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International Dominance Assessment: Commonalities and Differences

Study on dominance/SMP assessment across jurisdictions reveals common criteria like market share and barriers to entry. Differences include usage of presumptions and intervention thresholds. Report emphasizes the importance of competition authorities in liberalization and privatization processes.

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International Dominance Assessment: Commonalities and Differences

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  1. IntroductionUnilateral Conduct Working Group Dr Bernhard Heitzer, President of the Bundeskartellamt

  2. Dominance/SMP assessment:Questionnaire responses and the report show a great deal of commonalities across jurisdictions • 80 % of the responding jurisdictions use a „behavioural“ definition of dominance / substantial market power • All responding jurisdictions use a comprehensive set of criteria to assess dominance / substantial market power • Market share and barriers to entry or expansion (and thus durability of dominance/SMP) seen as the two most important criteria • Striking commonalities on how all these elements are assessed by competition authorities in practice Good basis to start work on recommendations

  3. However, there are alsodifferences in dominance/SMP assessment • 19 of the responding jurisdictions use either a dominance or a safe harbour presumption or both, whereas 16 jurisdictions do not • 12 of the 15 jurisdictions that use a dominance presumption have set it at 33% - 50%, whereas Brazil has set it at 20%, USA 70% and Canada 80% • In 15 responding jurisdictions intervention is also possible without a pre-existing dominant position, whereas it is not in 20 responding jurisdictions

  4. State-created monopolies • Reasons provided for the creation and/or maintenance of anti-competitive regulation and state-owned enterprises vary, e.g. “market unable to fulfil a public service mission”, safety and health considerations • Liberalization and privatization are typically aimed at increasing economic efficiency and introducing and promoting competition • Competition authorities can play an effective role in the liberalization and privatization processes, through enforcement and advocacy • Liberalization should continue around the world and competition authorities should play an important role in this process

  5. Practical relevance of UCWG report:An example from the BKartA‘s practice • Bundeskartellamt has brought a series of cases against gas and electricity suppliers both at wholesale and retail level, e.g. long-term gas supply contracts • Objectives: Goals of promoting competition and promoting consumer welfare coincide • Dominance/SMP assessment: Crucial role of barriers to entry • Energy markets as state-created monopolies: Full liberalization in 1998, but still not fully competitive markets • Advocacy example: National gas price comparison

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