Art. 102 - General principles Flashcards
Undertakings
Engaged in an economic activity
- Offering goods an services on a market
- No need for profit motivation or economic purpose (can offer services for free and still be an undertaking)
- The legal form of the undertaking is irrelevant
Private or public ownership
- Can both be considered an undertaking, if engaged in an economic activity
- Public –> will not be considered an undertaking if the activity is exercising the powers of a public authority
Activities that are not economic
- Solidarity –> fx social security
- Exercise of public powers
- Procurement pursuant to a non-economic activity –> fx public bodies providing healthcare on the basis of solidarity, the ancillary procurement of medicin is not economic either
Employees
- Form part of the economic unit of the undertaking and will therefor not constitute an undertaking
- The company where the employee is employed will probably be considered an undertaking
- Selfemployed –> will be considered as an undertaking
- Important to consider whether the person has the freedom to choose the time, place and content of the work
Dominant position
One or more undertakings has a dominant position
No clear definition
- Looks at substantial market power –> Undertaking can profitably act independent of its competitors, customers nd the consumers
- Absent of restraints confining the (considered) undertaking
The relevant market
Use the concept of the relevant market for all of the pillars
a) Demand substitution
b) Supply substitution
c) Potential competitors
a) is the most essential and c ) shouldn’t be taking (directly) into consideration
- Potential competitors are too far away from the relevant market (2-3 years), but relevant when assessing barriers to entry (posing restraints on the dominant undertaking)
Market power
Factors relevant to look into
- Actual competitors (Staturay monopolies, market shares)
- Potential competitors (barriers to entry)
- Countervailing buyer power
Statuary monopolies (legal monopoly)
- Not immune
Market shares
- Useful first indication –> could function as a proxy
- Have to take the market conditions into consideration
- above 50 % –> Dominance
- 40-50% –>Presumption of dominance
- 0-40% –> Not likely to be dominant
Barriers for entry/expansion, in short barriers
- Legal barriers –> Intellectual property rights, regulation from the government (E.ON ruhrgas)
- Economic advantages –> Economies of scale, control of essential faclities, sales network, brand image
- Switching costs –> Cost of a customer switching to new supplier
- Conduct –> The ability to act independently by initiating an abuse (can be circular)
Countervailing buyer power
- Customers ability to switch or threaten to switch to competing supplier
- Must be a certain amount of customer with enough power
Substantial part of the internal market
The dominant position must be held in the whole or a substantial part of the internal market
Not the same as the definition of the relevant market
- Use this with regards to the substantive test to determine whether dominant
If not substantial part, art. 102 will not apply
- National law may nevertheless apply
Abuse - General principles
Art. 102 applies to unilateral behaviour
- But abuse can also be in the form of an agreement
Special responsibility
- Not unlawful to be dominant, must be an abuse
- Responsibility not to allow its conduct to not impair undistorted competition
- Both conduct that is harmful to the consumers and to the structure of the market
List of different types of abuses (not exhaustive)
- Unfair prices and trading conditions;
- Exclusive behavior limiting the production etc. of competitors;
- Discrimination
- Tying/bundling of product and services where there is no natural connection
Objective concept
- Conduct can be abusive irrespective of the intention of the dominant firm
- Subjective intentions are not necessary, but can be relevant
The use of different methods than under normal competition
- Must not eleminate a competitor other than by methods that are within the scope of competition on the merits
- Dominant firm is allowed to protect its commercial interest, but only if it is within the scope of competition on the merit
Art. 102 applies to both exclusionary and exploitative abuse
Protection of competitors or competition
Some argues that art. 102 protects ineffecient competitors
Commission states that art. 102 only protect “as efficient” competitors and that inefficient can be forced to leave the market
Also protection of the effective competitive structure of the market
- can lead to protection of less efficient competitors, if the dominant undertaking is restricting access to the market
Per se rule?
No per se rule
- Dominant undertaking can argue that the alleged abuse will not have anti-competitve effects
- Only condem conduct if it can be shown that it will have anti-competitive effects in as-efficient competitors
By object?
- The book says that this is used
By effect
- If the conduct can not be said to have as it object the restriction of competition, must look at the actual or likely effects
- As efficient competitor test is one tool
- Also looks to see if the conduct impairs customers freedom of choice, forecloses competitors, discriminates or strengthenes the dominant position
Standard of proof
Likely or capable of restricting competition?
- Used interchangeably in Post Danmark II
De minimis
No de minimis doctrine
- Competition is already weakened due to the dominant position
- Abusive conduct will be condemned even where the effect is not appreciable
Single and continuous abuse
Looks at the overall strategy, instead of at each seperate act of the dominant firm
Three conditions
1. Existence of an overall plan pursuing a common objective
2. Intentional contribution of the undertaking to that plan
3. Awareness of the offending conduct of the other participants
Implications
- Each undertaking is responsible for the conduct of the other undertakings
- The Commission will not be time-barred when imposing fines
Three categories of abuse
Exclusionary abuse
- Dominant firm is able to behave in a way that leads to anti-competitive forclosure and prevents potentiel competitors from entering
- Can be either vertical or horizontal forclosure
The abuse can involve more than one market
- Dominant position and abuse on market A, benefits on market B
- Dominance and benefits on market A, abuse on market B
- Dominance on market a, abuse and benefits on market B
Exploitative abuse
- Dominant undertaking capable of reducing output or raising prices above the competitive level, thereby exploiting cusomers
Single market abuse
Defences
Objectively necessary
- The conduct must be proportionate
- Have to be based on external factors –> Factors that the dominant firm does not have control over, fx. have to protect its commercial interests due to attacks by competitors
Efficiencies - cumulative conditions
- Efficiencies would have to be realised or likely to be realised as a result of the conduct
- Conduct would have to be indespensable to the realisation
- Efficiensies must outweigh negative effects
- Conduct must not eliminate alle effective competition
