In the recent Tunstall case, the Belgian Supreme Court (“Cour de cassation”) clarified that an abuse of economic dependence can arise even without a pre-existing contractual relationship between the parties. This judgment overturns the restrictive interpretation previously adopted by the Court of Appeal.

We take this Supreme Court judgment as an opportunity to briefly revisit the relevant legal framework and the practical implications for companies active in Belgium.

The abuse of economic dependence: the conditions revisited 

To establish an infringement under Article IV.2/1 of the Code of Economic Law (“CEL”), three cumulative conditions must be satisfied: (i) the existence of a relationship of economic dependence between two companies; (ii) an abuse of that dependence; and (iii) an effect on competition within the Belgian market or a substantial part thereof.

(i) Position of economic dependence 

Unlike a position of dominance, which requires an undertaking to hold power in the market generally, economic dependence reflects a situation of relative strength vis-à-vis economic trading partners. A position of economic dependence is deemed to exist if:[1]

• no reasonable equivalent alternative is available to the dependent party within a reasonable time and on reasonable terms and costs; and 
• it allows the stronger party to impose terms or conditions that could not be obtained under normal market conditions.

Several indicators can help identify a position of economic dependence, including the share of the dependent party’s turnover which is generated through the stronger undertaking, the importance of the technology or know-how held by the stronger undertaking, brand recognition and loyalty considerations and the fear of serious economic damage or reprisals.[2]

(ii) Abuse of economic dependence 

Having a trading partner who is economically dependent is not prohibited per se. The law merely imposes an additional requirement that the relationship must not be abused. What constitutes an abuse of economic dependence is not precisely defined, but the law provides a non-exhaustive list of abusive behaviours:

• Refusing a sale, purchase, or other transaction terms.
• Imposing unfair purchase or sale prices or other unfair contractual terms.
• Restricting production, marketing, or technical development to the detriment of consumers.
• Applying dissimilar conditions to equivalent transactions with economic partners, placing them at a competitive disadvantage.
• Making the conclusion of agreements subject to acceptance of supplementary services unrelated to the agreement's subject.

Competition law practitioners will find this list reminiscent of the list of abuses of dominance in Article 102 TFEU. Indeed, behavior which constitutes an abuse of dominance, will typically also constitute an abuse of economic dependence in cases of relative commercial strength.[3]

With respect to the refusal to grant a licence to an intellectual property right, case law clarifies that only in "exceptional circumstances" will this refusal amount to an abuse.[4] According to case law, these exceptional circumstances must meet four conditions:

• the refusal concerns a product or service that is indispensable for carrying out an activity in a neighbouring market;
• the refusal must be capable of eliminating all effective competition in the market; 
• this refusal prevents the emergence of a new product for which there is a market; and 
• the refusal is not justified by objective considerations.

(iii) Effect on competition on the Belgian market or an essential part of it

Finally, an abuse of economic dependence requires an effect on competition on the Belgian market or an essential part of it. In other words, the conduct in question cannot merely disadvantage the dependent company but must potentially affect the functioning of the market as a whole.

Many judgments do not address this condition.[5] In other cases, however, it has resulted in a dismissal of the claim.[6]

The Tunstall case 

In the Tunstall case, Télé-Secours initially depended on Tunstall’s patented technology to provide telecare services to the elderly and vulnerable. Persistent delays from Tunstall in delivering updates prompted Télé-Secours to explore Victrix as an alternative provider. Tunstall then declined to grant Victrix a licence for its existing technology. When Télé-Secours eventually switched to software developed by Victrix, Tunstall initiated legal proceedings before the Commercial Court of Brussels, alleging patent infringement by both Victrix and Télé-Secours. In response, Victrix and Télé-Secours filed a counterclaim, requesting the court to require Tunstall to issue a licence for the use of its patented technology.

The court applied the conditions of economic dependence, noting that when an undertaking extensively relies on patented technology for a substantial portion of its operations, this serves as an initial indicator of economic dependence.

 The court further clarified that economic dependency is conclusively established in this context when: (i) the dependent company lacks viable alternatives; and (ii) there exists a 'threat rate', which refers to a scenario where the potential loss of a significant customer or supplier poses a risk to the survival of the dependent company.[7]

With regard to the condition of a contractual relationship, the first-instance court noted it is not explicitly required by the law itself. Article IV.2/1 CEL does not specify that a contractual relationship must exist for economic dependence to be established. The court observed that the legislative text and its preparatory works do not impose such a requirement.

Under these circumstances, the court ruled that Victrix and Télé-Secours were economically dependent on Tunstall and that the latter had abused that position by refusing to grant licences. [8]

Tunstall appealed this decision, and the Court of Appeal in Brussels overturned the first-instance court’s ruling. The Court of Appeal found that Télé-Secours had reasonable alternatives to Tunstall's platform and emphasised that a pre-existing contractual relationship is necessary to establish economic dependence. The court also considered that Tunstall’s behaviour was not abusive, as its refusal to grant Télé-Secours a licence did not prevent the market launch of a new product for which there is potential consumer demand, as is required by case law.[9]

Télé-Secours appealed the case to the Supreme Court, which found that a situation of economic dependence can exist even without a pre-existing contractual relationship. 

Key takeaways

• Clarification as to the scope of economic dependence: businesses should be aware that economic dependence can be established even without a pre-existing contractual relationship. This opens the door for more such claims, notably in situations of refusal of licence or refusal to deal.
• While the focus is on the relationship between the parties, the broader market circumstances remain important: while the position of economic dependence focuses on the relationship between parties, elements relating to the broader market such as the availability of reasonable alternatives and the impact of the behaviour on the broader market, are crucial. Parties should take this into account when assessing whether to (continue to) engage with another party, or bring a claim against them.
• Conditions remain stringent: While the Supreme Court’s judgment offers some reassurance for parties faced with a refusal to deal or refusal to license, the conditions for abuse of economic dependence remain strict—notably the requirement that competition is potentially affected. As a result, convictions ultimately remain rare.

If you need more information or further guidance in this area, please contact Baptist Vleeshouwers and Claire De Neve.

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[1] Art. I.6, 12bis Code of Economic Law.

[2] Parl. doc. 2018-19, nr. 54-1451/03, 4.; Commercial Court of Antwerp (Tongeren division) 16 April, 2021, No. A/21/00024, Pletsers/Blaser and Mauser, TBH 2021, issue 5, 646. 

[3]  Parl. doc. 2018-19, nr. 54-1451/03, 12.

[4] Judgment of the Court of Justice of 6 April 1995, C-241/91 P and C-242/91 P, RTE and ITP (Magill), paragraphs 49 and 50; Judgment of the Court of Justice of 29 April 2004, C-418/01, IMS Health, paragraphs 34 and 35.; Court of Appeal Brussel (Chamber 9), 8 Juin 2023, I.C.I.P-Ing.Cons., 20123, 507-538.; Amicus Curiae of 25 January 2022 of the Belgian Competition Authority in the case  Tunstall/Télé-Secours/Victrix (A/21/01929), paragraph 165-166. 

[5] Commercial Court of Antwerp (Tongeren division) 16 April, 2021, No. A/21/00024, Pletsers/Blaser and Mauser, TBH 2021, issue 5, 646, note by J. STUYCK; Commercial Court of Ghent, 28 October 2020, No. A/20/02490, De Troyer/The Woody Group, TBH 2021, issue 4, 514, note by S. COLAERS.

[6] Court of Appeal Antwerp, 20 October 2021, Kerkstoel Bouwmaterialen/Fingo, NjW 2022, 462. ; Commercial Court Brussels, 21 October 2021, Brevan/Fortis, Competitio 2021/3, 290. ; Court of Appeal Ghent, 4 April 2022, Gerca/Dr. Martens, Competitio 2022/1, 36. ; Brussels, 6 September 2023, 2022/AR/338, KBC Bank/Diamond House en Diamond House Jewellery (unpublished). ; Brussels, 25 September 2023, A/23/01310, The Football Forum e.a./KBVB en FIFA, (unpublished).  

[7] This threat becomes particularly pronounced if the company risks losing a substantial number of customers should it relinquish the patented technology.

[8] Commercial Court Brussels, 26 July 2022, nr. A/21/01929. 

[9] Court of Appeal Brussel (Chamber 9), 8 juni 2023, I.C.I.P-Ing.Cons., 20123, 507-538.