8 - Competition Law 2: Article 102 TFEU Flashcards
1
Q
What does Article 102 TFEU seek to deal with?
A
- Deals with the threat to competition in the market
- Posed by dominant undertaking
- Which has economic power to act independently of market prices.
2
Q
Does article 102 TFEU prohibit market dominance in itself?
A
- Does not prohibit market dominance in itself.
3
Q
What does Article 102 prohibit?
A
- Prohibits any abuse of dominant position that is capable of affecting trade between MS.
- Abuse = anti competitive behaviour that eliminates/ weakens competition in market, e.g. using the dominant position to weaken or drive out smaller competitors.
4
Q
What must be established for there to be infringement of Article 102?
A
- 1+ undertakings are in dominant position within the internal market/ substantial part of it. Requires determination of Relevant Market that undertaking is operating and of whether or not
- Conduct being investigated amounts to abuse of the dominant position of that undertaking
- Abuse can affect between MS.
5
Q
Explain the concept of “relevant market”?
A
- Have to identify relevant market
- Which provides framework within which to determine whether or not the undertaking under investigation has dominant position, which it abused.
- Commission looks at if products are in competition in which geographical area within the relevant time frame.
• Relevant Product Market
• Relevant Geographic Market
• Relevant Temporal Market
6
Q
What is the “Relevant Product Market”?
A
- RPM = consists of products / services which are in competition.
- Establishing this involves detailed and expensive analysis.
- This is crucial in deciding whether undertaking is in dominant position + has offended Article 102.
7
Q
Hilti AG v Commission
A
- This concerned RPM (Relative Product Market)
- Made nail guns, wanted to show that they were not in nail gun market exclusively (and dominant)
- But were actually a small part of the “industrial fasteners” market, to not offend Article 102
- Argument was rejected - HELD - nail guns sufficiently unique as a product to occupy separate part of the market.
- Hilti compatible cartridges and Hilti compatible nails had separate markets.
- Hilti held a dominant position in each of these markets.
- Considered as a whole because they could be transported throughout community without excess transport cost
- Also a “tie in” agreement
- Made purchase of nails guns conditional on the buyer also purchasing corresponding strips used in its nail guns
8
Q
United Brands Co v Commission
A
- This looked at the question of demand suitability.
- Question of whether bananas were part of overall fruit market or whether bananas formed separate market of their own.
- Here, identifying RPM was important because it determined the resulting market share.
- Had small share of fruit market as whole but larger share of the banana market.
- If bananas were part of overall fruit market (not dominant) or their own market - then United Brands would have a 40-45% share
- Ruled that bananas were their own separate market away from the fruit market
- Because of their characteristics - they are easy to handle and small, useful for the sick and very young and very old - would not be likely to be enticed away by other fruit.
9
Q
What is the SSNIP test?
A
- Small, significant non transitory (permanent) increase in the price
- This is a test for cross elasticity of demand
- It is the degree to which demand for one product increases n response to a rise in the price of another.
- If this is responsive, then the products = in competition.
10
Q
What is supply substitutability?
A
- If one company can easily change to produce another product
- Suppliers able to switch product to relevant product market
- Without significant risk.
- Have to assess how easy it is for rival manufacturers to switch production so as to produce competing goods now / in future.
- If easy to switch production, then can assume that it is unlikely that original manufacturer is dominant in the market.
11
Q
What can be assumed if there is low supply suitability for a certain product?
A
- If supply substitution is easy, then can assume that it is unlikely that the original manufacturer is dominant in the market.
- If manufacturer is dominant in market of high supply substitution, it is assumed that it will not retain dominance for long because rivals can easily manufacture the same product.
12
Q
Euroemballage Corn and Continental Can Co Ltd
A
- This is a good example of demand substitution.
- Continental Can bought a German company
- Transferred its shares in that company to a new subsidiary.
- Commission: acquisition and establishment of subsidiary gave Continental Can a dominant position in 3 markets.
- Court of justice annulled this decision
- Commission had failed to prove that these markets differed from the more general market for light metal containers, other container makers had sufficient supply suitability and could make their own containers.
13
Q
Michelin 1
A
- This also relates to demand substitution/ supply suitability
- This contrasts with the Euroemballage case.
- Courts rejected that there was a single market for replacement tyres
- 2 types of tyre used for different vehicles, therefore not interchangeable.
- no elasticity of supply.
- Production plant would have to be modified to switch production between the 2 types of tyre (heavy versus light)
- Would take time + considerable investment
- RGM = Netherlands, just 1 RGM
14
Q
Microsoft case?
A
- This is also an example of demand substitution/ supply suitability
- PC operating systems, Work server operating systems and Streaming Media Players = constitute separate markets.
- Low supply sustainability between them. only need to establish that on of the forms of suitability exists in order to find the products fall within the same product market.
- This was confirmed in Microsoft v Commission
15
Q
What does the Commission need to establish in terms of supply suitability?
A
- Only need to establish that one of these forms of suitability exists in order to find that the products fall within the same product market.
16
Q
What are aftermarkets?
A
- There are many sectors where consumers of one product will need, at a later time, to purchase complementary products such as spare parts / consumables.
- These are parts that need to be replaced frequently / need maintenance services
- Have to consider if these complementary products form part of the main primary market, or the secondary aftermarket.
17
Q
What happens if there is an aftermarket? How does the Commission use the aftermarket?
A
- Then an undertaking which is not dominant in the primary market might be dominant in the aftermarket.
- Therefore Commission may look at aftermarket to establish whether dominance exists in the market specifically.
- What might appear to be an inconsequential market can in fact amount to a separate market in its own right.
18
Q
How do ‘aftermarkets’ link with the Hugin case?
A
- Hugin were a swedish firm that made cash registers
- Liptons were a British company that serviced Hugins registers in London and could not use any spare parts that were not from Hugin.
- Hugin = asserted design rights therefore stopped them using other types
- Held: there was a separate market for spare parts for Hugin cash registers and Hugin was dominant in this market
- Refusal by Hugin to supply spare parts to firms who hired out and maintained cahs registered - was abuse of dominant position.
19
Q
What is relevant Geographic Market?
A
- This is the second dimension of ‘Relevant Market’
- RGM = clearly defined Geographic area in which the product is marketed and where conditions of competition are sufficiently homogenous for the effect of the economic power of the undertaking concerned to be able to be evaluated.
20
Q
Can a single MS be the RGM? If so, in which case did this occur?
A
- Yes, a single Member State can form RGM
- This is because it is just defined as an area in which the undertaking concerned are involved in the supply and demand of products of services
- In which the conditions of competition are sufficiently homogenous and that can be distinguished from neighbouring areas because the conditions of competition are different in those areas.
- This happened in the Michelin case.
21
Q
Alsatel v Novasam SA?
A
- In this case, it was more difficult to establish that a region is the RGM.
- E.g. in Alsatel v Novasam it was held that the relevant market that Alstatel operated in was the market for the rental and maintenance of telephone installations in france as a whole
- And not the market just for Alsace lorraine
- Therefore conditions of competition were sufficiently homogenous throughout france because it was not just compensated in one area.
22
Q
What happened in the Hilti case?
A
- They identified 3 separate markets
- 1 = primary market in nail guns
- The other 2 were aftermarkets
- One was in Hilti-Compatible nails which fired by the nail guns and the others was in the cartridges which were needed to actually fire the nails.
23
Q
Hugin Kassaregister AB v Commission
A
- Swedish firm, Hugin which manufactured cash registers
- Lipton could not use any spare parts apart from those from Hugin
- Found to have abused their dominant position
- Because they asserted their design rights to prevent anyone from using spare parts
- Problem - Hugin stopped supplying to Liptons.
- Held that if you refused to supply parts then this would amount to abuse of dominant position.
24
Q
United Brands
A
- Defined RGM: “Relevant Geographic Market”
- Clearly defined geographic area
- In which the product is marketed and where the conditions of competition are sufficiently homogenous for the effect of the economic power of the undertaking concerned to be able to be evaluated.
- Court of justice noted that transport costs did not stand in the way of the 6 member states being considered a single market
- Had 40-45% market share
- Nearest competitor only had 17% market share, nearest after that only had 9% market share: therefore united brands market share was much higher than next largest competitors.
- The exceptionally large capital investments required to create and run a banana plantation etc. - barrier to new players in the market.
- “insuperable” financial obstacles for those who tried to join the market
- People had come to attribute their Chiquita trademark with bananas
- Refusal of a dominant undertaking
- Ceased to supply a Danish distributor with bananas after the distributor had become the exclusive representative in Denmark of a competitor
- Also charged excessive prices to customers
25
Q
Michelin 1
A
- They upheld the decision that was in United Brands
- Agreed that the RGM was in the Netherlands despite the objection of Michelin that in determining dominance, the Commission had taken in to account factors which concerned the Michelin Group as a whole in the wider
26
Q
B&I line v SeaLink Harbours & Sealine Stena Ltd
A
- Courts determined that ‘a substantial part’ of the EU should be judged not just by geographical area, but also by other factors such as the volume of trade.
- Therefore, ports and airports that carry large volumes of inter state trade have been found to be ‘substantial parts of the market’.
- Port of holyhead in north wales
- Found to form a substantial part of the market
- Because of the volume of trade going through this route.
- Sealink tried to use its control of the port to introduce a sailing schedule that suited the commercial interests of its ferries but adversely affected the docking of B&I’s ferries.
- Caused considerable disruption to the loading and unloading of B&I’s ferry, especially at Peak Times
- Held: this behaviour was abuse of dominant position.
- Outlined the essential facility doctrine
- Over time if the port became less active - would be less of an abuse
- Would seem incongruent if commercial port
- Transportation costs can affect restrictions on supply
27
Q
What is one of the reasons that the RGM in Michelin 1 was held to be the Netherlands?
A
- Because dealers established in the Netherlands obtained their supplies ONLY from suppliers operating in the Netherlands
- Other factors may also come into play
- Impact of transport costs and restrictions may also come into play.
28
Q
What is the relevant TEMPORAL market?
A
- Temporal = time
- This embodies the relevant markets time dimensions
- Often treated as part of the RPM and RGM.
- Time can be significant, e.g. in the case of ABG Oil v Commission.
