The French Competition Authority, the Autorité de la concurrence ("AdlC"), has imposed a fine of €199 000 on Sanicorse for abusing its dominant position between 2011 and 2015. The company used its monopoly to abruptly, and significantly increase the price of its waste disposal services for infectious medical waste generated by healthcare establishments in Corsica.
| What you need to know |
- Unlike Article 102 of the TFEU, the imposition of unfair prices is not expressly cited as an example of an abuse of dominance in the French equivalent prohibition.
- However, the AdlC set out a number of contributing factors why Sanicorse's price increases qualified as abusive conduct. In particular, because the price rises where significant, permanent and not objective justified.
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Healthcare establishments are under a number of strict duties when they dispose of infectious medical waste. A number of them outsource this task to specialist companies. Sanicorse is one of these specialists and the only one active in Corsica. It therefore enjoys a de facto monopoly in the island which, according to the AdlC, constitutes a separate market.
From 2011, Sanicorse applied price increases to its customers reaching an average of 88% between 2010 and 2012 (individual increases of up to 135% or 194% were sometimes applied).
Unlike Article 102 of the TFEU, the imposition of unfair prices is not cited as an example of an abuse of a dominant position in the French equivalent prohibition. However, the AdlC considers that it may, in certain circumstances, sanction this kind of exploitative abuse, specifically when:
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the dominant undertaking enjoys a monopoly that may not be contested by potential competitors; and
- there is evidence that the dominant undertaking has implemented a strategy to exploit its customers. Such a strategy may be evidenced, in the case of a price increase, by the fact that it is sudden, significant, permanent and not objectively justified.
The AdlC considered that these circumstances were met in this case for the following reasons:
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It observed that the price increases were applied without any prior notice and under an implicit threat to terminate or not to renew the agreements if the price increases were refused.
- The AdlC considered that the price increases were significant as they exceeded 60% and were imposed on captive customers.
The AdlC observed that Sanicorse applied the prices increases for a period of more than four years. Thus, the price increases could not constitute a transitory business strategy.
- The AdlC also concluded that the price increases were not justified by Sanicorse's costs or investments. Rather, they were used as a threat of retaliation in case its clients developed alternative solutions for the disposal of medical waste.
On 20 September 2018, the AdlC therefore held that Sanicorse abused its dominant position and imposed a fine of €199,000.
It is interesting to note that Sanicorse could have paid a much lower fine had it not refused a settlement offer proposed by the Minister of the Economy, under its competition law enforcement powers in relation to local anti-competitive practices applied by small undertakings.
