Understanding Economic Dependence
The Code of Economic Law has been amended to incorporate the adjustments made by the laws of April 4, 2019 and May 2, 2019 regarding the abuse of economic dependence. These "coordinated" laws came into force on August 22, 2020.
Economic dependence
Economic dependence is defined as "a position of subjection of a business on one or more other businesses, characterised by the absence of a reasonably equivalent alternative available within a reasonable time, under reasonable conditions and at reasonable cost, allowing the business or each of them to impose benefits or conditions that could not be obtained under normal market circumstances".
“abuse of economic dependence occurs when a company has a certain degree of market power, allowing it to exercise relative dominance over its partners”
In other words, abuse of economic dependence occurs when a company has a certain degree of market power, allowing it to exercise relative dominance over its partners and to impose benefits and conditions that it would not be able to impose without this market power (without holding a dominant position). This situation is often found in an upstream-downstream relationship.
“The Auditor General can now decide to open an investigation directly or upon a complaint from a natural or legal person demonstrating a legitimate interest in the case of abuse of economic dependence. ”
Various factors may be assessed to establish the existence of a position of economic dependence, such as the relative market power of the other firm, a significant share of the other firm's revenues, the other firm's access to essential resources or infrastructure, the fear of serious economic disadvantage, retaliation or termination of the contractual relationship, or the regular granting to a firm of special conditions, such as rebates, that are not granted to other firms in similar cases.
What has changed
The Auditor General can now decide to open an investigation directly or upon a complaint from a natural or legal person demonstrating a legitimate interest in the case of abuse of economic dependence. In addition, he can set a time limit vis-à-vis the parties concerned in which they can indicate in writing their willingness to hold discussions with a view to reaching a transaction. In terms of sanctions, each of the companies and associations of companies concerned can now be fined up to a maximum of 2% of their turnover.
Similarly, in order to enforce its decision, each of the companies and associations of companies concerned may be fined up to 2% of the average daily turnover for each day of delay. This penalty payment may also be imposed in order to enforce compliance with the provisional measures intended to suspend the abuse of a position of economic dependence under investigation.
In addition, the Belgian Competition Authority may also intervene as amicus curiae before the courts with respect to the prohibition of abuses of economic dependence, just as it may do with respect to cartels and abuses of dominant position.
