Art 102 Flashcards
Define 102
Any abuse by one or more undertakings of a dominant position within the internal market or a substantial part of it shall be prohibited as incompatible with the internal market insofar as it may affect trade between Member States.
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 developments 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 the 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
Basic approach
Define relevant market
Is the undertaking in a dominant position on a relevant market?
Has an abuse been committed?
Market definition
“…effective competition between the products which form part of it”
“… a sufficient degree of interchangeability between all the products forming part of the same market insofar as a specific use of such products is concerned.”
Hoffmann-La Roche v Commission
Product market
Demand substitution
The SSNIP test (Small but Significant Non-transitory Increase in Price) or hypothetical monopolist test
United Brands
The Cellophane Fallacy: United States v. E.I. du Pont de Nemours
Supply substitution
Geographic Market
United Brands v. Commission
“with reference to a clearly defined geographic area in which [the product] is marketed and where the conditions are sufficiently homogeneous for the effect of the economic power of the undertaking concerned to be able to be evaluated.”
Michelin I
Dominance
“… a 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.” Case 27/76 United Brands
Substantial market power over a period of time – Commission Guidance
Market shares
“Very large shares are in themselves, and save in exceptional circumstances, evidence of the existence of a dominant position ..” Hoffmann-La-Roche
50% + Presumption of dominance AKZO
40-49%
More likely to be dominant than if below 40%
25-39%
Not likely (specific cases) – Commission Guidance
Under 25%
Not likely to be dominant – Commission DP
Entry barriers
Stigler – a cost of producing that must be borne by firms which seek to enter an industry but is not borne by those already in the industry
Bain - any market condition that enables an incumbent firm to charge monopoly prices without attracting new entry
Factors that make entry impossible or unprofitable while permitting established undertakings to charge prices above the competitive level – Commission DP
Specific features of the market that give incumbent firms advantages over potential competitors OFT/CC merger guidelines
Legal barriers Economies of scale and scope Privileged access to essential inputs Important technologies Established distribution and sales network Significant investment Long-term contracts
Conclusions
Criticism – markets defined too narrowly Michelin I, United Brands Dominance too easily presumed Low threshold Generous interpretation of barriers to entry Form vs economic effects?
DG COMP’s Discussion paper on exclusionary abuses
1) Art 102 should not be applied to protect competitors as such.
2) A dominant firm that defeats rivals as a result of its greater efficiency ought not to be condemned as acting abusively (Post Dankark)
3) Abuse is so complicated that per se rules are not appropriate.
4) Exclusionary behaviour should only be illegal where it has an anticompetitive effect.
Two stage test for dominance
Continental Can v Commission
1) Define the market, SSNIP, Cellophane fallacy, evidence
2a) Actual competitors
2b) Potential competitors
2c) Countervailing buyer power
Substantiality is not geographic
Susie Unie v Commission
Market share percentage shouldn’t be taken into account to determine substantiality
BP v Commission
Narrow markets
GM v Commission
Nellie Kroes
Former commissioner
1st Competition, then consumers.
