Competition Policy Flashcards
Plan for Article 102 Problem Q
Identify what Art 102 prohibits
(Mention Van Gend En Loos)
Is the Undertaking dominant?
- Define Dominance
- What is the market?
Has the dominant position been abused?
- Exploitative or Anti-Competitive?
Enforcement - If question asks to advise commission.
- Regulation 1/2003
Article 102
“Any abuse by one or more undertakings of a dominant position within the market or in a substantial part of It shall be prohibited as incompatible with the common market in so far as it may effect trade between member states”.
An undertaking
Any legal or natural person.
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 and ultimately its consumers”
United Brands
Factors used to assess dominance:
Market Share Period of Dominance Financial and Tech resources Access to Raw Materials and Sales outlets Behaviour Barriers to entry by others Dependance
Period of dominance:
6-12 months is fine, several years is not.
Financial and Tech resources:
Could potentially encourage predatory pricing.
AKZO
Access to raw materials and Sales Outlets
A good example of this is in United Brands, where the entire vertical distribution process was under their control.
Behavior
Can be evidence of dominance
Barriers to the entry of others:
Tetra-Pakk
Dependance:
Essentially a mitigating factor.
Geographical Market
Refers to the range of territory within which the goods can expect to be sold.
Identifying the market
Involves looking at available substitutes because:
“There must be sufficient interchangeability between all products part of the same market insofar as specific usage is concerned”.
Hoffmann La Roche
United Brands
UB believed that the relevant market was ‘fresh fruit’, however, the commission argued that the market was bananas.
The commission, after investigating, found that the banana market was very specific as it was normally consumed by the aged, young and ill.
Tetra-Pakk
Could not find a substitute for cartons of pasteurised and UHT milk.
Market share
Looks at size of nearest competitor.
Hoffman La Roche: not dominant because they were 43% and nearest comp was 40%.
UB: was dominant because they were 40-45% and nearest comp was 15%.
Anti Competitive Abuse
Effects competitors:
Tying-in Temporary price reduction Refusal to supply. Exclusive reservation of activities. Prevention of Imports and exports. Mergers.
Exploitative abuses
Effect consumers
Unfair pricing
Unfair trading conditions
Discriminatory treatment.
Refusal to supply.
Unfair Pricing (Exploitative)
General Motors:
Charged excessive rates for an exclusive inspection service for second-hand cars imported into Belguim.
Unfair Trading Conditions (Exploitative)
United Brands:
UB refused to let importers resell green bananas. This unduly favoured big wholesalers who had large warehouses to ripen the bananas.
Discriminatory Treatment (Exploitative)
British Leyland:
BL were the commercial body given power to issue, ‘type approval’, certificates for the safety of cars before they could be sold. They unjustifiably charged different prices for these certificates for UK manufacturers.
Refusal to Supply (Exploitative and Anti-Competitive)
The Magill
Concerned the refusal by TV broadcasters to allow weekly publications of TV listings by outsiders. This was a monopoly based on the copyright within the listings. Held to be an abuse.
Tying-in (Anti-Competitive)
AKA English Clause
Hoffmann La Roche:
Customers agreed to buy pharmaceutical supplies from Hoffmann in exchange for future discounts. Hoffmann would reduce prices if other companies were offering better pricing.
Temporary Price Reduction (Anti-Competitive)
Predatory Pricing as seen in AKZO.
AKZO
Akzo was the EUs main producer of Benozel Peroxide.
ECS were a small competitor of AKZO’s. To deter ECS from expanding, AKZO threatened and then implemented price cuts aimed at ECS’s customers.
Exclusive Reservation of Activities (Anti-Competitive)
Belgian Telemarketing
Concerned a telephone marketing service directed exclusively through the Belgian national broadcaster’s agent.
