Commission. Since Microsoft did not refer the case to the ECJ, the CFI judgement has
been final.
First, the CFI for the first time systematically summarised the practices implied in previous
cases with regard the definition of the primary and secondary markets. It stated that:
in order that a refusal to give access to a product or service indispensable to the
exercise of a particular activity may be considered abusive, it is necessary to
distinguish two markets, namely, a market constituted by that product or service and
on which the undertaking refusing to supply holds a dominant position and a
neighbouring market on which the product or service is used in the manufacture of
another product or for the supply of another service. [] it was sufficient that a
potential market or even a hypothetical market could be identified and that such was
the case where the products or services were indispensable to the conduct of a
particular business activity and where there was an actual demand for them on the
part of undertakings which sought to carry on that business. [] it was decisive that
two different stages of production were identified and that they were interconnected in
that the upstream product was indispensable for supply of the downstream
product.100
Consequently, two relevant products markets were defined in this case: OS for personal
computers (the primary product) and OS for work group servers (the derivative product).
97

Case COMP D3/38.044, para.101, supra note 90.

T-184/01, para.104, supra note 91.
99
Case T-201/04, Microsoft vs. Commission, Judgment of 17/09/2007, ECR [2007] II-3601. see also,
Commission Decision of 24.03.2004 relating to a proceeding under Article 82 of the EC Treaty (Case COMP/C3/37.792 Microsoft), not yet published.
100
Case T-201/04, para.335, ibid.
98

Microsoft was almost a monopoly (stably over 90% market shares) in the first market and was
dominant (about 60% market shares) and confronted with competition on the second market.
It should be noticed that no separate market was defined for the requested service, i.e. the
information of interoperability with personal computer OS for work group, which suggests
that the CFI included it into the market for client PC OS. This broader market definition did
not affect Microsofts dominant position on the primary market. However, as it will be
pointed out later this broader definition may be considered as the source of all the
controversies raised by Microsoft.
Subsequently, with regard to refusal to license IP rights the CFI re-summarised the conditions
in Case Magill: (i) the refusal relates to a product or service indispensable to the exercise of a
particular activity on a neighbouring market; (ii) the refusal is of such a kind as to exclude any
effective competition on that neighbouring market; (iii) the refusal prevents the appearance of
a new product for which there is potential consumer demand; and (iv) the refusal cannot be
objectively justified.101 As aforementioned, it is the first controversy that the interpretation of
Ladbroke that the condition of prevention of a new product established by Magill was
alternative to the indispensability test was questioned and nevertheless not rejected by IMS. In
Microsoft the CFI firmly maintained that the four conditions must be cumulative. Therefore,
the first controversy seems to be resolved if the rule that later decisions are controlling is
applicable.
Next, the CFI went to examine whether those conditions were fulfilled. However, if it can still
be argued that the CFI in Microsoft made commendable progress with regard to market
definition and the function of the condition of preventing the mergence of a new product, and
kept its interpretation relatively consistent with previous case law, its analysis on the
application of those conditions certainly suggests otherwise. A summary and evaluation of the
CFIs application of the four conditions is provided in the following.
First, the CFI held that the first condition was met in this case. In other words, the
interoperability with Microsoft Windows for client PC was indeed indispensable for
producing OS for work group servers. Nevertheless, the interpretation on the fulfilment of the
indispensability test varied considerably from the precedents. The previous case law indicates
at least two implications to the indispensability test. First, the assessment of the
indispensability test was always objective to the extent that the requested undertaking(s) could
in no way operate on the derivative market once being refused to supply the primary
product/service, for example raw material vs. finished products in Case Commercial Solvents,
TV advertising minutes vs. telemarketing in Case Telemarketing, Spare parts vs. maintenance
and repair services in Case Lipton/Hugin, airport facilities vs. ground-handling in Case FAG,
railway faculties vs. international passenger service in Case GVG/FS, and weekly TV
programmes vs. TV magazine publishing weekly TV guides in Case Magill. Secondly, other
products, even less advantageous, must be considered as substitutes with the primary product.
For example, in Bronner the court even considered other methods, such as by post and
through sale in shops and at kiosks, as substitutes with the home-delivery scheme of
Mediaprint.102 By contrast, the fulfilment of the indispensability test in Microsoft was based
on facts such as (i) there were still several work group OS present on the derivative market;103
(ii) some work group OS had constantly increased market share without having access to the

101

ibid, para.332-333.
Case Bronner, supra n. 48, para.43.
103
ibid, para.343.
102

information of interoperability with Microsoft;104 and (iii) there were five other methods to
achieve the interoperability between non-Microsoft OS and Windows for client PC.105 These
facts may not arguably fulfil the standard established by other cases.
Furthermore, as having been pointed out earlier the source of that controversy could be the
broader market definition. It should be noted that the requested service in this case, the
interoperability with client Windows, was a matter of degree. 106 The evaluation of the
indispensability could be completely different when referring to different degrees of
interoperability. Given the fact that a certain degree of interoperability had already been
realised by some competitors,107 it went beyond doubt that not every piece of information
related to interoperability was indispensible to every producer of OS for work group servers.
Nevertheless, the derivative market was defined to cover all OS for work group servers,
which included not only OS provided above the required interoperability, but also below
and/or equal to that requirement. Therefore, it is not flawless to argue that all the information
related to interoperability with Windows for client PC was indispensible to the provision of
all OS for work group servers, in particular to those undertakings that have achieved a certain
degree of interoperability,108 unless the derivative market was defined as OS for work group
servers based on the level of interoperability required by the Commission. In addition, it
seems that the CFI indeed recognised the existence of such a level of interoperability required
by the Commission, which was embraced within its reasons to reject Microsofts claims: (i)
other work group OS could not achieve the interoperability required by the Commission,
though a certain degree of interoperability had been achieved;109 (ii) none of other methods or
solutions recommended by Microsoft made it possible to achieve the high degree of
interoperability required the Commission,110 and (iii) the success of some work group OS
were based on interoperability with non-Windows products. 111 Should the level of
interoperability required by the Commission be added into the definition of the secondary
market, competition from other operators could have been excluded from the relevant market
and the indispensability could have been more clearly established.
Secondly, the analysis of the second condition, the elimination of competition, in previous
cases was interwoven with the indispensability test. The elimination of other competition by
the refusal to supply in previous cases is always immediate, complete and explicit. Thus, the
indispensability between the primary product/service and the derivative product/service in
previous cases left no room for any competition from other operators on the derivative market.
Nevertheless, in the current case the assessment of the second condition was challenged
because it was undeniable that other operators on the derivative markets were still present and
as mentioned earlier some even grew up. There were apparent no elimination of all
competition according to the standard established in other cases. In the current case the CFI
first alleged that that there was no need of imminent elimination of competition, 112 which is

104

ibid, para.347.
ibid, para.345-346.
106
Case T-201/04, para.158, note 99.
107
Case COMP/C-3/37.792 Microsoft, para.295-297, supra note 99.
108
A discussion whether the required level of interoperability is appropriate is not possible when lack of
technical knowledge. Accordingly, the CFI forbore from judge on this issue, given that no manifest error was
committed by the Commission. See, ibid, para.379-381.
109
Case T-201/04, para.432, and 421, note 99.
110
Ibid, para.435.
111
Ibid, para.433.
112
ibid, para.561.
105

still consistent with other cases. However, it then adopted a new interpretation, which is the
third controversy related to refusal to license,
[n]or is it necessary to demonstrate that all competition on the market would be
eliminated. What matters, for the purpose of establishing an infringement of Article 82
EC, is that the refusal at issue is liable to, or is likely to, eliminate all effective
competition on the market. It must be made clear that the fact that the competitors of
the dominant undertaking retain a marginal presence in certain niches on the market
cannot suffice to substantiate the existence of such competition.113
In other words, while the previous cases required the dominant undertakings to become
monopoly in the derivative market, Microsoft accepted a super dominance and allowed a
marginal presence of other competitors.
However, same as the argument within the discussion of the first condition, this extension
may be not necessary if the relevant markets had been more accurately defined. As pointed
out earlier, the CFI should have defined a derivative market of work group OS based on the
interoperability required by the Commission. It is observed that the competitors of a marginal
presence in the derivative markets established by the CFI mainly referred to Linux products
that were either designed for special use, or based on interoperability lower than that required
by the Commission, or grew to no detriment of Microsofts products,114 or only served clients
using previous version of Microsoft operating systems and other operating systems, such as
Linux.115 Moreover, corresponding to the shrinking size of other competitors in general, there
was a clear trend that customers started to switch to Windows products. 116 Therefore, it
should have been proved that no other competitors were found to produce OS based on the
Commissions requirement interoperability. It may again be argued that if a market for work
group OS had been defined by taking into account the level of interoperability required by the
Commission there should have been no need to extend the elimination of all competition to
the elimination of all effective competition.
Thirdly, the third condition requires that an abusive to license must be able to prevent the
emergence of a new product. As discussion before, this condition was first established in Case
Magill where the judgment did not make it clear whether this was an additional condition or
an alternative to the indispensability test. Subsequently, in Case Ladbroke, as quoted above,
that condition was considered not cumulative but an alternative to the indispensability test.117
Nevertheless, in the following Case IMS the CFI seemed reluctant to accept that interpretation,
though they did not reject it either. In the current case, the CFI articulated for the first time
that the prevention of the emergence of a new product was not alternative but additional to the
indispensability test. This is the evolution of the first controversy.
Nevertheless, Microsoft raised the second controversy in relation to refusal to license. With
regard to the term a new product it was not generalised in Case Magill that the new product
must constitute a new market, though the new product in that case indeed constituted a new
market. This question was clarified in Case IMS where that court alleged that the new product
113

ibid, para.563.
ibid, para.580-590.
115
As a matter of fact, the problem of interoperability appeared in a particularly acute manner only after the
release of Windows 2000, and not in the previous versions of Windows. Windows is a trademark used by
Microsoft for its operating systems. See, Case T-201/04, para.429, note 99.
116
ibid, para.579.
117
Supra, note 89.
114

must be a new market; and furthermore that new variations of the same service on the same
market as the dominant undertaking cannot be considered as a new product.118 Applying
that interpretation to Microsoft, it is conceivable that it would be unlikely for Microsofts
competitors to generate a new market based on the information of interoperability, and they
would probably compete still on the same market for OS for work group servers.
Consequently, the third condition should have been not met based on Case IMS. However, the
Microsoft court disagreed with that interpretation, and held that
[t]he circumstance relating to the appearance of a new product, as envisaged in
Magill and IMS Health [] cannot be the only parameter which determines whether a
refusal to license an intellectual property right is capable of causing prejudice to
consumers within the meaning of Article 82(b) EC (now Article 102). As that provision
states, such prejudice may arise where there is a limitation not only of production or
markets, but also of technical development.119
Thus, Microsoft extended the concept of new products/markets to new technical
development, though this court did not go further to define technical development. Based
on the new extension, the CFI concluded that Microsofts refusal to disclose information
about interoperability could indeed limit technical development from other competitors from
two aspects: (i) according to a survey non-Microsoft work group OS were better with regard
to a series features such as reliability/availability and security; 120 and (ii) other operators
would differentiate their products from Microsofts products after being able to use the
information of interoperability.121 Hence the third condition was met.
The last condition requires the infringer to provide justification. According to the past
experience, the room for manoeuvre by the infringer is limited once other conditions have
been fulfilled. In particular, given the characteristics of IP rights, lack of capacity, probably
the most powerful weapon for the infringers in other sectors, loses its grounds here. Microsoft
would like to justify its refusal by reference to the exclusivity of its IP rights and the great
value behind the license.122 However, the Court did not accept it since the previous three
conditions already represented a good balance against the essence of IP rights.123
6.6 Reflection
To sum up, the approach to dealing with cases of refusal to license in general resembles that
for the fourth group of cases. It includes all the three conditions established in the previous
group: (i) indispensability, (2) elimination of competition, and (3) objective justifications.
Nonetheless, difference still exists. Possibly in order to protect IP rights, there is one more
condition is included in the current group of case: prevention of the emergence of a new
product. Furthermore, as having been implied, three controversies exist in the judgements
related to refusal to license IP rights.
(i) The first controversy concerns the function of the inserted condition, in particular
whether it is additional or alternative to the indispensability test. The answer was
ambiguous when that condition was first established in Case Magill. It was then
118

T-184/01, para.101, supra note 91.

See, Case T-201/04, para.647, note 99
120
ibid, para.652.
121
ibid, para.658.
122
ibid, para.691-692.
123
ibid, para.693-695.
119

clarified in Case Ladbroke as an alternative to substitute the indispensability test.

Nevertheless, this interpretation was questioned, though not rejected, by Case IMS.
Finally, the more recent Microsoft maintained that the four conditions were
cumulative.
(ii) The second controversy, also related to the inserted condition, involves the question
whether the prevented new product must necessarily constitute a new market. Before
Microsoft, all the other three cases (Magill, Ladbroke and IMS) implied that that new
product must constitute a new product. In particular, IMS held that new variations of
the same service on the same market as the dominant undertaking cannot be
considered as a new product. However, Microsoft broke that limit by alleging that it
was sufficient to prevent technical development. Moreover, no definition of technical
development was provided.
(iii)The third controversy is related to the condition of eliminating competition from the
requested undertaking. In all the previous cases, it has been observed that the refusals
could indeed disallow the requested undertaking to even enter the derivative markets.
Hence that condition was established as eliminating all the competition from the
requested undertaking. However, Microsoft stressed that there was no need of
eliminating all competition, but all effective competition. Consequently, it allowed
marginal existence from the requested undertakings.
Although it usually prevails that later decisions are controlling, such amount of deviations in
Microsoft from previous cases may cast doubt on its authenticity as a new precedent.
Furthermore, there is a factual difference between Microsoft and other case. In other cases all
the requested undertakings always reserved their IP rights for own use whereas Microsoft may
be seen as a case of discontinuing granting a license. As a matter of fact, in most time of
1990s Microsoft actually granted a license relating to the disclosure of portions of the
Windows (versions before Windows 2000) source code to AT&T that developed a product
capable of enabling interpretability with Windows. AT&T then licensed its product to eleven
companies, including Sun. At the end of 1998, Microsoft decided not to license its new OS,
Windows 2000, technologies to AT&T. It was found by the Commission that precisely with
the release of Windows 2000 interoperability problems arose in a particularly acute manner
for Microsofts competitors.124 In this regard, Microsoft concerned a case where the refusal to
deal would substantially affect a long-standing market structure (in the CFIs words
competitors would be driven to a marginal presence) while in other cases the refused
undertakings did not actually enter the existing market structure. Therefore, it may be argued
that Microsoft is a new interpretation of the analytical framework for cases of refusing to
grant a license that has always been reserved for own use, but as a first precedent for cases of
refusing to continue granting a license.
7. Conclusions: a proposed framework for the analyse of abusive refusal to deal
The whole article discussed 21 cases of refusal to deal. Those cases are initially divided into
five groups, which are in turn: (1) refusal to supply a non-competitor client while serving
others, (2) refusal to supply a competitor while serving others, (3) refusal to continue supply
all third parties, (4) refusal to supply a product/service that is always reserved for own use,
and (5) refusal to grant a license related to IP rights. Based on the previous discussion, this
part aims to provide an analytical framework to deal with all cases of refusal to deal.
124

Ibid, para.429. See also, Case COMP/C-3/37.792 Microsoft, para.211-215, supra note 99.

7.1 Synthesis
Before concluding an analytical framework for all cases of refusal to deal, it is first to
synthesise the conclusions reached in examining each group of cases.
First of all, one common feature is shared by all cases of refusal to deal: (i) there are always
two markets involved in the dispute, though the relationship between the two markets vary
depending on particular groups. This common feature may be less visible with regard to the
first group where the requested undertaking and the refused undertaking have simply
relationship of seller and client. However, the hidden market is the retail market where the
refused undertaking operates. As showed in the all three cases in the first group, the requested
undertaking was all wholesalers while the refused undertakings were all retailers. Although
the behaviour of refusal to deal took place on the wholesale market, its effect spilled over on
the retail market to the extent to which the refused undertakings could not provide
products/services on the retail market as before. The two-market feature is clearer in other
groups of cases. In the second group of cases, refusal to deal on the first market was always
caused the competition on a second market. With regard to the third group of cases, the
disruption of supply in this first market was used a strategy to enter the second market. In
respect of the fourth and fifth groups, it must be first established that the second
product/market is dependant on the first product/market.
Secondly, it has been found that the analytical framework for the first and the second group of
cases are similar. They are dealt with under the non-discrimination provision of Article 102.
Moreover, both groups suggest no difference between non-competing clients and competitors.
The approach to solving this type of cases comprises three conditions:
(i)

there are other equivalent clients that are served or supplied by the requested
undertaking, which indicates a prima facie case of discrimination;

(ii)

the refusal to deal causes substantial damage to the refused undertaking. There is
no requirement of elimination of all competition from the refused undertaking, and
substitutes with the dominant undertaking supply are allowed to exist on the
relevant market, which represent the two main differences from other groups of
cases; and

(iii)

there are no objective justifications for the refusal from the requested undertaking.
General justifications, such as capacity limitation or technical limitation, may be
accepted. Attention should be paid to a special justification established by the ECJ
that refusal to supply an occasional customer may be justified in order to guarantee
the supply of long-standing customers in case of shortage of supply.

Thirdly, the methods to analyse whether a refusal to deal is abusive in the third and the fourth
group of cases do not present too much variance either. They both require the fulfilment of
three conditions:
(i)

the primary product/service (the requested product/service) must be indispensible

to the derivative, or secondary, product/service;

(ii)

the refusal to supply the primary product/service is likely to eliminate all

competition from the refused undertaking on the market for the derivative
product/service; and

(iii)

the refusal to deal cannot be objectively justified.

With regard to the application of the three conditions, attention should be paid to three
implications. First, although the European authorities have constantly announced the
separation between the first and the second condition, it is not observed that the evaluation on
the first condition is substantially different from the second. The analyses of the two
conditions are usually related to the extent to which that the primary product/service is
indispensible to the derivative product/service so that without the primary product/service the
refused undertaking cannot supply the derivative product/service. Subsequently, the standard
of proof to prove the three conditions remains rather high. The indispensability test requires
no other substitutes on the primary market. Furthermore, other products/services must be
considered as substitutes, even if they place the refused undertaking at a less advantageous
position. Successful examples were only found with raw material vs. finished products in
Case Commercial Solvents, TV advertising minutes vs. telemarketing in Case Telemarketing,
Spare parts vs. maintenance and repair services in Case Lipton/Hugin, airport facilities vs.
ground-handling in Case FAG, and railway faculties vs. international passenger service in
Case GVG/FS. Moreover, when the first two conditions have been fulfilled, it is difficult for
the requested undertaking to provide objective justifications. As a matter of fact no
undertaking has ever succeeded in justifying itself until now.
Although no difference was discovered between the third and the fourth group with regard to
the analysis of whether the refusal to deal was abusive, there might be a difference in defining
the requested product/service as a separate market. In the third group of cases where the
requested undertaking suddenly disrupts the supply to third parties, the existence of the
primary product/service and the derivative product/service is rather clear as both markets have
been existed for a while. Nevertheless, in the fourth group of cases the requested undertaking
has never provided the primary product to any third parties. This may increase the difficulty,
in comparison with the third group of cases, to prove that the requested product/service can in
fact constitute a separate market. This has been proved as a clear obstacle for the refused
undertaking in Case Info-Lab/Ricoh. In that case, Info-Lad could not prove that the requested
product, i.e. empty toner cartridges for Ricohs products, could be a separate market; thus the
requested product was included into the market for the consumables for Ricohs products. The
unfavourable effect appeared in the stage of analysing dominance that the broader definition
resulted into no dominance of Ricoh on the primary market, hence no abusive refusal.
Nevertheless, in some cases this difference may cause less problem as both a narrower and a
broader market definition cannot affect market position of requested undertakings, for
example, in case FAG and GVG/FS.
Lastly, cases of refusing to grant IP license were handled differently from the third and fourth
groups. Instead of requiring the fulfilment of three conditions, the approach for cases of
refusal to licence comprises four conditions by inserting one new condition:
(i)

that the requested license must be indispensible to the derivative, or secondary,

product/service;

(ii)

the refusal to license the primary product/service is likely to eliminate competition

from the refused undertaking on the market for the derivative product/service;

(iii)

the refusal risk of preventing the emergence of a new product; and

(iv)

the refusal to deal cannot be objectively justified.

However, different from previous groups of cases where consensus can be frequently
observed, this group of cases delivers three controversies. A borderline can be made by Case
Microsoft. Before Microsoft consistency largely existed. The first two conditions were
evaluated in the same way as their counterparts within the third and the fourth group of cases.
In principle there was no way for the refused undertaking to operate on the derivative market
without obtaining the request product/service. With regard to the new condition, preventing
the emergence of a new product, an agreement was also reached that that new product must be
able to constitute a new market. Nevertheless, there was still a controversy between Case
Ladbroke and Case IMS with regard to the function of the new condition whether it was
additional or alternative to the indispensability test, though it was replied in Microsoft that the
new condition is additional to the indispensability test. Furthermore, Microsoft created two
other new controversies for its lowering down the standard of proof of some conditions. With
regard to the indispensability test and elimination of competition, it alleged that there was no
requirement of eliminating all competition and a marginal presence of other competitors was
allowed. Concerning the new condition, it insisted that the new product may also include
products with new technical development.
7.2 A proposed analytical framework
Based on the above synthesis, cases of refusal to deal may be examined based on the
following steps. When receiving a complaint of refusal to deal, competition authorities should
investigate whether the requested product/service is provided to other equivalent third parties
at the same time. Based on different answers to this question, refusal to deal can be dealt with
under the following three situations.
First, if affirmative, the applicable conditions are then two: (i) the refusal to deal cause
substantial damage to the refused undertaking; and (ii) there are no justifications for
the refusal from the requested undertaking.
Second, if negative, then the applicable conditions are thus three: (i) the primary
product/service (the requested product/service) must be indispensible to the derivative,
or secondary, product/service; (ii) the refusal to supply the primary product/service is
likely to eliminate all competition from the refused undertaking on the market for the
derivative product/service; and (iii) the refusal to deal cannot be objectively justified.
It should be noted that when the requested product has always been reserved for own
use, competition authorities should carefully examine whether the requested
product/service can constitute a separate market. This may possibly affect the result of
dominance of the refused undertaking.
Third, if negative and IP rights are involved, a different approach will apply, which
contains four conditions (i) that the requested license must be indispensible to the
derivative, or secondary, product/service; (ii) the refusal to license the primary
product/service is likely to eliminate competition from the refused undertaking on the
market for the derivative product/service; (iii) the refusal to license prevents the
emergence of a new product, and (iii) the refusal to deal cannot be objectively justified.
However, it should be kept into mind that three controversies exist with regard to the
application of the first three conditions.