Competition Law 2: Abuse of a Dominant Position Flashcards
Hilti AG v Commission
RPM
Demand Substitutability: If consumers will readily switch from one product to another, they will both form part of the same product market.
Aftermarkets
In determining the RPM, consider whether complementary products form part of the main market or are part of an aftermarket (secondary market).
RGM
If a product can be easily transported across the EU, transport costs will not be a barrier to all Member States being considered the RGM.
Abuse of Dominance
Tie-in agreements can amount to abuse where they are used to exploit customers by requiring them to purchase a product they do not want in order to acquire they product they want or need.
United Brands Co v Commission
RPM
Demand Substitutability: If consumers will readily switch from one product to another, they will both form part of the same product market.
RGM
If a product can be easily transported across the EU, transport costs will not be a barrier to all Member States being considered the RGM.
Dominance
Economic 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 power to behave to an appreciable extent independently of its competitors and customers.
Establishing Dominance
In a fragmented market, it is sufficient for an undertaking to have a market share several times larger than nearest competitor for dominance to be established.
The existence of prohibitive financial barriers to entry to a market may be a relevant factor in determining that an undertaking is in a dominant position.
The degree of vertical integration an undertaking has established in the market may be relevant. This means the control over the process of bringing a product into the market from production to distribution to the ultimate sale.
Brand identification may contribute to an undertaking having a dominant position.
Abuse of Dominance
A refusal of a dominant undertaking, without objective justification, to supply a long standing existing customer who abides by regular commercial practice can constitute abuse.
Excessive pricing can be a form of abusive behaviour.
Continental Can
Supply substitutability: If suppliers are able to switch production to the relevant products and market them in the short term without incurring significant additional costs or risks in response to small and permanent changes in relative prices the products will form part of the same RPM.
Michelin 1
Supply substitutability
If suppliers are able to switch production to the relevant products and market them in the short term without incurring significant additional costs or risks in response to small and permanent changes in relative prices the products will form part of the same RPM.
RGM
The RGM can be a single Member State since the RGM comprises the area in which the undertakings concerned are involved in the supply and demand of products or services, in which the conditions of competition are sufficiently homogenous and which can be distinguished from neighbouring areas because the conditions of competition are appreciably different in those areas.
Establishing Dominance
Superiority of an undertaking’s technology can also contribute towards dominance in the relevant market.
Sophisticated distribution and sales networks can contribute towards dominance.
Abuse of Dominance
Granting of discounts, rebates and bonuses can be a form of abuse where they have the effect of stopping competitors from entering the market.
Microsoft
Supply substitutability
If suppliers are able to switch production to the relevant products and market them in the short term without incurring significant additional costs or risks in response to small and permanent changes in relative prices the products will form part of the same RPM.
Intellectual property rights may give rise to a dominant position.
Abuse of a dominant position
It is not necessary to establish that all competition would be eliminated by an undertaking’s refusal to supply competitors. Only to establish that the refusal to supply is liable to or is likely to eliminate all effective competition on that market. This can be satisfied even if there are some competitors who retain a marginal presence in certain niches on the market.
Bundling can be an abuse of a dominant position.
The decision established criteria that have to be fulfilled for tying and bundling to amount to abuse:
1. The tying and tied goods must not be within the same product market
2. The undertaking must be dominant in the tying product market
3. Customers get no choice whether to accept the tied product with the typing product; and
4. The tying closes out any competition
Hugin
Establishing dominance:
Intellectual property rights may give rise to a dominant position.
May affect inter-state trade:
Trade affected must be between Member States
Alsatel
It is difficult to establish that a region is the RGM as the conditions of competition are likely to be sufficiently homogenous throughout at least the whole country.
Sealink
RGM:
‘A substantial part of the EU’ should be determined not simply by geographical area by also by other factors such as volume of trade.
Abuse of Dominance:
The essential facility doctrine – a dominant undertaking which both owns or controls and itself uses an essential facility, and which refuses competitors access to that facility or grants access to competitors only on terms less favourable than those which it gives its own services – may constitute an abuse.
ABG Oil
RTM can be significant.
Italian Flat Glass
There can be joint dominance in a market by different undertakings acting together.
Tetra Pak
Establishing Dominance:
Market share should be considered when assessing dominance.
The effect of intellectual property rights can give rise to a dominant position.
Abusive Behaviour:
Predatory pricing can amount to abusive behaviour.
Intel Corporation
Establishing Dominance:
Market share should be considered when assessing dominance.
Abusive Behaviour:
Rebates can constitute abusive behaviour.
Akzo Chemie BV
Establishing Dominance:
Except in exceptional circumstances, very large market shares are evidence of the existence of a dominant position.
The fact that an undertaking has access to large amounts of capital can contribute towards dominance where its competitors are in a weaker financial position.
Abuse of Dominance:
Predatory pricing is an abuse of dominance.
The Court identified two situations which would amount to predatory pricing. 1) If the price is reduced below average variable costs – serves no other purpose than to eliminate competition. 2) If the price is reduced below average total costs – an abuse where an intention to eliminate competition is shown.
Hoffman-La Roche
Superiority of the undertaking’s technology can contribute to dominance in the relevant market.
Sophisticated distribution and sales networks can contribute towards dominance.
The granting of discounts, rebates and bonuses can be a form of abuse where they have the effect of stopping competitors entering the market.
Commercial Solvents
Refusal of a dominant undertaking to supply competitors with a product may constitute an abuse in certain circumstances. For instance, where it will eliminate competition either in the relevant market itself or in another related market in which it participates.
