## Facts

- Post Danmark A/S, the incumbent Danish postal operator with a universal service obligation and a nationwide distribution network, competed in the Danish market for distribution of unaddressed mail (advertising brochures and similar material).
- Forbruger-Kontakt a-s was Post Danmark’s main competitor in that unaddressed mail market.
- Post Danmark held approximately 95% of the unaddressed mail distribution market during the relevant period, and its position was linked to advantages from its statutory monopoly and infrastructure in addressed mail.
- Forbruger-Kontakt had contracts with three large supermarket chains to distribute unaddressed advertising; Post Danmark won those contracts after offering targeted discounts to those customers.
- The national competition authority found that one targeted price was below average total cost but above average incremental cost, and that Post Danmark charged higher prices to other customers without demonstrating a cost-based justification for the differentials.
- Danish authorities treated the conduct as selective price reductions and price discrimination constituting an abuse of dominance; the dispute reached the Danish Supreme Court, which requested a preliminary ruling on the interpretation of Article 82 EC (now Article 102 TFEU).

## Issues

1. Whether selective price reductions or price discrimination by a dominant undertaking, aimed at customers previously served by a competitor, are abusive in themselves under Article 82 EC/102 TFEU.
2. Whether prices below average total cost but above average incremental cost are necessarily abusive, particularly when used selectively.
3. Whether and how the authority must show actual or likely exclusionary effects on competitors at least as efficient as the dominant undertaking, and the relevance of an as-efficient-competitor approach.
4. Whether proof of intent to eliminate a competitor is required, and how objective justification (including efficiencies) affects the analysis and burden of proof.

## Decision

- The Court held that selective price reductions and price discrimination by a dominant undertaking are not automatically abusive; the legality depends on their capacity, in context, to exclude as-efficient competitors and harm consumers.
- The Court rejected a per se rule that pricing below average total cost but above average incremental cost is abusive; such pricing may be abusive only if, without objective justification, it is likely to have an exclusionary effect on as-efficient competitors.
- The Court stated that Article 82 EC targets conduct that, through methods other than competition on the merits, has an actual or likely exclusionary effect detrimental to consumers.
- The Court held that proof of subjective intent to eliminate a competitor is not required; the focus is on capability and likely effects in the economic and legal context.
- The Court confirmed that objective justification is available; once the authority shows likely exclusionary effects, the dominant undertaking bears the burden to show objective necessity or efficiencies outweighing competitive harm.
- The Court provided interpretive criteria and left application to the referring national court.

## Legal Principles

- Article 102 TFEU does not prohibit dominance acquired on the merits and does not protect less efficient competitors; not every exclusionary effect is harmful to competition.
- Selective low prices or discriminatory pricing by a dominant firm are abusive only where, assessed in context, they are capable of excluding competitors at least as efficient as the dominant firm and thereby harming consumers.
- Prices below average total cost but above average incremental cost are not presumptively abusive; a finding of abuse requires a showing of likely exclusionary effect absent objective justification.
- A competition authority need not prove actual market exit or subjective intent; it is sufficient to establish that the conduct is capable of producing exclusionary effects in the circumstances.
- If the authority shows likely exclusionary effects, the dominant undertaking may avoid liability by proving objective justification, including efficiencies that counteract likely harm and do not exceed what is necessary.

## Conclusion

The Court held that dominant-firm selective pricing, including prices between average incremental cost and average total cost, is assessed by effects and context rather than formal labels: it is abusive only when, without objective justification, it is likely to exclude as-efficient competitors and harm consumers, and intent is not a required element.


Post Danmark A/S v. Konkurrencerådet, Case C-209/10 (C.J.E.U. 2012)