Competition Policy

Question 1

Plan for Article 102 Problem Q

Answer 1

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

Question 2

Article 102

Answer 2

“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”.

Question 3

An undertaking

Answer 3

Any legal or natural person.

Question 4

Dominance

Answer 4

“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

Question 5

Factors used to assess dominance:

Answer 5

Market Share
Period of Dominance 
Financial and Tech resources
Access to Raw Materials and Sales outlets
Behaviour
Barriers to entry by others 
Dependance

Question 6

Period of dominance:

Answer 6

6-12 months is fine, several years is not.

Question 7

Financial and Tech resources:

Answer 7

Could potentially encourage predatory pricing.

AKZO

Question 8

Access to raw materials and Sales Outlets

Answer 8

A good example of this is in United Brands, where the entire vertical distribution process was under their control.

Question 9

Behavior

Answer 9

Can be evidence of dominance

Question 10

Barriers to the entry of others:

Answer 10

Tetra-Pakk

Question 11

Dependance:

Answer 11

Essentially a mitigating factor.

Question 12

Geographical Market

Answer 12

Refers to the range of territory within which the goods can expect to be sold.

Question 13

Identifying the market

Answer 13

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

Question 14

United Brands

Answer 14

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.

Question 15

Tetra-Pakk

Answer 15

Could not find a substitute for cartons of pasteurised and UHT milk.

Question 16

Market share

Answer 16

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%.

Question 17

Anti Competitive Abuse

Answer 17

Effects competitors:

Tying-in
Temporary price reduction
Refusal to supply.
Exclusive reservation of activities.
Prevention of Imports and exports.
Mergers.

Question 18

Exploitative abuses

Answer 18

Effect consumers

Unfair pricing
Unfair trading conditions
Discriminatory treatment.
Refusal to supply.

Question 19

Unfair Pricing (Exploitative)

Answer 19

General Motors:

Charged excessive rates for an exclusive inspection service for second-hand cars imported into Belguim.

Question 20

Unfair Trading Conditions (Exploitative)

Answer 20

United Brands:

UB refused to let importers resell green bananas. This unduly favoured big wholesalers who had large warehouses to ripen the bananas.

Question 21

Discriminatory Treatment (Exploitative)

Answer 21

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.

Question 22

Refusal to Supply (Exploitative and Anti-Competitive)

Answer 22

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.

Question 23

Tying-in (Anti-Competitive)

AKA English Clause

Answer 23

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.

Question 24

Temporary Price Reduction (Anti-Competitive)

Answer 24

Predatory Pricing as seen in AKZO.

Question 25

AKZO

Answer 25

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.

Question 26

Exclusive Reservation of Activities (Anti-Competitive)

Answer 26

Belgian Telemarketing

Concerned a telephone marketing service directed exclusively through the Belgian national broadcaster’s agent.