Prohibition on abuse of a dominant position
A company with a dominant position has such a strong market position that competition is weakened. The position of a company with a dominant position is so strong that it can impose its will on competitors, suppliers and customers. This may lead to unnecessary higher prices, reduced quality of products and services and less innovation. Moreover, abuse sometimes limits the entry of new companies. This could harm consumers, companies and society as a whole.
In order to prevent that a company with this power abuses its position, the prohibition on abuse of a dominant position has been laid down in the National Ordinance on competition.
What constitutes a dominant position?
A company has a dominant position by definition if its market share is 60% or more. A company may also have a dominant position if the market share is smaller. This depends on the strength of the competition, among others, and on the possibilities for new firms to enter the market.
What constitutes abuse?
Having or creating a dominant position as such is not prohibited. However, on account of the very strong position of a company with a dominant position, stricter anti-abuse rules apply, which do not apply to firms which do not have a dominant position.
A company can abuse its dominant position if it for example:
- forbids customers to do business with other suppliers (exclusivity)
- forces customers to buy a desired product in combination with another product (tied selling);
- charges extremely high prices;
- applies unreasonable terms of delivery;
- refuses to deliver to customers when there are no alternatives;
- charges different prices for similar services with the objective to restrict competition;
- temporarily charges extremely low prices to crowd a competitor out of the market (predatory pricing).
Other forms of commercial practices by a company with a dominant position may also be regarded as abuse. Certain practices may constitute abuse if they have the same impact as forbidding customers to do business with other suppliers.
To whom does the prohibition on abuse of a dominant position apply?
The prohibition on abuse of a dominant position applies to companies with a dominant position. Companies include all national and foreign firms and associations of companies which perform economic activities in the Curaçao market. Economic activities may comprise products and/or services offered by companies in the market. They not only include ordinary companies but also for example independent professionals, state companies [in Dutch: overheids-NVs] and some foundations.
What is the sanction for a violation?
The FTAC may impose a binding directive on companies with a dominant position. A binding directive is not a sanction but it comprises instructions for a company with a dominant position on how to behave in the market in order to avoid abuse. A binding directive may for example be an obligation to enter into an agreement with a customer under reasonable conditions. In urgent cases the FTAC may anticipate the imposition of a binding directive and impose preventative measures.
In case of violation of binding directives and preventative measures, the FTAC may impose fines up to a maximum of 10% of a company’s annual turnover. FTAC’s (sanction) decisions are public and are published on this website.