The Swedish Supreme Court receives guidance from the European Commission regarding the definition of the ‘relevant market’

30 October 2007

Henrik Nilsson, Josefine Jonsson

For the first time since the enactment of the Modernisation Regulation, 1/2003 EC, the Swedish Supreme Court has requested an opinion from the European Commission with reference to Article 15 paragraph 1 of the Regulation concerning the application of the community competition rules.

The case concerns the Danish state-owned company BornholmsTrafikken, which operates ferry services from the Danish island of Bornholm on the route Rönne (Bornholm) – Ystad (Sweden). BornholmsTrafikken has brought an action for damages against the port of Ystad, claiming that the port has charged harbour fees in breach of the restrictions against municipalities charging fees above costs for municipal services and thereby abused its dominant position by charging excessive fees for the port services provided to BornholmsTrafikken.

Two lower instance courts have - in interlocutory judgments - defined the relevant market at odds with each other. Looking at the questions whether there are any viable alternative to the port of Ystad, the District Court found that the port of Trelleborg was a viable alternative to the port of Ystad, while the Court of Appeal found that the port of Trelleborg was not a substitute to the port of Ystad.

The Supreme Court granted a leave for appeal and, pursuant to the Modernisation Regulation, decided to request an opinion on the definition of the relevant market from the Commission. Article 15(1) states that in proceedings for the application of Article 81 or Article 82 of the EC Treaty, courts of the Member States may ask the Commission to transmit to them information in its possession or its opinion on questions concerning the application of the community competition rules. It should be noted that opinions by the Commission are non-binding and only preliminary rulings by the European Court of Justice pursuant to Article 234 of the EC Treaty are binding upon national courts.

The Commission’s opinion under Article 15 (1) must be limited to factual information or economic or legal clarification, without considering the merits of the case pending before the national court. Therefore, the Commission noted in its response that as market definition is dependent on case specific elements it could only take a position on the methodology and procedure used when defining the relevant market.

After reviewing the relevant case law, the Commission concluded that the Supreme Court would have to consider whether there is any port that can be regarded as a substitute for the port of Ystad for traffic to and from Bornholm. As part of such an assessment the Supreme Court should examine (i) whether another port can offer the services that the ferry operator would require were it to change its route and instead call at that port; and (ii) whether and alternative route would constitute a viable alternative for both the ferry operators and the end-users of the ferry services. The former question (i) would involve an analysis of the current facilities, capacities and services provided by potentially alternative ports, as well as possible upgrades and adjustments that might be necessary to provide the required port service. The latter question (ii) would involve a detailed analysis of the overall demand for ferry transport services to and from Bornholm in order to determine the existence of possible alternative routes to the Rönne-Ystad route.

The Supreme Court now has to determine whether any other port can be regarded as a substitute for the port of Ystad for traffic to and from Bornholm. When the relevant market has been defined, the Supreme Court will have to determine whether the port of Ystad has a dominant position which has been abused in violation of Article 82 of the EC Treaty.

Even though the opinion given by the Commission is not legally binding as such, the possibility for national courts to ask the Commission for its opinion may provide useful guidance to the courts in their application of Articles 81-82 of the EC Treaty. As the ice has now been broken, one may expect that asking the Commission for its opinion may become more common in Swedish courts.

Source: Opinion from the European Commission, Swedish Supreme Court case T2808/2005, file nr 28, received on 1 March 2007. A translated version will be published on the Commission website.