Opinion of Advocate General Saugmandsgaard Øe delivered on 9 September 2020.

• Jurisdiction: European Union
• Court: Court of Justice (European Union)
• ECLI: ECLI:EU:C:2020:678
• Date: 09 September 2020

Provisional text

OPINION OF ADVOCATE GENERAL

SAUGMANDSGAARD ØE

delivered on 9 September 2020 (1)

Cases C‑152/19 P and C‑165/19 P

Deutsche Telekom AG (C‑152/19 P),

Slovak Telekom a.s. (C‑165/19 P)

v

European Commission

(Appeal – Competition – Abuse of dominant position – Slovak market for broadband services – Conditions laid down by the incumbent operator for unbundled access by other operators to the local loop – Decision finding an infringement of Article 102 TFEU and Article 54 of the EEA Agreement – Access obligation imposed by the regulatory framework – Bronner case-law – Inapplicability – Imputability of a subsidiary’s conduct to the parent company – Concept of an ‘economic unit’ – Decisive influence – Actual exercise of such influence – Body of consistent evidence)

I. Introduction

1. These cases ask the Court to clarify once again the scope of the judgment in Bronner (2) within the regulatory landscape of Article 102 TFEU. That case concerned the refusal by a dominant undertaking to make infrastructure which it owned available to competitors.

2. In essence, the applicants, Deutsche Telekom AG (‘DT’) in Case C‑152/19 P and Slovak Telekom, a.s. (‘ST’) in Case C‑165/19 P, suggest that the conditions established in paragraph 41 of that judgment, in particular the requirement that the service be indispensable, should be applied to implicit refusals to grant access which follow not from an explicit refusal on the part of the dominant undertaking, but from unfair contract terms.

3. For the reasons I shall set out below, I propose that the Court reject the concept of an ‘implicit refusal to grant access’ and emphasise the limited scope of the judgment in Bronner. To my mind, the judgment in Bronner is and must remain a special case within the regulatory landscape of Article 102 TFEU.

4. I shall also propose that the Court dismiss the second and third grounds of appeal raised by DT in Case C‑152/19 P. An examination of those grounds of appeal will enable the Court to reiterate the principles relating to the imputability of conduct engaged in by a subsidiary (ST) to its parent company (DT), on the understanding that the latter company’s shareholding in its subsidiary is too small to be covered by the presumption established in Akzo Nobel. (3)

II. The factual and regulatory background to the disputes

5. The factual background to the disputes was set out in paragraphs 1 to 11 of the judgment of the General Court in Deutsche Telekom v Commission (‘the judgment in DT’) (4) and in paragraphs 1 to 11 of the judgment of the General Court in Slovak Telekom v Commission (‘the judgment in ST’). (5) It may be summarised as follows.

6. DT and ST are the incumbent telecommunications operators in Germany and Slovakia respectively. As from 4 August 2000 and throughout the period covered by the decision at issue, that is to say, from 12 August 2005 to 31 December 2010, DT had a 51% shareholding in ST.

7. As regards the supply of internet access, the local loop is the physical twisted metallic pair circuit (also called ‘the line’) that connects the network termination point at the subscriber’s premises to the main distribution frame or any other equivalent facility in the fixed public telephone network.

8. Unbundled access to the local loop allows new entrants, usually called ‘alternative operators’, to use the existing telecommunications infrastructure belonging to those incumbent operators in order to offer various services to end users, in competition with the incumbent operators.

9. Local loop unbundling was organised at EU level, inter alia, by Regulation (EC) No 2887/2000 (6) and Directive 2002/21/EC. (7)

10. In essence, that regulatory framework required the operator ‘with significant market power’, as identified by the national regulatory authority, to grant alternative operators unbundled access to its local loop and to related services under transparent, fair and non-discriminatory conditions, and to maintain an updated reference offer for such unbundled access.

11. Following an analysis of its national market, on 8 March 2005, the Slovak telecommunications regulatory authority adopted a decision designating ST as an operator with significant power on the wholesale market for unbundled access to the local loop within the meaning of Regulation No 2887/2000. That decision, which ST challenged, was confirmed by the Chairman of that authority on 14 June 2005.

12. In implementation of that decision, ST published its reference unbundling offer on 12 August 2005. That offer, which was amended on nine occasions between that date and the end of 2010, set out the contractual and technical conditions for unbundled access to ST’s local loop.

13. ST’s offer covered 75.7% of Slovak households and all local loops that could be used to transmit a broadband signal. However, during the period between 2005 and 2010, access to only very few of ST’s local loops was unbundled, as from 18 December 2009, and these were used by a single alternative operator to provide retail broadband services to undertakings.

III. The decision at issue

14. On 15 October 2014, the European Commission adopted a decision penalising DT and ST for infringement of Article 102 TFEU and Article 54 of the EEA Agreement (‘the decision at issue’) on the Slovak broadband services market. (8)

15. In the decision at issue, the Commission found that the undertaking formed by DT and ST had committed a single and continuous infringement of Article 102 TFEU and Article 54 of the EEA Agreement, during the period between 12 August 2005 and 31 December 2010, in connection with the conditions under which ST offered unbundled access to its local loop.

16. More specifically, the infringement found by the Commission consisted of the following practices:

– withholding from alternative operators network information necessary for the unbundling of local loops;

– reducing the scope of ST’s obligations regarding unbundled local loops;

– setting unfair terms and conditions in ST’s reference unbundling offer as regards collocation, qualification, forecasting, repairs and bank guarantees; and

– applying unfair tariffs which do not allow an equally efficient competitor relying on wholesale access to ST’s unbundled loops to replicate the retail broadband services offered by ST without incurring a loss.

17. The Commission imposed a fine of EUR 38 838 000 jointly and severally on DT and ST, and a fine of EUR 31 070 000 on DT.

IV. The procedures before the General Court and the judgments under appeal

A. The judgment in DT

18. In support of its action before the General Court, DT relied on five pleas in law alleging, respectively:

– errors of law and of fact in the application of Article 102 TFEU as regards ST’s abusive conduct, and a breach of the rights of defence;

– errors of law and of fact as regards the duration of ST’s abusive conduct;

– errors of law and of fact in the imputation of ST’s abusive conduct to DT, in so far as the Commission has not proved that DT did indeed exercise a decisive influence over ST;

– misinterpretation of the concept of ‘undertaking’ within the meaning of EU law and breach of the principle that the penalty must be specific to the offender, and failure to state reasons; and

– errors in the calculation of the amount of the fine imposed on DT and ST.

19. By the judgment in DT, the General Court partially annulled the decision at issue. It then fixed the amount of the fine that DT is jointly and severally required to pay at EUR 38 061 963 and the amount of the fine that DT alone is required to pay at EUR 19 030 981. It dismissed DT’s action as to the remainder.

B. The judgment in ST

20. In support of its action before the General Court, ST relied on five pleas in law alleging, respectively:

– manifest errors of law and assessment in the application of Article 102 TFEU;

– infringement of its rights of defence as regards the practice resulting in margin squeeze;

– errors in the finding of margin squeeze;

– manifest errors of law and assessment by the Commission in finding that DT and ST were part of a single undertaking and were both liable for the infringement at issue;

– in the alternative, errors in the determination of the amount of the fine.

21. By the judgment in ST, the General Court partially annulled the decision at issue. It then fixed the amount of the fine that ST is jointly and severally required to pay at EUR 38 061 963. It dismissed ST’s action as to the remainder.

V. The appeals before the Court of Justice

A. The appeal lodged by DT against the judgment in DT

22. In support of its appeal against the judgment in DT in Case C‑152/19 P, DT raises four grounds of appeal alleging, respectively:

– misinterpretation and misapplication of the legal principle that, in order for a refusal of access to constitute an infringement of Article 102 TFEU, the access sought must be indispensable to activity on a downstream market;

– misinterpretation and misapplication of the legal principle that a parent company must have actually exercised a decisive influence over its subsidiary in order for an infringement of Article 102 TFEU committed by the subsidiary to be imputable to the parent company;

– misapplication of the legal principle that the subsidiary must have applied, in all material aspects, the instructions given to it by the parent company in order for an infringement of Article 102 TFEU committed by the subsidiary to be imputable to the parent company; and

– infringement of the right to be heard during the administrative procedure.

23. In addition, DT asks the Court of Justice to admit, if necessary, a ground of appeal raised by ST in Case C‑165/19 P, the subject matter of which it claims to be identical to that of the third limb of the first plea in law raised by DT before the General Court, namely the framework used for calculating the long-term average marginal costs taken as a basis for the finding of...