New Belgian law on abuse of economic dependence and other illegal practices in B2B relationships

On 21 March 2019, Belgium adopted a law introducing three new types of infringements in B2B relationships: abuses of 'economic dependence', abusive clauses, and unfair market practices. The new law extends the concept of 'abuse of a dominant position' to prohibit abusive conduct by companies that can be considered as indispensable commercial partners for other companies. Together with the new rules on abusive clauses and unfair practices, the freshly adopted provisions aim at protecting smaller trading partners especially in vertical relationships.

Abuse of economic dependence

The main change brought about by the new law¹ is the introduction of a new category of competition infringement in the Belgian Code of Economic Law (CEL), in addition to anti-competitive agreements and abuses of dominance. The new Article IV.2/1 CEL prohibits companies from abusing another company's 'economic dependence' in circumstances where competition is likely to be affected in the Belgian market concerned or a substantial part of it. 

For the purpose of the application of the new provision, 'economic dependence' is defined as a "subordinate position of an undertaking in relation to one or more other undertakings, characterised by the absence of reasonably equivalent alternatives available within a reasonable period of time, on reasonable terms and at reasonable costs, allowing it or each of them to impose services or conditions that could not be obtained under normal market circumstances".

The (non-exhaustive) list of 'abuses' is similar to that included in Article IV.2 CEL/Article 102 TFEU and covers the following conduct:

• refusal to deal; 
• imposition of unfair prices or trading terms; 
• output limitation; 
• discrimination between trading parties; and 
• abusive tying. 

This is intended to allow the BCA as well Belgian courts to rely on existing case law in order to find an abuse. 

An abuse of economic dependence may be pursued by the BCA acting on its own initiative or following a complaint, and may be sanctioned with a fine of up to 2% of the company's annual turnover. Companies may also challenge such abuses through a court action seeking injunctive relief or damages.

These rules will enter into force on the first day of the thirteenth month following the publication of the law in the Belgian Official Gazette, i.e. most likely on 1 May 2020.

Abusive clauses

The new law also prohibits abusive clauses in contracts between companies (Article IV.91/3, §1 CEL). A clause is considered as abusive whenever it creates, alone or in combination with other clauses, a clear imbalance between the rights and obligations of the parties. The law however specifically excludes any assessment of the adequacy of the price paid in consideration for the products or services covered by the agreement, which would have to be caught by other general or specific legal provisions (such as e.g. competition law).

This general prohibition rule is accompanied by two (non-exhaustive) lists of clauses:

• Clauses in the 'black list' (Article IV.91/4 CEL) are considered abusive and prohibited in all cases without the need for any further evaluation. These include, for example:
• potestative clauses (i.e. that depend solely on the will of one party); 
• clauses giving a party the unilateral right to interpret any clause of the contract; 
• clauses requiring one party to waive any means of recourse against the other party in the event of a dispute, or 
• clauses which irrefutably establish one party's adherence to clauses of which it has not had the opportunity to become aware before the conclusion of the contract. 
• Clauses in the 'grey list' (Article IV.91/5 CEL) are presumed to be unfair unless proven otherwise. These include clauses that:
• authorise a party to unilaterally change the price or other terms of the contract without a valid reason; 
• tacitly extend or renew a fixed-term contract without specifying a reasonable period of notice; 
• place, without counterpart, the economic risk on a party when this risk would normally be borne by another party; 
• exclude or inappropriately limit the rights of a party in the event of total or partial non-performance;
• bind the parties without specifying a reasonable period of termination; 
• exempt a party from liability for willful misconduct or gross negligence and except in cases of force majeure, for any failure to fulfil the essential obligations covered by the contract; 
• limit the means of evidence that a party may use; or 
• in the event of non-performance or delay in the performance of a party's obligations, provide for excessive damages. 

In assessing whether a clause is abusive or not in a particular case, the overall context must be taken into account including, in particular, the intention of the parties as well as all the nature of the products covered by the contract, the circumstances in which it was concluded, the general economy of the contract, normal practice in the industry sector concerned, as well as all other clauses of the contract or of any other contract on which it may depend.

The new rules on abusive clauses do not, for the time being, apply to financial services or public procurement contracts. They will enter into force on the first day of the nineteenth month following the publication of the law in the Belgian Official Gazette, i.e. most likely on 1 November 2020, and will only apply to contracts entered into, renewed or modified after the date of their entry into force.

Unfair market practices

The new law further specifies the pre-existing general prohibition of unfair market practices between companies by prohibiting misleading and aggressive commercial practices (Articles VI.105-105/1 and Articles VI.109/1-VI.109/2 CEL). The law thereby extends to B2B relationships provisions that already existed previously in B2C relationships. 

These rules will enter into force on the first day of the fourth month following the publication of the new law in the Belgian Official Journal, i.e. most likely on 1 August 2019.

Comments 

The new law brings about a substantial change in Belgian competition law by introducing the new concept of 'abuse of economic dependence' which presupposes the existence of a relative dominant position. In doing so, the Belgian legislator has, following the example of other Member States such as Germany, Austria, France and Italy, decided to make use of the possibility offered by Article 3(2) of Regulation No 1/2003, which allows EU Member States to enforce stricter national rules to prohibit and sanction unilateral conduct by companies. The parliamentary debates show that the lawmakers' main concern was to protect small and medium-sized companies from unfair practices by other companies that are indispensable commercial partners for them. The debates specifically refer to relationships between food producers and supermarket chains, as well as between franchisers and franchisees, as examples of relationships that are particularly susceptible to such abuses. Whilst the BCA has welcomed the possibility of tackling vertical abuses, its limited resources may delay the actual enforcement of this new provision. 

However, the provisions of the new law are likely to raise complex issues of interpretation and create a high degree of legal uncertainty for companies especially to the extent that they rely on vague concepts. In particular, the question of whether a company can be regarded as having no reasonable substitute and thus being 'economically dependent' on another company is likely to be hotly debated in every case. This is illustrated, for example, by the German Rossignol case,² in which the ski manufacturer Rossignol, which had a market share of only about 8% in Germany, was nonetheless found guilty of an abuse when it refused to continue to supply a small German retailer that only sold a limited number of skis of the brand. The German courts found that the reputation of the Rossignol brand was such that the retailer's image could be damaged if he was no longer able to sell skis of that brand. This was deemed sufficient to establish a link of economic dependence.  

Furthermore, the prohibition of abusive clauses in B2B relationships is also likely to create difficulties in pre-contractual negotiations between companies, especially as some of the clauses appearing in the 'grey list' (for example, clauses that shift liability to one party for a particular risk that is normally borne by another party) are relatively common and very useful in practice. 

Overall, the new Belgian law reflects a stricter stance towards companies which, whilst not being dominant on the market within the meaning of competition rules, are nonetheless in such a strong position that they may be able to, in practice, impose unfair terms on their commercial partners. These rules are likely to be relevant to a large number of companies (regardless of their size and market position) and will have an important impact on companies' contractual practices.

With thanks to Antoine Accarain of Ashurst for his contribution.

1. Law of 21 March 2019 amending the Code of Economic Law as regards abuses of economic dependence, abusive clauses and unfair market practices between companies, full text available here (in French and Dutch).
2. BHG [20 November 1975] KZR 1/75