Abuse of economic dependence
As from 22 August 2020, the prohibition of abuse of economic dependence (Article IV.2/1 Belgian Code of Economic Law) is a new feature of the Belgian legislative framework applying to B2B relationships.
New tool in the toolbox of the Belgian Competition Authority
The legal concept of abuse of economic dependence aims to target any situation where a company abuses the relative economic dependence of another company (e.g. a specific supplier or customer), where one is an indispensable economic partner for the other. Similar rules already exist in e.g. France and Germany.
The new rules come in addition to the existing prohibition of the abuse of a dominant position (Article IV.2 Belgian Code of Economic Law). They are an important new enforcement tool for the toolkit of the Belgian Competition Authority, allowing it to take action even in cases where the conditions of the abuse of a dominant position are not fulfilled, in particular when a dominant position cannot be established.
It remains to be seen whether the Belgian Competition Authority will make extensive use of this new tool. Nevertheless, the new rules could be an interesting instrument to target abusive practices in e.g. the digital economy in situations of dependency (for example in cases where a party needs to rely on a digital infrastructure from a third party for which it cannot find a suitable alternative).
Three cumulative conditions
There is an infringement of Article IV.2/1 CEL when three cumulative conditions are fulfilled: (i) the existence of a relationship of economic dependence between two companies; (ii) an abuse; and (iii) an effect on competition on the Belgian market or a substantial part of it.
Economic dependence is defined as "a subordinate position of an undertaking in relation to one or more other undertakings, characterised by the absence of reasonably equivalent alternatives available within a reasonable period of time, on reasonable terms and at reasonable costs, allowing it or each of them to impose services or conditions that could not be obtained under normal market circumstances”.
Economic dependence is a factual situation that may arise from various factors such as (i) market power, (ii) the significant share of the undertaking in the turnover of dependent undertaking, (iii) the technology or know-how of the undertaking, (iv) brand reputation, product scarcity, the perishable nature of the product or consumer loyalty, (v) access to essential resources or facilities, (vi) the fear of serious economic harm, retaliation or the termination of business relationships, (vii) unusual commercial conditions (not imposed or granted to similar undertakings) and (viii) whether or not the economic dependence stems from the deliberate choice of the dependent undertaking or rather from a constrained choice.
An abuse of economic dependency may consist of (i) refusal to deal, (ii) imposing unfair trading conditions, (iii) limitation of production, distribution or technical development, (iv) applying dissimilar conditions to equivalent transactions or (v) tying or bundling.
This is a non-exhaustive list of types of abuse. Other practices may also fall within the scope of the prohibition.
Anticompetitive effect on the Belgian market
The third condition of the new provision requires a (potential) anticompetitive effect on the Belgian market or a substantial part of it. It is difficult to predict how this condition will be applied. It may reintroduce elements of market wide analysis akin to the assessment of abuse of dominance.
The rules can be enforced by the Belgian Competition Authority and by courts. In enforcing the new rules, the Belgian Competition authority can conduct dawn raids and impose fines (up to a maximum of 2% of the consolidated turnover of the infringing undertaking) or preliminary measures.
Stéphanie De SmedtCounsel Attorney at Law
Stéphanie De Smedt, attorney-at-law, is a member of the Litigation & Risk Management practice group in our Brussels office. She is head for Belgium of the IP/IT Team, the Data Protection Team and the Life Sciences Team.T: +32 2 773 23 77 E: email@example.com
Wim Vande VeldePartner Attorney at Law
Wim Vande Velde is a local partner in the Corporate and M&A Practice Group in Belgium. He has extensive experience in national and international M&A transactions for both listed and non-listed companies, as well as in corporate restructuring.T: +32 2 743 43 96 E: firstname.lastname@example.org
Wannes BuelensAssociate Attorney at Law
Wannes Buelens is a member of the Litigation & Risk Management practice group in our Brussels office. He specializes in health law, liability law and insurance law. He is also a member of the firmwide Healthcare & Life Sciences Team.T: +32 2 773 23 72 M: +32 4 94 43 31 04 E: email@example.com
Charlotte JacquesAssociate Attorney at law
Charlotte Jacques, attorney at law, is a member of the Litigation & Risk Management practice group in our Brussels office. She specialises in Commercial Law IP, IT and Data Protection & Privacy. Charlotte is also a member of the Data Protection & Privacy Team and Corporate Investigations, Compliance & Defence Team.T: +32 2 700 10 26 E: firstname.lastname@example.org