Refusal to deal in the field of technologies as a form of abusing of a dominant position in European and Eurasian unions law

Nowadays the objective of strengthening scientific and technological bases is not only the goal of individual states but an objective of integration organisations as well. Both European and Eurasian legal systems consider competition a key element for economical and technological development. Rivalry between various research institutes is an essential driver of economic and scientific efficiency, in absence of which the dominant undertaking would lack adequate incentives to continue to create. Sometimes further technological development is impossible without an access to technological solutions owned by dominant undertaking refusing to grant such access. In this case it is necessary to find a due balance between intellectual property rights of such owing undertaking and necessity of requesting company. The EU case law developed a test allowing to asses whether the refusal to make a deal granting an access to a new technology complies with EU law or amounts an abuse of a dominant position. This paper deals with key elements of this test – i.e. (1) the refusal must be likely to eliminate all competition in the market on the part of the person requesting the service; (2) the refusal must be incapable of being objectively justified; (3) the service in itself must be indispensable to sustain the business; (4) there must exist no actual or potential substitute for the service in question – and studies perspectives of using the same test within Eurasian Economic Union.


Foreword
Both European and Eurasian legal systems consider competition a key element for economical and technological development.
In the European Union the principle of free competition, as enshrined in Articles 119 and 120 Treaty on the functioning of the European Union (hereinafter -TFEU), is one of the foundational elements of the Internal market 1 . One of the internal market's key elements and, thus one of the Union's main objectives, as provided in Article 3(3) TEU, is a highly competitive social market economy, aiming at full employment and social progress. Protocol 27 to the Treaty of Lisbon establishes that the Internal market as set out in Article 3(3) TEU includes a system ensuring that competition is not distorted 2 , i.e. 1  a system protecting competition from restrictions. This protection against distortions of competition is based on securing equal opportunities for all market participants 3 .
Basic rules protecting competition in the EU are stipulated in Articles 101 and 102 TFEU. More specifically, Article 101 TFEU prohibits all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market. Article 102 TFEU, in its turn, interdicts abuses by one or more undertakings of a dominant position within the internal market or in a substantial part of it in so far as it may affect trade between Member States. Article 105(1) TFEU stipulates that the Commission is the authority responsible for ensuring the application of the principles laid down in Articles 101 and 102.
The Commission, having responsibility to ensure the application of the principles laid down in Articles 101 and 102 TFEU 4 , stressed in its relevant Guidance on Enforcement Priorities that it is not in itself illegal for an undertaking to be in a dominant position, and such a dominant undertaking is entitled to compete on the merits 5 . The Court has consistently held that a finding that an undertaking has a dominant position is not in itself a ground of criticism of the undertaking concerned 6 , and cannot deprive it of its entitlement to arrange its own affairs 7 , protect its own commercial interests, taking all reasonable steps it deems appropriate to this end 8 .
We should bear in mind that rivalry between undertakings is an essential driver of economic efficiency, in absence of which the dominant undertaking would lack adequate incentives to continue to create and pass on efficiency gains 9 .
Although it is not in itself illegal for an undertaking to be in a dominant position 10 , as underlined by the Commission, dominant undertaking has a special responsibility not to allow its conduct to impair genuine undistorted competition on the market 11 . As consistently held by the Court, 'abuse' is an objective concept referring to the behavior of a dominant undertaking that influences the structure of a market where, as a result of the very presence of the undertaking in question, the degree of competition is already weakened and which, through recourse to methods different from those governing normal competition in products or services, has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition 12  3 dominant position are forbidden in case they are resulted in prevention, restriction, elimination of the competition and (or) infringement of interests of other persons. For the purposes of this article dominant position means the position of a business entity (market participant) (group of persons) or several business entities (market participants) (groups of persons) on a certain goods market, that gives such a business entity (market participant) (group of persons) or such business entities (market participants) (groups of persons) the ability to exert decisive influence on the general conditions of circulation of the good on the relevant goods market, and (or) eliminate from this market other business entities (market participants), and (or) impede access to this goods market for other business entities (market participants).
In this paper we will study specific form of abuse of dominant positionrefusal to deal.

Refusal to deal concept in European law
In Commercial Solvents the Court first held that an undertaking holding a dominant position in the market of raw materials and which, with the object of reserving such raw material for manufacturing its own derivatives, refuses to supply a customer, which is itself a manufacturer of these derivatives, and therefore risks eliminating all competition on the part of this customer, is abusing its dominant position within the meaning of Article 82 TEC (presently 102 TFEU) 13 . In Télémarketing 14 , where the input sought was TV air time, the Court referred to Commercial Solvents, thus confirming that the same rules apply to cases involving intangible property. Under Article 17(1) of the Charter 15 , everyone has the right to own, use and dispose of their lawfully acquired possessions. Thus, as pointed out by the Commission, any undertaking, including a dominant one, is free in its choice of trading partners and may dispose of its property freely 16 . As held in Magill 17 and other instances 18 , a refusal by a dominant undertaking to deal does not per se constitute abuse of a dominant position. Any intervention entailing an obligation to contract would thus first require careful consideration 19 and can only be applied in exceptional circumstances 20 . Therefore, a close scrutiny of factual an economic context is in order to establish the existence of the alleged abuse 21 .
The conditions under which a refusal by a dominant undertaking to grant access to its property is deemed abusive were clarified by this Court in Bronner 22 , and are the following: (1) the refusal must be likely to eliminate all competition in the market on the part of the person requesting the service; (2) the 1685 (2020) 012009 IOP Publishing doi:10.1088/1742-6596/1685/1/012009 4 refusal must be incapable of being objectively justified; (3) the service in itself must be indispensable to sustain the business; (4) there must exist no actual or potential substitute for the service in question.

Elimination of competition on a certain market
Prior to assessing whether a certain behaviour of a dominant undertaking constitutes an abuse, it is essential to determine the relevant market 23 ; a determination of the relevant market is a necessary prerequisite for establishing anti-competitive behaviour by a dominant undertaking, the absence of the alleged market as such renders any abuse impossible.
However as pointed out by the Court 24 and the Commission 25 , for a refusal to be abusive, it is not necessary for the refused product to have ever been traded. It is merely required that there is actual demand from potential purchasers and that a potential market, or a hypothetical one, can be identified. As the Court stressed in IMS Health, this would be the case where an undertaking seeks to obtain certain products or services if they are indispensable to carry on a particular business 26 . Secondly, it follows from the Court's 27 and the Commission's 28 practice that in certain circumstances a dominant undertaking shall be obliged to open up its facilities to a new client 29 . In the doctrine it is even argued that any distinction between dominant firms' duties towards new and existing customers is arbitrary, as all these customers are subject to the requirement that the requested input be essential 30 .
As a second point, when following the Bronner test, it should be noted that the exclusive use of certain product or technology for captive purposes by all players in the market satisfies the criteria of being likely to eliminate all competition on the part of the party requesting the product or technology in question. In this situation there is no alternative for the input that constitutes an essential facility in a certain market. As was recently stressed by the Court in Microsoft, a mere risk of elimination of competition is sufficient for action to be taken under Article 102 TFEU, as to wait until the elimination of competitors was sufficiently imminent would 'clearly run counter to the objective of that provision, which is to maintain undistorted competition in the common market and, in particular, to safeguard the competition that still exists on the relevant market' 31 .
At the same time as stressed by AG Jacobs in its Opinion in Syfait, there is a narrow range of circumstances in which a dominant undertaking will be obliged to open up its facilities or license its intellectual property rights to a third party for the first time, and for this to be the case, some exceptional harm to competition must be shown 32 . As held by the Court in United Brands, a dominant undertaking is not obliged to meet orders which are out of the ordinary. Allowing access to a company's facilities 23  too easily would disincentivise both the competitor gaining access and the dominant undertaking allowing access from investing in such facilities, and 'the mere fact that by retaining a facility for its own use a dominant undertaking retains an advantage over a competitor cannot justify requiring access to it' 33 .

A justification of a refusal to deal
As held by the Court 34 and stressed by the Commission 35 , a dominant undertaking's conduct may be justified by substantial efficiencies it produces that counterbalance or outweigh any anticompetitive effects, and ultimately benefit consumers. Consumer welfare is one of the EU's highest priorities and this priority can outweigh the risks of distortion of competition.
The conditions for a justification on the grounds of producing efficiencies to be substantial are: that these efficiencies (e.g., technical improvements in the quality of goods or services) have been realised as a result of the conduct; that the conduct is indispensable to the realization of these efficiencies, and there are no less anti-competitive alternatives to the conduct capable of producing the same efficiencies; that the efficiencies outweigh any likely negative effects on competition and consumer welfare in the affected markets; and that the conduct does not eliminate effective competition 36 .
As follows from the practice of the Court 37 and the findings by the Commission 38 , the ultimate goal of the Union is to protect an effective competitive process and not simply competitors. Consequently, competitors who deliver less to consumers in terms of price, choice, quality and innovation may have to leave the market 39 . Notably, innovation is even more important for the purposes of competition analysis in an industry as dynamic as the online platforms sector 40 . As was stressed by the European Parliament "competition policy should contribute to promoting and enforcing open standards and interoperability in order to prevent technological lock-in of consumers and clients by a minority of market players" 41 .

Indispensability of the requested product or technology for production of new products or technologies.
Next element to be examined in order to qualify a refusal to deal as abusive one is the absence of actual or potential substitutes for the service in question 42 . Following the Bronner test, these potential substitutes should be subject to a number of limitations: foreseeability (temporal limitation), and technical, legal and economic feasibility (factual limitation). A potential substitute, in this regard, must be a realistic one 43 . In assessing whether there are such substitutes, it is to be established whether it is economically viable to create an alternative service (i.e., to replicate the input) 44 , and whether there are any 'technical, legal or economic obstacles' that would render such replication impossible, or at least 'unreasonably difficult' 45 . These obstacles may lie, i.a., in the prohibitive cost of and/or time reasonably required for reproducing the input 46 . The Commission also points out it must be assessed whether competitors could effectively duplicate the input concerned "in the foreseeable future" 47 . An input shall be regarded impossible to replicate if it involves a natural monopoly, where there are strong network effects or when it concerns so-called "single source" information 48 . Account shall also always be taken of the dynamic nature of the industry and, in particular, whether or not market power can rapidly dissipate 49 .
The indispensability test is virtually the same for new entrants 50 and already existing competitors 51 . In Bronner, for instance, the Court held that the service must be indispensable 'to carrying on' the business 52 . More recently, the Court stressed in Microsoft 53 , and the Commission later reiterated 54 , that for an input to be indispensable, it is not required that, without the refused input, no competitor could ever enter or survive on the downstream market. Thus, for the indispensability condition to be satisfied, it merely needs to be established whether the product or a service sought constitutes an essential facility, i.e. a product or service that is objectively necessary to be able to compete effectively on a downstream market 55 .
As for intangible property, the most relevant case-law would be Magill and IMS Health. As held by the Court in these two cases, in order for the refusal by an undertaking owning a copyright to give access to a product or service indispensable for carrying on a particular business to be treated as abusive, it is sufficient that three cumulative conditions be satisfied, namely, that refusal is preventing the emergence of a new product for which there is a potential consumer demand, that it is unjustified and such as to exclude any competition on a secondary market.
In this context the 'new product' criterion is a condition that the undertaking requesting the license must not limit itself 'essentially to duplicating the goods or services already offered on the secondary market by the owner of the intellectual property right, but intends to produce new goods or services not offered by the owner of the right and for which there is a potential consumer demand '56 . This requirement was most scrupulously analysed in Microsoft, where it was stressed that it is sufficient that the new