1. Introduction

Long-term concession market foreclosure refers to a situation in which the grant of an exclusive or substantially preferential concession for an extended period restricts, prevents, or distorts the ability of competing enterprises to enter or expand in a particular market.

A concession is an arrangement under which a government authority, public institution, or infrastructure owner grants a private or public enterprise the right to operate, manage, develop, or commercially exploit a particular asset, service, or facility.

Examples include:

Airport terminal and ground-handling concessions.

Seaport cargo-handling and logistics concessions.

Railway infrastructure and passenger-service concessions.

Electricity transmission and distribution concessions.

Water supply and waste-management concessions.

Telecommunications infrastructure concessions.

Highway construction and toll-road concessions.

Digital infrastructure and public-service technology concessions.

Long-term concessions are not inherently anticompetitive. They may encourage investment, infrastructure development, technological innovation, and operational efficiency.

However, problems arise when the duration, exclusivity, renewal provisions, scope, or allocation process of a concession effectively prevents competing firms from accessing essential facilities or entering the downstream market.

The central competition-law concern is that a concession intended to promote investment may become a mechanism for creating or maintaining market dominance.

2. Meaning and economic foundations of concession foreclosure

Market foreclosure occurs when competitors are denied commercially viable access to the facilities, customers, infrastructure, inputs, or opportunities necessary to compete effectively.

Long-term concession arrangements can create foreclosure through several mechanisms.

A. Duration-based foreclosure

A concession granted for 20, 30, or 50 years may prevent competitors from accessing a strategically important facility for an extended period.

Even where the original award was lawful, market conditions may change considerably during the concession period.

B. Exclusive concession rights

An exclusive concession may prevent other operators from providing similar services within the concession territory.

For example, granting one company exclusive rights to operate all cargo-handling facilities at a major seaport may restrict independent logistics operators.

C. Infrastructure foreclosure

A concessionaire may control infrastructure that competing businesses cannot economically replicate.

Examples include:

Airport terminal facilities.

Railway tracks and stations.

Electricity distribution networks.

Water pipelines.

Port terminals.

Fibre-optic networks.

D. Customer foreclosure

A concessionaire may obtain exclusive relationships with major customers, public institutions, distributors, or commercial users.

This may prevent rival suppliers from reaching sufficient customers to compete effectively.

E. Renewal-based foreclosure

Automatic extensions, repeated renewals, or preferential renewal rights can prevent periodic competitive tendering.

F. Technological foreclosure

A concessionaire may control technical standards, interfaces, data, software systems, or interoperability arrangements that make switching to competing providers difficult.

3. Legal framework governing long-term concession foreclosure

The applicable legal framework depends on the jurisdiction. Nevertheless, several important competition-law principles recur across legal systems.

In the European Union, particularly relevant provisions include Articles 101 and 102 TFEU, together with EU public procurement and concession-award rules.

Article 101 addresses anticompetitive agreements, while Article 102 prohibits abuses of dominant positions.

The EU Concessions Directive 2014/23/EU also provides a framework for the award of concession contracts.

A crucial distinction is that an improperly awarded concession does not automatically establish an infringement of competition law. Procurement legality and antitrust legality are related but separate questions.

4. Major forms of long-term concession foreclosure

4.1 Exclusive territorial concessions

A government may grant a single enterprise exclusive rights to operate a particular service within a defined geographical area.

For example, a company may receive exclusive rights to operate all public parking facilities in a city for 30 years.

Potential competition problems include:

Exclusion of competing service providers.

Elimination of alternative investment opportunities.

Restriction of independent infrastructure development.

Increased prices due to reduced competitive pressure.

Reduced incentives to innovate.

The legality of exclusivity depends on its necessity, proportionality, duration, market effects, and applicable statutory framework.

4.2 Essential-facility foreclosure

A concessionaire may control infrastructure that competing enterprises cannot reasonably duplicate.

For example, an airport operator may control terminal access, baggage systems, passenger-processing infrastructure, and essential operational facilities.

If competing ground-handling companies cannot obtain access on reasonable and nondiscriminatory terms, the concessionaire may foreclose downstream competition.

Competition authorities should examine:

Whether the infrastructure is genuinely indispensable.

Whether duplication is technically and economically feasible.

Whether access has been refused or restricted.

Whether the restriction eliminates effective competition.

Whether objective operational or security justifications exist.

4.3 Vertical foreclosure

Vertical foreclosure occurs when a concessionaire operates both an essential infrastructure facility and a downstream commercial service.

For example, a railway infrastructure concessionaire may also operate passenger transportation services.

It could discriminate against competing passenger operators through:

Unfavourable scheduling.

Higher access charges.

Delayed approvals.

Restricted platform access.

Preferential allocation of capacity.

Discriminatory maintenance arrangements.

This can transform infrastructure ownership or control into a competitive advantage in adjacent markets.

4.4 Strategic renewal and automatic extension

A concession may initially be awarded through a competitive process but subsequently extended without meaningful competition.

Automatic renewal can create several difficulties:

New competitors cannot bid for the opportunity.

Incumbents gain long-term regulatory certainty unavailable to rivals.

Infrastructure access remains concentrated.

Public authorities lose opportunities to reassess market conditions.

Technological alternatives may be excluded.

Renewal should therefore be assessed as a potentially new allocation of market opportunity rather than an administrative formality.

4.5 Investment-recovery foreclosure

Long-term concessions are frequently justified by substantial capital expenditure.

An enterprise constructing a port terminal, railway network, or water-treatment facility may require many years to recover its investment.

Nevertheless, excessively long concession periods can protect the incumbent beyond the period reasonably required for investment recovery.

A proper assessment should compare:

Initial capital investment.

Expected operational expenditure.

Reasonable investment-recovery period.

Expected demand and revenue.

Technological depreciation.

Competitive opportunities lost during exclusivity.

The duration should be economically justified rather than determined solely by the concessionaire's preference.

5. Important case laws

The following European Union decisions provide particularly useful comparative principles concerning exclusive rights, public-service concessions, infrastructure access, market dominance, and foreclosure.

Case 1. Höfner and Elser v Macrotron GmbH (1991)

Citation: Case C-41/90, [1991] ECR I-1979.

Facts: The dispute concerned a public employment agency holding exclusive rights over employment-placement services.

Legal issue: Whether an undertaking holding a statutory monopoly could be regarded as dominant and whether the exercise of its exclusive rights could create competition-law problems.

Judgment: The Court held that a public undertaking exercising economic activities could qualify as an undertaking under competition law. A Member State could violate competition rules by creating a situation in which the undertaking was led to abuse its dominant position.

Relevance to long-term concessions:

This judgment establishes an important principle: granting exclusive rights does not automatically make the arrangement unlawful, but the State cannot create a monopoly structure that necessarily or predictably produces abusive conduct.

Application: A government granting an exclusive 30-year employment-platform concession must consider whether the arrangement creates conditions that permit exclusionary conduct or an unavoidable abuse of dominance.

Case 2. Merci Convenzionali Porto di Genova SpA v Siderurgica Gabrielli SpA (1991)

Citation: Case C-179/90, [1991] ECR I-5889.

Facts: The dispute involved exclusive rights concerning dock-work operations at the Port of Genoa.

Legal issue: Whether a statutory monopoly over dock work could result in abuse of a dominant position.

Judgment: The Court explained that granting exclusive rights is not inherently incompatible with competition law. However, a Member State violates the relevant competition provisions where exercising those rights necessarily leads to abuse or creates a situation likely to induce abuse.

The Court identified problematic conduct including:

Charging disproportionate prices.

Demanding payment for services not requested.

Restricting technological development.

Applying discriminatory commercial conditions.

Relevance to long-term concessions:

This is one of the most directly relevant authorities for port and infrastructure concessions.

It demonstrates that exclusive concession rights cannot be used to impose unreasonable conditions on users or prevent technological progress.

Application: A port concessionaire controlling cargo-handling operations cannot rely on its exclusive concession to justify unreasonable charges or restrictions on competing operators.

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Case 3. Telaustria and Telefonadress GmbH v Telekom Austria AG (2000)

Citation: Case C-324/98, [2000] ECR I-10745.

Facts: The dispute concerned the award of a public service concession relating to telephone directory services.

Legal issue: Whether public authorities granting service concessions must observe transparency and equal-treatment requirements.

Judgment: The Court established that concession awards with cross-border interest must comply with fundamental Treaty principles, including transparency and equal treatment.

The contracting authority must provide sufficient publicity to enable potential competitors to express their interest.

Relevance to long-term concessions:

An opaque concession award may exclude potential competitors before the concession even begins.

A concession granted without adequate publicity can therefore create long-lasting barriers to entry.

Application: A telecommunications authority granting an exclusive directory-data or network-service concession should ensure that interested operators have a genuine opportunity to compete.

Case 4. Parking Brixen GmbH v Gemeinde Brixen and Stadtwerke Brixen AG (2005)

Citation: Case C-458/03, [2005] ECR I-8585.

Facts: The case concerned the transfer of management of public car-parking facilities to a municipal company.

Legal issue: Whether the award of a service concession complied with the principles of equal treatment, transparency, and competition.

Judgment: The Court emphasised that public service concessions with relevant cross-border interest are subject to fundamental Treaty principles.

The Court also examined whether the relationship between the public authority and the company justified treating the arrangement as an in-house award.

Relevance to long-term concessions:

A public authority cannot automatically favour a municipal or incumbent operator without considering the applicable competition and procurement requirements.

Application: A city granting a 25-year parking-management concession to a municipal company must establish that the applicable conditions for an in-house arrangement are satisfied or conduct an appropriately transparent competitive award.

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Case 5. MOTOE v Elliniko Dimosio (2008)

Citation: Case C-49/07, [2008] ECR I-4863.

Facts: A Greek motorcycling association organised sporting events while also exercising regulatory powers concerning the authorisation of competing events.

Legal issue: Whether an undertaking involved in economic activities could exercise regulatory authority in a way that created competitive advantages for itself.

Judgment: The Court examined the conflict arising where an entity engaged in economic activity also possessed powers to authorise competing activities.

The arrangement could infringe competition rules where it was not subject to appropriate limitations and safeguards.

Relevance to long-term concessions:

This judgment is important where a concessionaire combines operational control with powers to approve, regulate, or supervise competing enterprises.

Application: An airport concessionaire that operates commercial airport services should not independently determine access approvals for competing service providers without adequate safeguards against discrimination.

Case 6. Sporting Exchange Ltd v Minister van Justitie (2010)

Citation: Case C-203/08, [2010] ECR I-4695.

Facts: The case concerned the grant of an exclusive gambling licence in the Netherlands.

Legal issue: Whether exclusive licensing arrangements complied with EU principles of transparency and equal treatment.

Judgment: The Court accepted that an exclusive licence could be justified under certain public-interest objectives, but emphasised the need for transparency and consistency in the licensing arrangement.

Relevance to long-term concessions:

The case illustrates that exclusivity may be legitimate when supported by genuine public-interest objectives, but it cannot be used as an unrestricted mechanism for protecting an incumbent.

Application: A government granting an exclusive digital betting or public-service concession must demonstrate the legitimacy of the regulatory objectives and ensure that the licensing framework is consistent with those objectives.

Case 7. ASM Brescia SpA v Comune di Rodengo Saiano (2008)

Citation: Case C-347/06, [2008] ECR I-5641.

Facts: The dispute concerned the extension of a public-service concession involving gas distribution.

Legal issue: Whether an extension of an existing concession could comply with EU Treaty principles governing equal treatment and transparency.

Judgment: The Court considered the relevance of the concession's cross-border interest and the obligation to ensure transparency and nondiscrimination.

Relevance to long-term concessions:

The case is particularly important for concession extensions. Existing concessionaires should not automatically receive preferential treatment when an extension affects opportunities for other operators.

Application: A government extending a gas-distribution concession without considering competitive opportunities may create barriers to market entry.

Case 8. Bronner GmbH & Co. KG v Mediaprint (1998)

Citation: Case C-7/97, [1998] ECR I-7791.

Facts: The dispute concerned access to a newspaper home-delivery distribution system controlled by a competing newspaper publisher.

Legal issue: Whether a dominant undertaking was required to grant competitors access to infrastructure it had developed.

Judgment: The Court established stringent conditions for finding an abusive refusal to provide access.

Among the important considerations were:

Whether the facility was indispensable.

Whether there was no actual or potential substitute.

Whether refusal was likely to eliminate all competition from the requesting undertaking.

Whether objective justification existed.

Relevance to long-term concessions:

This judgment provides a framework for assessing whether a concessionaire controlling essential infrastructure must provide access to competing enterprises.

Application: A railway concessionaire cannot automatically be required to share every facility. However, where the strict essential-facilities conditions are satisfied, refusal may raise Article 102 concerns.

These principles must be applied carefully because a concessionaire's investment incentives and legitimate property interests also deserve protection.

6. Additional case laws and judicial principles

Case 9. Coname v Comune di Cingia de' Botti (2005)

Citation: Case C-231/03, [2005] ECR I-7287.

Facts: The dispute involved the direct award of a public gas-distribution service concession to a company in which public authorities held an interest.

Legal issue: Whether the award of a concession without adequate transparency was compatible with EU law.

Judgment: The Court considered the requirement of transparency where a concession could be of interest to enterprises from other Member States.

Competition significance: Direct concession awards can exclude rival operators from potentially valuable markets.

Case 10. Wall AG v Stadt Frankfurt am Main (2010)

Citation: Case C-91/08, [2010] ECR I-2815.

Facts: The dispute concerned a public service concession for public toilets in Frankfurt and changes involving a subcontractor.

Legal issue: Whether significant changes to a concession arrangement could require a new competitive procedure.

Judgment: The Court examined whether modifications to the concession were substantial enough to constitute a new award requiring competitive treatment.

Competition significance: A concessionaire should not use subsequent contractual modifications to expand its protected market position beyond what was originally competitively awarded.

Case 11. ANAV v Comune di Bari (2006)

Citation: Case C-410/04, [2006] ECR I-3303.

Facts: The dispute concerned the provision of local public transport services and the award of a service concession.

Legal issue: Whether a public authority could directly award a concession without complying with the applicable transparency and equal-treatment requirements.

Judgment: The Court reaffirmed that public service concessions are subject to the fundamental principles of equal treatment, nondiscrimination, and transparency.

Competition significance: Public transport concessions can create long-term entry barriers when public authorities allocate routes and operating rights without sufficient competitive safeguards.

Case 12. Belgacom SA v Interkommunale voor Teledistributie van het Gewest Antwerpen (2013)

Citation: Case C-221/12.

Facts: The case concerned the extension of an existing concession arrangement involving the exploitation of cable television infrastructure.

Legal issue: Whether extending an existing concession without an appropriate competitive process was consistent with EU law.

Judgment: The Court examined the circumstances in which an extension or modification of a concession could amount to a new award and the importance of transparency.

Competition significance: This decision is particularly relevant to telecommunications and digital infrastructure, where concession extensions may preserve incumbent control over strategically important networks.

7. Economic assessment of long-term concession foreclosure

Competition authorities should not determine foreclosure merely by observing that a concession is exclusive or long-term.

They should examine the actual and potential competitive effects.

A. Market definition

The first step is identifying the relevant product and geographical markets.

For example, an airport concession might involve several separate markets:

Airport infrastructure management.

Ground-handling services.

Passenger processing.

Cargo handling.

Airport retail operations.

Airport parking services.

The relevant market depends on demand-side and supply-side substitution.

B. Market concentration

The authority should assess whether the concession results in excessive concentration.

Useful indicators include:

Market shares.

Herfindahl-Hirschman Index (HHI).

Number of independent operators.

Entry and expansion barriers.

Availability of substitute infrastructure.

Dependence of customers on the concessionaire.

C. Duration-to-investment analysis

The concession period must be compared with the reasonable time required to recover the investment.

For illustration:

Illustrative concession-duration assessment

30 years

Proposed concession period

Investment recovery period
12 years

Additional exclusivity period
18 years

Illustrative figures, not a legal presumption. The additional period requires justification based on investment, risk, demand, and market conditions.

An additional 18 years of exclusivity may create significant foreclosure risks if there is no corresponding investment or public-service justification.

D. Foreclosure percentage

A useful analytical measure is the proportion of commercially viable market opportunities unavailable to rivals.

For example:

\[ F=\frac{\text{Foreclosed market capacity}} {\text{Total viable market capacity}}\times100 \]

If a concessionaire controls 75% of viable terminal capacity, the remaining 25% may be insufficient to sustain effective competition.

This calculation is only a preliminary screening indicator. It does not independently establish an infringement.

E. Contestability analysis

Authorities should determine whether competitors can realistically challenge the concessionaire.

Relevant questions include:

Can competing enterprises build alternative infrastructure?

Can they access equivalent facilities?

Can they compete when the concession expires?

Are switching costs excessively high?

Does the concessionaire control essential data or technology?

Are alternative routes or distribution channels commercially viable?

8. Long-term concession foreclosure in different industries

9. Defences and legitimate justifications

A long-term concession may be justified by legitimate economic and public-policy considerations.

1. Capital-intensive investment

Large infrastructure projects require predictable investment conditions and sufficient time to recover capital expenditure.

2. Universal service obligations

Concessionaires may be required to provide services to remote, economically disadvantaged, or commercially unattractive areas.

3. Public safety and security

Airports, ports, electricity grids, and water systems may require centralised operational responsibility.

4. Technical coordination

Integrated infrastructure may require a single operator to coordinate complex systems.

5. Continuity of essential services

Abrupt termination of a concession may disrupt critical public services.

6. Environmental investment

Long-term arrangements may be necessary to recover expenditure on environmentally sustainable infrastructure.

However, the authority must assess whether exclusivity is necessary and proportionate. Less restrictive alternatives should be considered.

For example, a 30-year exclusive airport concession may be replaced by a shorter concession with transparent renewal procedures and nondiscriminatory third-party access obligations.

10. Remedies and regulatory safeguards

Competition authorities and concession-granting institutions can adopt several measures.

Competition for the market versus competition within the market

This distinction is particularly important.

Competition for the market occurs when enterprises compete to obtain the concession through a competitive award process.

Competition within the market occurs when multiple enterprises can provide services using the same infrastructure or within the same geographical market.

A concession may legitimately rely on competition for the market where natural-monopoly characteristics make multiple infrastructure operators inefficient.

However, downstream services may still be capable of supporting competition within the market.

For example, a single railway infrastructure operator may be economically justified, while multiple independent passenger and freight operators can compete over that infrastructure.

11. Special concerns arising from digital and AI-based concessions

Modern concession arrangements increasingly involve digital infrastructure and artificial intelligence.

Examples include government contracts granting exclusive rights to operate:

National digital identity systems.

Public cloud infrastructure.

AI-based transport management systems.

Smart electricity grids.

Digital payment gateways.

Public data-exchange platforms.

Automated customs and border-management systems.

These arrangements create additional foreclosure risks.

A. Data foreclosure

A concessionaire may accumulate exclusive access to public-sector datasets, preventing competing enterprises from developing comparable services.

B. Algorithmic discrimination

An AI concessionaire may prioritise its own downstream services or those of affiliated enterprises when allocating infrastructure capacity.

C. Platform lock-in

Long-term software contracts may prevent government institutions from switching providers because of proprietary interfaces and migration costs.

D. Model dependency

A public authority may become dependent on a single AI provider for essential decision-making infrastructure.

E. Interoperability restrictions

A concessionaire may restrict access to APIs, technical documentation, or system interfaces, preventing competitors from offering compatible products.

Appropriate safeguards include data portability, interoperability, independent technical audits, transparent access conditions, and periodic competition assessments.

12. Practical hypothetical case study

Scenario: Exclusive 35-year seaport concession

A government grants Company A an exclusive 35-year concession to operate a major seaport terminal.

The concession includes:

Exclusive cargo-handling rights.

Control over terminal infrastructure.

Authority to determine access charges.

Exclusive access to operational data.

Preferential rights to expand terminal capacity.

Automatic renewal provisions.

After ten years, Company B seeks to establish an independent cargo-handling operation.

Company A refuses access to the terminal and imposes high infrastructure charges on third-party logistics providers.

Competition-law issues

Whether the concession duration is objectively justified.

Whether the exclusive rights are proportionate.

Whether the terminal constitutes essential infrastructure.

Whether access restrictions constitute abusive conduct.

Whether the renewal clause prevents competitive tendering.

Whether the concessionaire discriminates against competing service providers.

Whether government intervention creates or protects a dominant position.

Possible legal analysis

The principles in Merci Convenzionali are particularly relevant to the exercise of exclusive dock-work rights.

The principles in Bronner are relevant to assessing refusal of access to infrastructure.

The principles in ASM Brescia and Belgacom are relevant to concession extensions.

The authority should investigate the commercial necessity of exclusivity, alternative infrastructure, access conditions, investment recovery, and actual foreclosure effects.

Possible remedies

Introduce transparent terminal-access conditions.

Require nondiscriminatory infrastructure charges.

Review the automatic renewal provision.

Permit competing cargo-handling operators.

Separate infrastructure management from competing commercial activities where justified.

Conduct periodic market assessments.

13. Key principles emerging from the case laws

The twelve judgments establish several important principles:

Exclusive rights are not automatically unlawful.

State-created monopolies must not facilitate inevitable or foreseeable abuses of dominance.

Public concessions must respect applicable transparency and equal-treatment requirements.

Long-term extensions can undermine competitive opportunities.

Control of infrastructure may create substantial barriers to entry.

Refusal of infrastructure access must be examined under the applicable essential-facilities standards.

A concessionaire combining commercial and regulatory functions may create conflicts of interest.

Investment recovery and legitimate public-service obligations can justify certain restrictions.

Public authorities must distinguish legitimate exclusivity from unnecessary market protection.

Procurement violations and competition-law infringements must be analysed separately.

14. Conclusion

Long-term concession market foreclosure is an important issue in modern competition law because concessions frequently involve control over essential infrastructure, public services, strategically important resources, and commercially valuable markets.

Although long-term concessions can promote investment, infrastructure development, and service continuity, excessive exclusivity, automatic renewal, discriminatory access, and restrictions on technological development may protect incumbent operators and prevent effective competition.

The most important judicial foundations include Höfner, Merci Convenzionali, Telaustria, Parking Brixen, MOTOE, Sporting Exchange, ASM Brescia, Bronner, Coname, Wall, ANAV, and Belgacom.

Ultimately, the appropriate competition-law approach is to balance investment incentives and public-service requirements against market contestability, fair access, technological progress, and consumer welfare.

The central regulatory principle is that a concession should reward efficient investment without granting an incumbent unnecessary or disproportionate protection from future competition.

Note on jurisdiction: These cases primarily establish EU legal principles and are useful comparative authorities. Their application in other jurisdictions depends on the relevant domestic competition, concession, and procurement legislation. Not every cited judgment establishes an antitrust infringement; several concern concession-award transparency and procurement principles.