CAPACITY BUILDING – INDIA; ABUSE OF DOMINANCE

1. CAPACITY BUILDING – INDIA; ABUSE OF DOMINANCE Eleanor M. Fox Professor, New York University School of Law CUTS-CIRC New Delhi 18 Jan 06

2. OUTLINE • THE CHALLENGES OF CAPACITY BUILDING • Commitment, infrastructure, tasks, priorities, strategies • TAKING A PERSPECTIVE ON SUBSTANTIVE LAW • What is harm to competition • Abuse of dominance • The example of Microsoft

3. I. THE CHALLENGES OF CAPACITY BUILDING • Belief in the market, unfettered by power • Resources • Structure, infrastructure • Autonomy to do what is right for competition and consumers • Knowledge and skills • Procedural and substantive • Outreach:inward and outward, nation+world

4. Priorities and Strategies • For India – much “low-lying” fruit • What initiatives will make the most difference; clearest gains to consumers • Cartels • Mergers • Monopolistic abuses • Careful choices, as examples • Most gains, most credibility, least backlash

5. Advocacy, autonomy Following thru studies Trucking Cement + steel Telecom, Mfg. Are there cartels? Also check timber, tires, pharmaceutical Trade associations Forum for cartels? Big mergers, acq. Airlines Cement Running shoes Acqs. in course of privatizations Abuse of dominance Choices for India

6. II. SUBSTANTIVE LAW:ABUSE OF DOMINANCE • Abuse of dominance as a touchstone for defining what is harm to competition • Protecting competitors versus protecting competition • Leveling the playing field v. letting hard competition play its course • Mandate not to protect firms from competition itself • Examples from U.S.

7. What is harm to competition? • Does the law protect competition process or does it intervene only to prevent lessening of aggregate consumer surplus (or, output limitation) • Nations have choices of presumptions • US – presumes markets are efficient; errs on side of non-intervention • EU – presumes market access is efficient

8. Microsoft as example • The US case – conduct that did not make sense except to destroy challenges to Microsoft’s OS; IP • Europe -

9. Duties to Deal, Bundling: US • IP cases – no duty to license, except in rare circumstances – Intel • Duty to deal – telecoms • Verizon v. Trinko – no duty to aid rival • Bundling – Microsoft • Browser + operating system • May be efficient • no negative presumption from foreclosure • But some acts- no purpose except • To harm competition - Microsoft

10. Duties to deal, bundling: EU • IP – a limited duty to deal where access is indispensable, refusal unjustified • Microsoft • Media player story – bundling • Foreclosure limits innovation by rivals • Work Group Server story – interoperability • Denial of full interoperability limits innovation • No IP justification – Microsoft has appealed

11. Summary on Abuse 1. Competition law should not protect competitors from competition on merits But what is competition on merits? We want efficient, robust competition 2. Is it better to err on side of non-intervention? Or on side of access? 3. For analytical capacity building, Point 1 is more important; point 2 can be decided case by case

12. CONCLUSIONS • The challenges of capacity building • A grip on the world