Competition II: Abuse of Dominant Position

Question 1

United Brands

Answer 1

1. A relevant geographic market is where ‘conditions of competition are sufficiently homogenous’
2. An example of brand identification, and vertical integration, for showing a position of dominance
3. An undertaking with less than 50% share can still be dominant if market is fragmented

Question 2

3 Parts of Relevant Market

Answer 2

Relevant Product Market
Relevant Geographic Market
Relevant Temporal Market

Question 3

Demand Substitution

Answer 3

Which products would consumers purchase if the original product they sought was not available?

Evaluated by reason of their:

1) characteristics
2) prices
3) intended use

Question 4

Hilti

Answer 4

1. An undertaking can be dominant in a secondary market (nail guns)
2. Example of demand substitutability
3. Example of exploitative behaviour being an abuse of a dominant position

Question 5

Michelin

Answer 5

1. Relevant Geographic Market can be limited to just one country
2. Providing loyalty schemes to select customers to prevent them going to the competition can be an abuse of a dominant position

Question 6

Alsatel

Answer 6

French region not RGM because same conditions are rest of France

Question 7

Sealink

Answer 7

Seaport considered a RGM due to the volume of trade

Question 8

Continental Cans

Answer 8

Manufacturers are in a dominant position when they can behave independently without taking into account suppliers/customers

Question 9

Akzo Chemie

Answer 9

1. Dominant position may be assumed with a market share of over 50%
2. Use of predatory pricing can be used to establish a dominant position

Question 10

Tetrapak

Answer 10

1. Market share above 80% considered dominant

2. Exerting legal barriers to entry such as IP rights can be used to show a dominant position

Question 11

Hoffman-la-Roche

Answer 11

1. Superior Technology / distribution and sales network helps to establish dominant position
2. Providing rebates with no relation to market forces can be an example of unfair pricing

Question 12

Dominant Position Factors (5)

Answer 12

1. Superior Technology
2. Wealth of Capital and Financial Barriers
3. Vertical Integration
4. Distribution Systems
5. Brand Identification

Question 13

Microsoft

Answer 13

1. The lower the degree of supply substitutability, the more likely the undertaking is to be considered dominant in the market
2. Established the four criteria for a tie-in to be an abuse of a dominant position

Question 14

British Leyland

Answer 14

1) Abuse of a dominant position does not have to have an actual impact on trade, it is enough that it ‘may’ affect trade
2) example of excessively high prices

Question 15

Hugin

Answer 15

The trade affected must be between MSs

Question 16

Tie-Ins/bundling 4 criteria

Answer 16

1. The tying and tied goods are separate products
2. The undertaking is dominant in the tying product
3. Customers have no choice but to buy the tied product along with the primary one; and
4. This bundling has the ability to affect competition