Acquisition of shares: No abuse of dominance

By Decision 2019-R-01 of 15 March 2019, the Competition Council (“Council”) dismissed the complaint filed against Encevo S.A. (“Encevo”), Enovos Luxembourg S.A. (“Enovos”), the number one energy suppliers in Luxembourg, and Paul Wagner & fils S.A. (“Paul Wagner”), active in the technical equipment installation sector in Luxembourg.

In its complaint of November 2018, the Fédération des Artisans, the representative organisation of craftsmen and self-employed persons in Luxembourg, alleged that the acquisition, in July 2018, by Encevo, the mother company of Enovos, of all the shares of Paul Wagner amounted to an abuse of a dominant position in violation of the Law of 3 October 2011 on Competition, as amended, and Article 102 of the Treaty on the Functioning of the European Union.

According to the Fédération des Artisans, the acquisition presented serious risks of these companies adopting abusive conduct in the future and foreclosing competitors of Paul Wagner in various ways (e.g. through joint offers, creating entry barriers, or in a public procurement context). The Council dismissed these claims arguing that the alleged abuse of a dominant position was merely potential and that the risk of abusive conduct in the future, however significant, did not justify for an investigation to be launched.

The Fédération des Artisans further alleged that the acquisition of the shares itself constituted an abuse of a dominant position as it increased the size and economic power of the Encevo group, leading to competition being seriously disturbed within the meaning of the “Continental Can” case law of the Court of Justice of the European Union (judgment of 21 February 1973, Case 6-72).

Referring to “Continental Can” and its own case law ( Decision 2016-FO-04 - Utopia), the Council reiterated that the fact that an undertaking holds a dominant position does not imply that there is an abuse of a dominant position. Since no abusive conduct had been established, the question of whether Encevo held a dominant position was irrelevant. In addition, Encevo and Paul Wagner were not active in the same business sector and were therefore not competitors prior to the acquisition. The Council saw no possibility to intervene, but did not exclude a possible future investigation if new elements arose.