The Competition Council strikes again with three decisions on abuse of dominance issued in the past two months.
1. Circumstances of facts
The recent case concerns the operator of the Chișinău International Airport (CIA) which allegedly abused of dominant position. It is to be recalled that the CIA was given in concession in 2013 to a private company Avia Invest SRL. Within CIA operate two handling companies AH and MGH. According to the Competition Council Decision from 17.09.2020, MGH complained that since 2015 it receives only 30 days rent extensions for its premises within the CIA. MGH argued that these premises located within the security zone of the CIA are indispensable for its uninterrupted provision of handling services.
2. Airport’s indirect acquisition of a handling company
The Competition Council has appraised that the airport operator has a decisive influence over AH one of the two handling companies operating within CIA. This finding resulted from (i) overlap in the board members (ii) Kroll report on the banking fraud shows the allegiance of these entities to the same group (iii) economic dependence generated by roughly 93 gratuitous loans which the airport operator granted to the handling company AH.
It is the first time when the Competition Council ascertains de facto decisive influence amounting the airport operator and AH as part of the same group of undertakings under Moldovan Competition Law or the same undertaking under EU Competition Law. The Competition Council is silent in its non-confidential Decision on whether this economic concentration was duly notified and whether it received the proper blessing. The question is open, and as first thought, it is highly unlikely that such an economic concentration would pass the significant impediment to effective competition test under the Moldovan Regulation on economic concentrations. Without the dissolution of this market marriage, effective competition on the handling market is highly unlikely.
3. Airport’s abuse in renting services
The Competition Council retained that the 30 days extension of rent agreements granted to MGH amounted to an abuse of dominant position. The antitrust authority refuted the argument that AH benefitted of the same rent conditions with due account that this is an intra-group agreement which was just a formality. Thus, the airport operator applied dissimilar conditions to equivalent services because MGH had only 30 days rent and AH a rent equal to the duration of the airport concession agreement – 49 years. Therefore, MGH was prevented from making any long-term investment and was unjustifiably discriminated in this regard. The Competition Council demonstrated that the premises rented by MGH were not touched by the modernisation of the CIA and the airport operator failed to produce any evidence to the contrary. Thus, the 30 days rent extension to MGH for almost five years was objectively not justified. It concluded that the airport operator acted in bad faith.
The Competition Council accused the airport operator that by granting more expensive rent to MGH, it gave a competitive advantage to its subsidiary AH which amounted to an abuse. The airport operator failed to substantiate such behaviour.
Unfortunately, the Competition Council did not give any details on whether the gratuitous loans which the airport operator gave to AH amounted to a separate count of abuse of dominance.
4. Abuse on one market distorted the competition on a different market
The abuse was on the renting services market within the CIA. The Competition Council has concluded that this abuse has affected the “downstream” market – handling services. It showed that MGH lost and was unable to gain new clients within this period and was bleeding financially. Moreover, AH to some former MGH clients was able to offer lower handling rates. According to MGH observations from the non-confidential version of the Decision, its market share dropped from 35% to 5%.
It is good that the Competition Council accepted the approach from the old Flughafen Frankfurt (case no. 98/190/CE) case on the abuse in one market affecting another. However, it is a pity it did not elaborate on this for future case-law application.
Why should it be considered a landmark Decision for Moldova?
It is the first-time the Competition Council endorses the “essential facility” doctrine. Unfortunately, it does not elaborate on the three conditions for its enforcement present in para 77 of the Moldovan Regulation on abuse of dominance which has incorporated para 81 from the Commission Guidance on the Commission’s enforcement priorities in applying Article (101 TFUE).
It is the first-time de facto control is ascertained. This may open the opportunity for other market participants to litigate cases where competitors are acquired via third parties in order to circumvent competition law concerns and clearance, however, there is behavioural evidence that shows a decisive influence pattern.
It is the biggest fine so far imposed by the Competition Council – 1,6 million Euros. It is rather strange why the Competition Council imposed the fine only to the parent company, considering that the subsidiary AH was also involved and benefitted from the abuse.