Competition Law (Abuse of a Dominant Position)

Question 1

What are the two main types of abusive behaviour an undertaking can display?

Answer 1

Exploitative (exploit customers)and Exclusionary abuses (drive out competitors)

Question 2

Which case defines the meaning ‘Dominant position’ and what is it’s definition?

Answer 2

United Brands
· Position of economic strength
· Prevents effective competition
· Affords the power to act independently of competitors, consumers and customers

Question 3

Which case falls under the Relevant Temporal Market category, and why?

Answer 3

ABG Oil

Question 4

What steps do you have to undertake when tackling an Article 102 tutorial question?

Answer 4

1) Check to see if there is at least one undertaking in a dominant position
·What is the relevant market?
·Is the undertaking dominant in that market?
2) It is abusing that position?
3) With dominance and abuse established, is trade affected between member states?

Question 5

What is Demand Substitution

Answer 5

From the perspective of the consumer

Question 6

What is Supply Substitution?

Answer 6

From the perspective of the supplier - Manufacturer
Examines how easy production can be switched between different products and part of the same product market – reflected in the notice by the commission.

Question 7

What does the Relevant Product Market comprise?

Answer 7

All products or services which are interchangeable / substitutable which entails either demand or supply substitution

Question 8

What is the sophisticated approach to analyse Cross Elasticity of Demand? And how does this approach work?

Answer 8

Sophisticated approach investigates the cross-elasticity of demand. This is the degree to which the demand for one product changes in response to a change of price in another product.
If demand for the first product increases in response to another product it is said to be a high elasticity of demand between them – They are in competition

SSNIP – to assist with defining elasticity
Looks at how consumers would respond to a permanent increase of price by 5-10%. It asks whether enough consumers will switch to another products to make the price increase unprofitable. If yes – it is said they are within the same relevant market.

Question 9

There is no need to determine whether trade has occurred between member states when establishing abuse of dominant position?

True or False?

Answer 9

False. The Hugin case was unsuccessful as the other company involved did not seek spare parts from other member states - only from Sweden (at the time Sweden was not part of the EEC)

Question 10

What example of abuse did B.R.T. v S.A.B.A.M provide, and what happened in this case?

Answer 10

Unfair conditions

A cooperative association of authors, composers and publishers had a de facto monopoly over the management of the Intellectual property rights of such artists in Belgium. A standard contract required members to assign all rights over their current and future work to the association. The association retained these rights for 5 years even after the member had withdrawn from the association. The CoJ held these terms were so unfair it amounted to an abuse of a dominant position

Question 11

What are the 7 factors which can establish whether an undertaking has a dominant position?

Answer 11

1) Market share (4 cases)
2) Intellectual Property (3 cases)
3) Sophisticated Technology (2 cases)
4) Financial Barriers & Wealth(2 cases)
5) Vertical Integration (1 case)
6) Sales and Distribution (2 cases)
7) Brand Recognition (1 case)

Question 12

What case is an example of Brand Recognition, and why?

Answer 12

United Brands

Question 13

Which cases are an example of Sophisticated Technology, and why?

Answer 13

Hoffman

Michlen I

Question 14

Which cases are an example of Market Share, and why?

Answer 14

Tetra

Intel

Az Chem

United Brands

Question 15

Which cases are an example of Sophisticated Technology, and why?

Answer 15

1) Hoffman

2) Michlen I

Question 16

Which cases are an example of Market Share, and why?

Answer 16

1) Tetra
2) Intel
3) Az Chem
4) United Brands

Question 17

Which cases are an example of Sales & Distribution, and why?

Answer 17

1) Michlen I

2) Hoffman

Question 18

What case is an example of Vertical Integration, and why?

Answer 18

1) United Brands

Question 19

What cases are an example of Financial Barriers and Wealth and why?

Answer 19

Wealth - Az Chem

Financial Barriers - United Brands

Question 20

What cases are an example of Financial Barriers and Wealth and why?

Answer 20

Wealth - AKZO Chem

Financial Barriers - United Brands

Question 21

What examples of exclusionary abuse have been proven by case law?

Answer 21

·Predatory Pricing
·Discounts and Rebates
·Refusal to supply
·Tie-in Agreements and Bundling

Question 22

What cases are an example of Predatory Pricing and why?

Answer 22

AKZO

Tetra Pak

Question 23

What cases are an example of Discounts and Rebate abuse and why?

Answer 23

Hoffman-La Roche
Offered better prices buyers demonstrating loyalty who made repeat purchases. The CoJ held it gave purchasers an unfair incentive to obtain it’s supplies exclusively from Hoffman

Michelin I
Offered financial rebates and bonuses on a dodge criteria. This uncertainty put dealers under pressure to hit targets and prevented them from making an informed choice to choose more favourable options from other suppliers.

Question 24

What cases are an example of Refusal to supply and why?

Answer 24

United Brands

Question 25

What is a Tie-in Agreement and Bundling?

Provide examples of cases which demonstrate this example of abuse.

Answer 25

Tie-in agreement - an agreement where the dominant undertaking agrees to supply a product only if the buyer accepts further products e.g. Hilti - buyer had to purchase cartridge strips AND nails. This prevented other suppliers who only manufactured nails from entering the market.

Bundling - 2 or more products are sold together as 1 package. e.g. Microsoft - windows media player was bundled together with windows, which induced users to rely solely on this streaming media as opposed to using other competitors.

Question 26

What type of abuse is ‘excessive high prices’, and which cases demonstrate this practice?

Answer 26

Exploitative abuse

United Brands - had charged it’s customers in certain member states excessive prices in relation to the actual economic value. (even though it was annulled in part by the CoJ it still accepted this principle can still stand)

British Leyland Plc v Commission

British Leyland produced a model of car called the Metro, these cars could not be lawfully registered in the UK without a certificate of conformity. It charged £35 for it’s own brand but charged £150 for left hand driven cars – this was excessive as the certificates only required a simply check. The fee was disproportionate to the value of service being provided. (CoJ accepted the Commission’s decision.)

Question 27

Which case set the precedent that the Commission can impose fines under regulation 1/2003?

Answer 27

Google Search (Shopping) case

Question 28

Who received the record fine before google?

Answer 28

Intel Corporation

Question 29

Which directive is applicable for obtaining damages?

Answer 29

Directive 2014/104

Question 30

Which case established the precedent that there must be a mere potential to effect trade between member states?

Answer 30

British Leyland

Their argument - that their refusal to issue certificates had no detrimental impact on the volume of imports was deemed irrelevant

Question 31

What cases give examples of Supply Substitution?

Answer 31

Continental Can

The commission identified 3 separate markets in metal containers. One was for light containers to preserve meat, second for preserved fish and the third for metal enclosures for glass containers (eg. Glass tops ).
The ECJ disagreed with the commission and held that metal containers were part of a single general market, as manufacturers can easily switch production between light containers.

Michelin I
EJC rejected Michelin I’s argument that there was a single market for replacement tyres. The court held there were 2 distinct tyre markets – one was for heavy goods vehicles and tyres for light vehicles. There was no supply substitution between them as the production plant would have to be modified in order to switch production b/t the 2 types of tyres – takes time and money to do so

Microsoft
A distinct was drawn b/t 3 different types of software. 1 – PC operating systems, 2 – work server operating systems and 3 – streaming media players. There was no supply sub. b/t these different types of software due to the substantial amount of time, expense and commercial risk involved in developing each type of software

Question 32

Which cases provided examples of demand substitution?

Answer 32

United brands

The commission had concluded UB formed a separate market of their own, but UB disputed this and argued bananas formed part of the overall fruit market. However, the ECJ agreed with the commission
-bananas have distinct features and from the perspective of consumers prevented them to be interchangeable with other fruit
They were soft and seedless
easy to handle
Available all year round!!
Consumers were unlikely to be enticed away by other fruit especially the old, young and the sick.

Hilti AG v Commission
The commission, the general court and ECJ – rejected Hilti’s argument that nail guns were part of the general market for industrial fasteners. Nail guns are unique as a product to have their own product market. Moreover Hilti compatible nails and fasteners were found to have their own separate markets.