ECJ Rules That Prices Covering Incremental Costs Are Not Abusive Per Se

On 27 March 2012, the Court of Justice of the European Union ("ECJ") handed down its preliminary ruling in an Article 82 (now Article 102 TFEU) case involving Post Danmark.

The ruling concerned a complaint made by Forbruger-Kontakt, the major competitor of Post Danmark, that Post Danmark had abused its dominant position when targeting clients of Forbruger-Kontakt in the unaddressed mail market with prices below average total costs ("ATC") but above the incremental costs of the service concerned.

At the outset, the ECJ noted that protecting competitors who are less efficient than the dominant undertaking is not a goal of EU competition law. Instead, Article 102 TFEU prohibits a dominant undertaking from, among other things, adopting pricing practices that have an exclusionary effect on competitors considered to be as-efficient as itself and strengthening its dominant position by using methods other than those that are part of competition on the merits.