1 / 28

Abuse of dominant position in competition law

Abuse of dominant position in competition law. Doc . dr . sc . Jasminka Pecotić Kaufman University of Zagreb- Faculty of Economics and Business , Department of Law jpecotic @ efzg.hr University of Zagreb- Faculty of Law Course : Competition Law 20.12.2011. Art . 102 TFEU.

ting
Download Presentation

Abuse of dominant position in competition law

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Abuseofdominantpositionincompetitionlaw Doc. dr. sc. Jasminka Pecotić Kaufman Universityof Zagreb-FacultyofEconomicsandBusiness, Department ofLaw jpecotic@efzg.hr Universityof Zagreb-FacultyofLaw Course: CompetitionLaw 20.12.2011

  2. Art. 102 TFEU • Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far it may affect trade between Member States.

  3. Art. 102 TFEU • Such abuse may, in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) limiting production, markets or technical development to the prejudice of consumers; (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

  4. Difference: agreements - abuse • Restrictiveagreements • Two or more undertakings • Art. 101 TFEU • Abuseofdominantposition • Unilateralbehaviour • Art. 102 TFEU

  5. Twosteps • Dominance • One undertaking • More than one undertaking (jointdominance) • Abuse

  6. “Zero” step = definitionofrelevantmarket • Relevantproductmkt • Substitutabilityofdemand(SSNIP-test) • Substitutabilityofsupply • Relevantgeographicmkt • Aim: whatcompetitiveconstraints are undertakingsfacedwith?

  7. Dominantpositionandmarket power • Market power • Power to increase price abovecompetitivelevel • Canfirms use theirmarket power? • Dominantposition: a levelofmarket power significantlyhighercompared to otherfirms on themarket, whichcanbeused to harmeconomicfreedomofotherfirmsbyeliminatingthemfromthemarket • Aim: not to createperfectcompetition, but to concentrate on significantmanifestationsofmarket power

  8. Dominantposition • POSITION OF ECONOMIC STRENGTH ENJOYED BY AN UNDERTAKING WHICH ENABLES IT TO PREVENT EFFECTIVE COMPETITION BEING MAINTAINED ON THE RELEVANT MARKET BY GIVING IT THE POWER TO BEHAVE TO AN APPRECIABLE EXTENT INDEPENDENTLY OF ITS COMPETITORS , CUSTOMERS AND ULTIMATELY OF ITS CONSUMERS(United Brands, 1978.) • Neoclassicdefinitionofmonopoly (US) • Firm is a monopolist if it canprofitablyincrease price abovecompetitivelevel • New interpretationofdominanceinthe EU (2005) • Dominance = significantmarket power • Power to decreaseoutputandincreaseprices

  9. Marketshares • Marketsharenotinitselfsufficient, but canserve as usefulindicatorofdominantposition • ALTHOUGH THE IMPORTANCE OF THE MARKET SHARES MAY VARY FROM ONE MARKET TO ANOTHER THE VIEW MAY LEGITIMATELY BE TAKEN THAT VERY LARGE SHARES ARE IN THEMSELVES, AND SAVE IN EXCEPTIONAL CIRCUMSTANCES, EVIDENCE OF THE EXISTENCE OF A DOMINANT POSITION  • AN UNDERTAKING WHICH HAS A VERY LARGE MARKET SHARE AND HOLDS IT FOR SOME TIME IS BY VIRTUE OF THAT SHARE IN A POSITION OF STRENGTH (Hoffmann-La Roche, 1979.)

  10. Presumptionofdominance • If more than 50%, plus no exceptionalcircumstances, dominancepresumed(AKZO, 1991.) • Burdenofproof on undertaking to prove otherwise • Relevant: • Marketsharesofcompetitors • Assimetryofmarketshares • Stabilityofmarketshares

  11. Virgin/BA

  12. Entrybarriers • Preventing / discouragingotherfirmsfromenteringthemarket • E.g. technology, verticalintegration, exclusiveright… • Marketshares= static picture • Entrybarriers = dynamics of a market • Ifmarketentryeasy, marketshares no indicatorofmarket power

  13. Specialresponsibilityofdominantfirm • A FINDING THAT AN UNDERTAKING HAS A DOMINANT POSITION IS NOT IN ITSELF A RECRIMINATION BUT SIMPLY MEANS THAT, IRRESPECTIVE OF THE REASONS FOR WHICH IT HAS SUCH A POSITION, THE UNDERTAKING CONCERNED HAS A SPECIAL RESPONSIBILITY NOT TO ALLOW ITS CONDUCT TO IMPAIR GENUINE UNDISTORTED COMPETITION ON THE COMMON MARKET(Michelin, 1985.)

  14. Jointdominance • Twoor more firmsbehavinginthe same way on themarket(DIP, 1995.) • a dominant position may be held by two or more economic entities legally independent of each other, provided that from an economic point of view they present themselves or act together on a particular market as a collective entity(CompagnieMaritimeBelge, 2000.) • Airtours(2002.) • Oligopolisticstructureresultinginmarkettransparency • Efficientdeterrent for disuadingfirmsfrom ‘cheating’ • Competitors, consumersnotendangeringcollusiveequilibrium

  15. Effect on tradebtw MS • No need to prove actualeffect • Ifeffectsofabuselimited to one MS, Art. 102 notapplicableexceptifeffectsofabusemay influence existingleveloftradebtw MS • E.g. ifabusepreventscompetitorsfromother MS fromenteringthemarket • E.g. ifabuseforcesbuyersofdominantfirm to turntosourcesofsupplyinother MS

  16. Conceptofabuseofdominance • PRACTICES WHICH ARE LIKELY TO EFFECT THE STRUCTURE OF A MARKET WHERE, AS A DIRECT RESULT OF THE PRESENCE OF THE UNDERTAKING IN QUESTION, COMPETITION HAS ALREADY BEEN WEAKENED AND WHICH, THROUGH RECOURSE TO METHODS DIFFERENT FROM THOSE GOVERNING NORMAL COMPETITION IN PRODUCTS OR SERVICES BASED ON TRADERS ' PERFORMANCE, HAVE THE EFFECT OF HINDERING THE MAINTENANCE OR DEVELOPMENT OF THE LEVEL OF COMPETITION STILL EXISTING ON THE MARKET (Michelin I, 1983.)

  17. Conceptofabuse • Relatesnotonly to practicethatharmsconsumers, but also to practiceharmingconsumersindirectly (duetoits negative effect on effectivecompetitivestructure), ContinentalCan, 1973 • Notrelevantifabusivepracticeresultsin no financial gain for theabusingfirm

  18. Categorisationofabuse • Exclusionaryabuse • Competitorsexcludedfromthemarket or ‘disciplined’ orpotentialcompetitorspreventedfromenteringthemarket • Exploitativeabuse • Directharm to consumerinterests or interestofclients

  19. Typesofabuse • Predatorypricing • Excessiveprices • Price discrimination • Discounts / rebates • Tying • Refusal to deal • Limitingproduction, markets or technicaldevelopment • Unfairtradingconditions

  20. Predatorypricing • Short-termdecreaseinpricesinorder to eliminatecompetitors or discouragepotentialcompetitorsfromenteringthemaket • Aim: to earnhigherprofitslong-term • Lowprices v. predatoryprices • Do wewant to sanctionlowprices? • AKZO-test • Pricesbelowaveragevariablecostsalwayspredatory • Pricesaboveaveragevariablecost, but belowaverage total costalsoabusive, but onlyifpartof plan to eliminatecompetitors

  21. Excessiveprices • Art. 102 – directly or indirectlyimposingunfairprices • Exploitativetypeofabuse • Firmwithlargemarket power, shieldedbyentrybarriers, harmsconsumerswithitsinsufficientefficiency • Excessive price - concept • No objectiverelationshipwitheconomicvalueofgoods • Comparisonbetween sale pricesandcostofproduction

  22. Price discrimination • Applyingdissimilar conditions to equivalent transactions • Differentpricesalthough price differentialnotrelated to differencesincosts or same price althoughcostsdifferent • “Temporary” price discrimination • There is competition on themarket – trying to competefirmgivesdifferentpricestobuyers • “Systemic” price discrimination • Systemicdivisionofbuyersincategoriesinorder to use differenceinelasticityofdemandofcertaincategoriesofbuyers

  23. Discounts / rebates • BreachofArt 102 ifonlyrationalexplanationofdiscounts/rebatesanattempt to eliminatecompetitors or exploitconsumers • Ifdiscounts/rebatesreflectionoffirms’ efficiency, no breachofArt 102 • Loyaltyrebates • Closingoffpartofthemarket for competitors • Quantitiverebates • Allowedif transparent andnottyingbuyers

  24. Tying • Art 102: making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts • Supplier (dominantfirm) makessupplyof one productsubject to acceptanceofsupplyofotherunrelatedproduct • Expandingmarket power from one market to theother

  25. Refusal to deal • No obligation to dealunlessrefusaltodealexercisedinordertoexpandmarket power from one market to theother or ifintention to eliminateconsumersfromthemarketwhererefusaltodealhasbeenexercised • No abuseifnodominancebecauseproductscanbeobtainedfromotherfirms on themarket

  26. Essentialfacilitiesdoctrine • Infrastructureindispensable for reachingbuyers; cannotbeduplicated; without use ofinfrastructurefirmcannotoperate on neighbouringmarket • Abuseofdominanceiffirm holding essentialfacilityrefuses access to otherfirmswithoutobjectivejustification

  27. Essentialfacilitiesdoctrine • Criteria: • Access indispensable to operate on neighbouringmarket • Refusalof access eliminatescompetition, completelyandpermanently, on neighbouringmarket • No objectivejustification for refusal to access • Duplicationnotviable

  28. Limitingproduction, markets or technicaldevelopment • Ceasing to produce spare parts for certain car modelsalthoughstillincirculation(Volvo, 1988) • Magill– new product (TV guides)

More Related