Discriminatory treatment
What is discriminatory treatment?
Discriminatory treatment by a dominant undertaking - such as price discrimination or the application of different trading conditions – may amount to an abuse of dominance contrary to Section 5 of the Competition Act 2002 (as amended) and Article 102 TFEU.
Discriminatory treatment arises where a dominant undertaking applies dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage.
Why can discriminatory treatment be unlawful?
The case‑law has established that three main conditions must be met:
- Equivalent transactions: The dominant undertaking must have entered into transactions that are comparable in nature with different trading parties.
- Dissimilar conditions: The dominant undertaking must apply different prices or other unequal conditions to those equivalent transactions.
- Competitive disadvantage: The discriminatory treatment must place one or more trading parties at a competitive disadvantage, or be capable of distorting competition between them.
Equivalent transactions
In determining whether transactions are equivalent, it is necessary to consider factors such as:
- the nature of the product or service supplied;
- the volumes involved;
- the costs of supply; and
- whether the trading parties are in comparable situations.
Transactions do not need to be identical, but they must be sufficiently comparable.
Dissimilar Conditions
Dissimilar conditions arise where a dominant undertaking applies unequal criteria to equivalent transactions. This may include:
- different prices or rebates;
- differences in access, quality, or timing of supply; or
- other contractual terms that are not objectively justified.
Artificial price differences between comparable customers or suppliers may constitute discriminatory treatment.
Competitive Disadvantage
The discriminatory treatment must affect the competitive position of one or more trading parties. It is not necessary to show actual harm. It is sufficient if the conduct is capable of placing certain trading parties at a competitive disadvantage.
For example, applying higher prices or less favourable terms to particular customers may weaken their ability to compete with other customers downstream and may distort competition.
However, the fact that trading parties experience different outcomes does not, in itself, amount to unlawful discrimination, where those outcomes result from objective differences or legitimate commercial considerations.
If you believe you have evidence of a business engaging in discriminatory treatment, you can contact the CCPC.
