Since 22 August 2020, the abuse of economic dependence by an undertaking - without being in a dominant position - is prohibited under Article IV.2/1 of the Belgian Code of Economic Law (“CEL”). For this provision to apply, three cumulative conditions must be met: (i) there must be the existence of a position of economic dependence; (ii) there must be an abuse of this position; and (iii) there must be the possibility that this abuse affects competition on the Belgian market or on a substantial part of it. These conditions are formulated in broad terms, allowing the judge a wide margin of appreciation.
The first judgments in relation to the concept of abuse of economic dependence demonstrate that this concept may significantly impact the relations between undertakings. Indeed, the plurality of sectors in which this provision has been applied so far (ranging from the distribution of children’s clothes and the distribution of hunting weapons to the supply of defibrillators) clearly shows that judges are willing to sanction abusive practices taking place between undertakings in a vertical agreement, thus giving companies a possibility to stand up against their business partners.
However, while competition law practitioners have been eagerly looking forward to these initial judgments, their precedential value is perhaps more limited than expected. Although some lessons can be drawn from these judgments, it remains unclear what exactly can be considered as “a reasonable equivalent alternative” when assessing a position of economic dependence or how “the adverse impact on competition on the Belgian market” must be demonstrated. As regards the latter condition, it also remains to be seen whether it will be applied (or applied more systematically) by the judiciary in the future. In most cases, the judges indeed considered the third condition to be either secondary or unnecessary. Ignoring this third condition however denies the very nature of Article IV.2/1 CEL, which aims to protect the structure and functioning of the market by securing free and undistorted competition. In this context, it is good to see that the judgment of the Enterprise Court of Leuven of 27 April 2021 paves the way for a more rigorous application of Article IV.2/1 CEL, as it emphasises the fundamental difference between the impact of a behaviour on a particular undertaking (e.g. lower margins or being forced to leave the market) and the impact on competition.
What is also striking is that in the cases where applicants successfully invoked Article IV.2/1 CEL, the conduct in question is considered each time to constitute at least an unfair market practice as well. Therefore, it appears that the Belgian Courts are using Article IV.2/1 CEL as an illustration of an unfair market practice (Article VI.104 CEL) rather than as a legal basis in its own right.
Please contact Pierre de Bandt or Jeroen Dewispelaere for further information about these judgements and/or for general legal advice relating to the provision on the abuse of economic dependence.