Has the Prohibition on Abuse of Economic Dependence Lived Up to Expectations?

Great expectations

On 22 August 2020, the Belgian legislation prohibiting the abuse of economic dependence entered into force (Article IV.2/1 CEL). The purpose of the new law was to fill a gap in the Belgian and European rules on abuse of dominance, which do not protect against abusive practices by an undertaking that does not enjoy a 'dominant position' on the market, even when its trading partners are economically dependent on it.

The prohibition is intended to provide undertakings with a new tool to take action against abusive practices by suppliers or customers that constitute indispensable trading partners and to strengthen the negotiating position of so-called weaker undertakings. Faced with the possibility of legal actions as well as investigations by the Belgian competition authority ("BCA"), undertakings were strongly advised to revise their contractual practices and parties injured by potentially abusive practices were urged to come forward.

However, even strong promotional campaigns such as that sponsored by the Belgian Ministry for Economic Affairs, stating that 'might is right is a thing of the past', have been dwarfed by criticism of the new legislation. This criticism focuses in particular on (i) the difficulty of relying on the prohibition in practice and (ii) the lack of available guidance, which will inevitably result in uncertainty in the context of B2B contracts.

But few results so far

The business world and legal practitioners looked to the BCA and the courts to clarify the scope of the prohibition through concrete examples. At first, the BCA expressed concern that, in the absence of additional funding, it would not be able to investigate potential violations of the new provision. According to statements made by the authority, it appears that in the meantime the BCA has received various complaints, of which two are currently being formally investigated.

On 28 October, the first judicial decision on the prohibition was rendered. The case concerned a request for an injunction brought before the president of the Ghent Commercial Court against a Belgian designer and producer of (children's) clothing. The claimant was a small retailer, which primarily sold children's clothing supplied by the defendant. The retailer claimed that the defendant had abruptly decided to cease supplying it, which constituted an alleged refusal to supply in violation of the prohibition on abuse of economic dependence. The president of the Court sided with the claimant and concluded that there had been an abuse of economic dependence or at least careless conduct violating fair market practices (Article VI.104 CEL). Unfortunately, the judgment may lack precedential value and did not provide the hoped-for clarification.

Keep calm and carry on?

Despite a slow start, and the perceived difficulty to rely on the new prohibition, it is reasonable to expect that case law by the BCA and civil courts may emerge soon and (hopefully) provide further guidance for undertakings and legal practitioners. The prohibition on abuse of economic dependence should therefore not yet be disregarded as a tool for negotiations and an additional ground to take legal action against certain contractual practices.

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