Abuse of Economic Dependence

The abuse of economic dependence is a practice forbidden by the Portuguese Competition Act. Although not expressly foreseen by European Union competition law, some Member States have similar prohibited practices in their laws. An abuse of economic dependence consists in the abusive exploitation by one undertaking of the economic dependence of another undertaking due to the absence for the latter of an equivalent alternative for the supply of goods or the provision of services, insofar as such behaviour may affect the functioning of the market or the structure of competition.

In order for an abuse of economic dependence to be ascertained, the following essential requirements must be met:

1. The undertakings involved (the firm or firms committing the abuse and its victim) are placed in a vertical relation (supplier-dealer or dealer-supplier);
2. The victim of the abusive behaviour is dependent on the abusing undertaking due to the absence of equivalent alternatives for either the supply or distribution of its goods and services. An undertaking has no equivalent alternative when the supply or distribution of the goods or services in question is provided by a restricted number of undertakings and the former cannot obtain identical conditions from other commercial partners within a reasonable period of time;
3. The dominant undertaking’s conduct is considered to be abusive vis-à-vis the other undertaking. A list of examples of such conduct is provided by the Competition Act, comprising the refusal to deal and the unjustified termination of an existing commercial relationship between the undertakings involved, taking into account, inter alia, their previous commercial relations and commercial usage; and
4. The abusive exploitation of the economic dependence affects the functioning of the market or the structure of competition.