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On 10 April 2025, two hearings were held in the Court of Justice of the European Union (CJEU) in cases C-245/24 and C-260/24, initiated on preliminary references from the Administrative Court – Sofia Region. The main proceedings in which the references to the CJEU were made are related to the judicial review of Decision No. 332/2023 and Decision No. 184/2023 of the Bulgarian Commission on Protection of Competition ("CPC" or the "Commission"), which imposed sanctions on companies of the Lukoil Group for abuse of dominant position.
The two references for a preliminary ruling to the CJEU are among the rare cases in which a Bulgarian jurisdiction has referred questions to the Court of Justice, specifically in the area of competition law.
With its first decision, the CPC found that the companies violated Art. 21, para. 2, para. 5 of the Competition Protection Act ("CPA") and Art. 102, para. 'b' of the TFEU, consisting in an abuse of a dominant position on the market for the storage of motor fuels by failing to provide access to importers and producers of automotive fuels in their own tax warehouses, restricting imports by sea by blocking tax warehouses and not providing access to the group's petroleum products, including by refusing access to their key infrastructure.
In the main proceedings, the Bulgarian competition authority identified three forms of conduct that it viewed as part of a unified strategy by the Lukoil Group. It based this conclusion on the overall conduct of the undertakings over an extended period, resulting in a common anticompetitive effect. In this context, the Administrative Court – Sofia Region is asking the Court of Justice whether, where different forms of conduct – some classified as refusal to grant access to an essential facility and others as a restraint of trade – are grouped into a common strategy, it is permissible to find a single infringement under Article 102 TFEU or whether separate infringements should be identified.
Another issue raised in the case and leading to a second preliminary question, relates to the applicability of the Broner case[1].
As a reminder, the Court of Justice in the Bronner case outlined strict conditions under which refusal to supply or grant access by a dominant undertaking constitutes an abuse. These conditions are the following:
· access to the facility must be indispensable (i.e. no real or potential alternative);
· refusal must be likely to eliminate all competition on the downstream market;
· there must be no objective justification for the refusal; and
· the request must involve reasonable compensation.
In its decision, the CPC concludes that the Bronner test is applied to protect the interests of an undertaking which has built its own infrastructure, and which is not subject to an ex ante obligation to provide access to it. However, referring to the Baltic Rail decision[2], the CPC notes that the Bronner criteria should not apply where the infrastructure under consideration is funded by public funds rather than by the dominant undertaking's own investment (as in the present case) and is not owned by the dominant undertaking.
The circumstances in the present case are very specific, as the dominant undertaking has obtained key infrastructure built with public funds and the subsequent investments were made to upgrade and renovate that infrastructure, but as an obligation under a privatisation contract and not on the undertaking's own initiative. As further noted in the CPC's decision, following the privatisation of the state-owned company, the infrastructure came under the ownership of the Lukoil Group. However, in the Commission's view, this does not render the Bronner test applicable, as there were no economic incentives for investment warranting protection that would outweigh the public interest in maintaining undistorted competition.
In view of the above, the Bulgarian court is asking the Court of Justice whether the application of the Bronner test must be excluded in cases of alleged refusal to supply under Article 102 TFEU whenever the undertaking in a dominant position in relation to the essential facility has received public funding, or whether it is necessary to assess the amount of the investment and the performance of the privatisation contract/concession, as well as whether the investment was made in connection with fulfilling the investment contract/concession or on the undertaking's own initiative.
The remaining preliminary issues relate to the principle of proportionality, set out in the Guidance on the enforcement of Article 102 TFEU.
No deadline has been set for the Court's ruling. The Advocate General in Case C-245/24 is expected to give his opinion by 10 July 2025.
In its second decision, the CPC found that Lukoil Bulgaria EOOD had infringed Art. 21 CPA by abusing its dominant position through the application of a price squeeze against its competitors in the wholesale motor fuel market. This conduct is liable to prevent, restrict or distort competition in the fuel markets in that territory and affect the interests of consumers.
Particularly relevant for the Commission's decision and for the first preliminary question is the practical interpretation of "price squeeze".
In its decision, the CPC notes that, according to EC and ECJ case law, a price squeeze occurs when a vertically integrated firm sets upstream prices too high and downstream prices too low, thereby preventing non-vertically integrated competitors from making a normal profit that covers the costs of selling the product on the downstream market.
Based on national and European case law, the CPC has set out basic criteria for assessing the existence or absence of a price squeeze:
In view of the above, the Commission considers that, in any price squeeze case, two relevant markets must be identified: the upstream and the downstream market. The CPC defined the relevant markets in light of this concept. The very definition of a price squeeze as a competition infringement presupposes vertically integrated markets, where the undertaking holds a dominant position in the upstream market, enabling it to foreclose competition in the downstream market.
In the present case, the Commission found that Lukoil Bulgaria, as an undertaking in a dominant position, applies a unilateral pricing policy on the wholesale motor fuel submarket and on the vertically related downstream wholesale submarket of motor fuels exempted for consumption, resulting in a price squeeze that can prevent, restrict or distort competition on fuel markets and affect the interests of consumers.
Therefore, in Case C-260/24, the referring Bulgarian court asked the Court of Justice whether a margin squeeze infringement required the identification of two vertically related relevant markets – namely, an upstream and a downstream market – and whether, in relation to those two markets, the competition authority must, when bringing the accusation and adopting its final decision, make statements of fact concerning the size of the markets, the market participants and their respective market shares, including those of the undertaking alleged to hold a dominant position.
The remaining preliminary issues raised in the case relate to the definition of product markets and their analysis.
No opinion of the Advocate General is foreseen in Case C-260/24.
author: Yoana Strateva
Yoana
Strateva
Attorney at Law
bulgaria