Dominant Position

A Competition Law term that refers to companies whose market position is so strong that they can essentially dictate the terms of competition to other customers and market participants. Under EU law, abuse of dominant position is prohibited by Article 102 of the Treaty on the Functioning of the European (formerly Article Article 82 of the Treaty of Amsterdam and originally Article 86 of the Treaty of Rome) and a ‘firm’ is in a dominant position if it has the ability to behave independently of its competitors, customers, suppliers, i.e., it can do what it likes and force other market participants to accept its decisions. However, what actually constitutes a dominant position is a subject of intense debate and litigation, since it depends on what is defined as the relevant market.

In general, worldwide, dominant positions have not been found where the accused business has a less than 40 percent market share. Businesses can be dominant in one area of activity, but non-dominant in others. Having a dominant position as such is not prohibited, abuse of that position is. However, since only a dominant firm can abuse a dominant position, being potentially dominant brings into consideration a host of new legal considerations and requires careful compliance policies. A key factor in merger regulation is that mergers will usually not be allowed where they would tend to create or reinforce a dominant position. Control of essential facilities is typically held to confer a dominant position.

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