Luxembourg, December 18, 2025 — The EU’s top court has clarified how national authorities must define relevant markets and assess dominance when pursuing margin squeeze cases, ruling that only sufficiently substitutable products may be grouped into a single product market and that authorities must demonstrate upstream dominance before finding abuse.
In a preliminary ruling requested by a Bulgarian administrative court, the Court of Justice addressed a challenge by Lukoil Bulgaria to a 2023 decision of the Bulgarian competition authority finding that the company had abused a dominant position in the wholesale fuel market through a margin squeeze.
Margin Squeeze Framework
The court confirmed that a margin squeeze constitutes an autonomous form of abuse under Article 102 TFEU, provided a vertically integrated undertaking holds a dominant position upstream and applies pricing downstream that is capable of excluding competitors that are at least as efficient.
To establish such an infringement, authorities must show upstream dominance by reference to market shares or other relevant indicators of economic power and demonstrate that the pricing structure downstream can produce exclusionary effects. By contrast, the court reiterated that dominance on the downstream market itself is not a precondition for a margin squeeze finding.
Market Definition and Substitutability
The ruling also provides guidance on product market definition. The court held that products may be included in the same relevant market only where they display a sufficient degree of substitutability, assessed in light of demand, supply conditions, and market structure.
While the absence of end-consumer substitutability is relevant, it is not decisive. On wholesale markets, fuels that are not functionally interchangeable for consumers — such as petrol and diesel — may still belong to the same product market if storage, logistics, and supply conditions allow wholesalers to switch between them without additional cost.
Conversely, the court stressed that excluding a product such as liquefied petroleum gas requires objective justification. Differences in storage requirements, transport methods, and regulatory treatment may support such exclusion, but must be assessed on the facts.
Implications for Enforcement
The judgment underscores that competition authorities must carefully substantiate both dominance and market definition in margin squeeze cases, particularly where vertically integrated energy groups operate across multiple fuel segments.
The dispute now returns to the Bulgarian court, which must assess whether the authority’s market definition and dominance findings comply with the standards set out by the EU court.
The case is C‑260/24, a Bulgarian request for preliminary ruling involving Lukoil Bulgaria before the European Court of Justice.
