What is the Purpose of Article 102?

What is the Purpose of Article 102?

Purpose of Article 102

Article 102 of the Treaty on the Functioning of the European Union (“TFEU”) is one of the foundational competition laws of the European Union (“EU”). Broadly, Article 102 seeks to promote fair economic activity amongst EU Member States by prohibiting entities from abusing their dominant positions within the internal market.[1] In other words, entities holding a dominant position within the EU market have an obligation to prevent practices or agreements that may be deemed abusive, due to such position. Statutorily, Article 102 involves two important elements: (1) a “dominant position within the internal market” and (2) “abuse” [of a “dominant position”].[2]

Generally, there is no single formula to determine whether a given entity exhibits a “dominant position” under Article 102. Instead, a “dominant position” is determined by various inquiries, such as, whether an entity has the ability to distort competition—independent of its competitors, suppliers, and/or customers.[3] Additionally, where an entity holds a significantly large market share within a defined product and geographic market, such evidence is indicative of a “dominant position.”[4]

Article 102 provides a non-exhaustive list of practices/conduct prohibited as constituting “abuse” of a “dominant position.” Per the statute, such practices include: “(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) limiting production, markets or technical development to the prejudice of consumers; (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; [and] (d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.”[5] Therefore, “abuse” of a “dominant position” has been found in cases involving “excessive pricing, predatory pricing, fidelity or loyalty-inducing rebates, and refusal to supply.”[6]

Along with other EU competition laws, Article 102 can be enforced by the European Commission, the General Court, the Court of Justice, Member State national competition authorities, national courts, and private parties.[7] Where an Article 102 case is dealt with by the European Commission or a national competition authority, for example, such a case can originate either: (1) upon receipt of a complaint; or (2) through its own opening of an investigation or a sector inquiry.[8] Importantly, because Article 102 cases can originate upon receipt of a complaint, private parties, who either conduct their business directly in the EU or engage in conduct that otherwise has an effect in the EU, have a valuable remedy available. For example, a foreign company may enforce EU competition laws against another company for damages allegedly caused by anti-competitive practices by complaining to the Commission or Member State competition authorities.[9]


Article 102 of the TFEU Compared to Article 101 of the TFEU

Like Article 102, Article 101 of the TFEU (“Article 101”) is foundational to EU competition law. Broadly, Article 101 prohibits all (direct or indirect) agreements or practices between entities engaged in economic activity that prevent, restrict, or distort competition within the internal market, either by their object or effect.[10] Also similar to Article 102, Article 101 provides a non-exhaustive list of conduct that is prohibited as anti-competitive.

What is important under Article 101, however, is that the conduct, i.e., agreement or practice, does not strictly apply to unilateral conduct, such as intra-company agreements.[11] Instead, for conduct to be prohibited under Article 101, it must have been between parties, or via a third party (e.g., a common supplier or licensor), who are “engaged in economic activity.[12] In essence then, while Article 101 prohibits anti-competitive agreements or practices between entities, Article 102 prohibits abuses of a “dominant market position,”—whether done so unilaterally or not. Phrased differently, while “Article 101 applies to collusive behavior between consenting parties[,] Article 102 applies to unilateral conduct that victimizes the other party or parties or otherwise undermines competition.”[13]


Article 102 of the TFEU Compared to Section 2 of the Sherman Antitrust Act

The major (federal) antitrust laws in the United States are: (1) the Sherman Antitrust Act; (2) the Clayton Act; and (3) the Federal Trade Commission Act. The Sherman Antitrust Act of 1890 (hereinafter “the Sherman Act”) particularly prohibits restraints of trade and monopolization. For example, Section 1 of the Sherman Act outlaws conduct (e.g., contracts) that unreasonably restrains interstate and foreign trade.[14] Under Section 2 of the Sherman Act (hereinafter “Section 2”), it is a felony to monopolize, attempt to monopolize, or conspire to monopolize any part of trade or commerce among the States or with foreign nations.[15] According to the Supreme Court of the United States, Section 2 “has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.”[16]

Upon quick inspection of both Section 2 and Article 102 of the TFEU, both seem to be concerned with prohibiting conduct that restrains trade between certain states. However, Section 2 may be seen as being the broader of the two (i.e., less strict).[17] For instance, with respect to the language of the two statutes, Section 2 utilizes broader terms, such as “monopolize,” while Article 102 details more specific types of conduct that constitute abuse of a dominant position, including imposing unfair prices, limiting production, employing discriminatory trade practices, and imposing a tying arrangement.[18] Likewise, Article 102 is found to have a narrower interpretation of market power, i.e., dominant position, which is defined as “a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, [customers, and consumers].”[19] In contrast, the Supreme Court of the United States has defined monopoly power as the “power to control prices or exclude competition[,]” which “ordinarily may be inferred from the predominant share of the market.”[20]


Extent/Scope of U.S. and E.U. Competition Law

It is important to note that under both E.U. and U.S. competition laws, including Article 102 and Section 2, merely having a dominant position or monopoly power is not—on its own—unlawful. For instance, the U.S. Supreme Court has long held that U.S. anti-trust law “does not make the mere size of a corporation, however impressive, or the existence of unexerted power on its part, an offense, when unaccompanied by unlawful conduct in the exercise of its power.”[21] Such interpretation is consistent with the language of Section 2, which does not criminalize a monopoly, but rather, criminalizes “monopoliz[ation].”[22] Similarly, E.U. competition law, and more specifically Article 102 of the TFEU, does not prohibit the mere holding or acquiring of a dominant position because “[a] dominant company is entitled to compete on the merits as any other company.”[23]Where Article 102 draws the line at, however, is where a party with a dominant position “abuses” such a position to the detriment of competition in the E.U.[24]

Though regardless of whether a given conduct is analyzed as “abuse” under Article 102 of the TFEU, or as an act to “monopolize” under Section 2 of the Sherman Act, the lines “between lawful but competitively aggressive competitive conduct and unlawful anticompetitive conduct [remains] one of the most difficult tasks in antitrust analysis.”[25] On the bright side, both U.S. and E.U. competition laws are promulgated with consumers in mind.[26]


By: Daniel Admed


[1] See Consolidated Version of the Treaty on the Functioning of the European Union art. 102, 2012 O.J. C 326/47 [hereinafter TFEU].

[2] Id.

[3] See Irving Scher & Scott Martin, Antitrust Adviser § 7:41 (5th ed. 2015).

[4] See Id.

[5] TFEU, supra note 1.

[6] Scher & Martin, supra note 3.

[7] See id. at § 7:44.

[8] European Commission Factsheet, Competition: Antitrust Procedures in Abuse of Dominance (July 2013) [hereinafter Competition Factsheet], https://competition-policy.ec.europa.eu/system/files/2021-05/antitrust_procedures_102_en.pdf.

[9] See Scher & Martin, supra note 3, at § 7:44.

[10] See supra note 1, at 101.

[11] See Scher & Martin, supra note 3.

[12] See Poucet v. Assurances Générales de France, Joined Cases C-159—60/91, [1993] E.C.R. I-637, ¶ 17 (stating that “in the context of competition law the concept of an undertaking encompasses every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed.”).

[13] Philip Raworth, European Union Law Guide, § 33:11 (1994).

[14] See 15 U.S.C. § 1 (2004).

[15] See 15 U.S.C. § 2 (2004).

[16] U.S. v. Grinnell Corp., 86 S.Ct. 1698, 1704 (1966).

[17] See Laws of International Trade, European Union Competition Law Principles, § 33:11.

[18] Laws of International Trade, European Union Competition Law Principles, § 115:3. “Tying arrangement” is defined as “[a] seller’s agreement to sell one product or service only if the buyer also buys a different product or service.” Tying arrangement, Black’s Law Dictionary (11th ed. 2019).

[19] Hoffmann-La Roche & Co. AG v. Commission of the European Communities, Case C-85/76, [1979] E.C.R. I-461, ¶ 4.

[20] Grinnell Corp., 86 S.Ct. at 1704 (quoting U.S. v. E.I. du Pont De Nemours & Co., 76 S.Ct. 994, 1005 (1956)).

[21] U.S. v. International Harvester Co., 47 S.Ct. 748, 753–754 (1927).

[22] See 15 U.S.C. § 2 (2004); see generally Raymond A. Noble, No Fault Monopolization: Requiem or Rebirth for Alcoa, 17 New Eng. L. Rev. 777, 781 (1981) (explaining that the Sherman Act includes broad and suggestive language “not to prohibit and punish all monopoly for its own sake[,]” but “so that courts would have sufficient discretion to identify and correct problems of monopolies wherever the[y may] arise.”).

[23] Competition Factsheet, supra note 8.

[24] See generally Scher & Martin, supra note 3, at § 7:41 (describing dominant firms as bearing a “special responsibility” not to allow their conduct to impair competition in the E.U.).

[25] John J. Miles, Health Care and Antitrust Law, Background and General Antitrust Principles § 5:4 (1992).

[26] Compare U.S. Chamber of Commerce, Antitrust Laws: Promoting Competition and Free Markets (last visited Dec. 20, 2022), https://www.uschamber.com/major-initiative/antitrust-laws (providing that “America’s antitrust laws promote competition and benefit consumers”), with European Union, Priorities and Actions: Competition (last visited Dec. 20, 2022), https://european-union.europa.eu/priorities-and-actions/actions-topic/competition_en (stating that “[t]he European Commission monitors and investigates anti-competition practices, mergers and state aid to ensure a level playing field for EU business, while guaranteeing choice and fair pricing for consumers.”).