Exploitative Abuses

Article 102 TFEU is, inter alia, intended to restrict exploitative unilateral conduct by dominant undertakings. This includes abuses such as setting excessive prices if the undertaking in question is the provider and requiring abusively low prices if it is the buyer. Furthermore, the dictation of unreasonable contract conditions, artificially limited out-puts, the refusal to enter into contractual relations, the refusal to provide licenses or the requirement of unreasonably long license duration, would fall under this kind of abuse. The abuses could take place indirectly if the dominant undertaking is not dealing directly with the consumer, but requires the passing-on of the abuse.[1]

Whilst the elimination of exploitative abuses is obviously intended to protect the consumer, the application of this to public HEIs might cause problems with their public service character. Similarly to what is mentioned above regarding collusion, one might, for example, wonder if the limitation of study places could be regarded as limiting outputs under Article 102(b) TFEU. In England, for example, plans were, first, aired that additional places for students willing and able to pay higher fees could be created[2] and eventually student number controls were abolished entirely for certain providers,[3] which seems to suggest that the limitation of study places is not a business necessity from the point of view of the HEIs. If places are limited artificially, this could enable students to challenge such behaviour under Article 102 TFEU if conducted by a dominant HEI. Article 106(1) TFEU in conjunction with Article 102 TFEU would also allow challenges to government regulations which enable dominant undertakings to abuse their position this way. As the citizenship cases of Belgium and Austria discussed in Chap. 2 have shown, the equilibrium of public finances might, however, not necessarily allow the offering of publicly financed places for everybody, particularly if one considers that all EU students have to be granted equal access.[4] Additionally, in the field of research, there could equally not be artificial limits placed on output, which could possibly lead to an increase in commercial research in comparison to public service research.

With regards to education, a student in Ireland has, indeed, already attempted to challenge the limitation of study places for medicine for European students in that country inter alia under Article 102 TFEU.[5] Whilst publicly subsidised European students had to fulfil very high entrance criteria, international students who paid full cost prices did not. The student in question had offered to match the full cost price, if he would then be admitted with his lower grades, which was denied. The national court dealt at length with the issues of national law, but only discussed EU competition law in two short paragraphs which are not overly clear. It appears that the national court assumed that because medical schools could, in theory, opt out of government subsidies and offer private education at full cost rates and because medical education is expensive for the government to subsidise ‘that there is nothing wrong in competition terms’. However, the medical schools offered medical education as a market service at least for international students, it appears from this case that there are only five medical schools in Ireland which therefore all hold positions of economic strength and it might also be assumed that barriers to entry are rather high in the medical education market. It, thus, seems possible to regard the individual medical schools as undertakings in a dominant position which abuse that position by limiting outputs for certain consumers. A reference for a preliminary ruling might have been indicated in this case.

Furthermore, if governments were to adopt a strategy of different prices for different students based on their financial background, as had been explored by the British Government,[6] this could be regarded as price discrimination and could therefore also be an abuse of a dominant market position. Similarly, excessive prices for research, favourable purchase prices or contract conditions regarding supplies for research or discounts for certain undertakings (for example for local undertakings) could be challenged. It might, in particular, cause problems to charge undertakings from other Member States more than national ones because this would cause partitions in the internal market. Whilst price discrimination, particularly the originally envisaged price strategy for tuition fees in England, is generally debatable, it could theoretically also be used to enhance equality (for example, higher prices for better-off students could cross-subsidise places for less well-off students). Price reductions for local undertakings regarding research could help to promote a certain region. Furthermore, high priced private research could be utilised to cross-subsidise teaching and research in the public interest. The application of Article 102 TFEU would also take away the opportunity to attach additional contract conditions which are not economically justified to the contracts. The behaviour of some HEIs in demanding that students not only prove that they can pay the fee, but also prove in advance that they can cover their living costs for the time of the study[7] might potentially be regarded as such. Whilst, as mentioned above, there are no exemptions for Article 102 TFEU, an exemption under Article 106(2) TFEU might be possible if the application of competition law would obstruct the public service obligation entrusted to an HEI.

  • [1] See Jung 2009, para 143 seq.
  • [2] See Vasagar J (2009) Richest students to pay for extra places at Britain’s best universities.The Guardian, 9 May 2011 http://www.guardian.co.uk/education/2011/may/09/universities-extra-places-richest-students. Accessed 11 July 2011. The plans were not taken over into the 2011government White Paper as such, but the White Paper still included the possibility of such extraplaces being funded by business and charities (see BIS 2011, p. 51 para 4.22 seq).
  • [3] CMA 2015 para 3.3. Further lifting of student number controls is envisaged (BIS 2016, p. 27).
  • [4] See Chap. 2 (Sect. 2.3.1) above.
  • [5] Prendergast v Higher Education Authority & Ors [2008] IEHC 257.
  • [6] See n 228 above.
  • [7] Such a policy at the University of Oxford has been challenged by a student under the BritishHuman Rights Act 1998. See BBC News (2013) Judgement reserved over Oxford Universitystudent discrimination row. BBC News, 15 February 2013 http://www.bbc.co.uk/news/uk-eng-land-21465879. Accessed 17 February 2013.
 
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