Moot Flashcards
Why is a refusal to supply justified?
1) Fundamental freedom of contract: the right to choose one’s trading partners and freely dispose of one’s property.
2) Short term minded free riders can take advantage of investment. Short-term gain can ultimately be anti-competitive through discouraging investment and innovation, which can be detrimental to consumers.
3) Refusal can be justified by other reasons than the exclusion of a competitor. According to the Court of Justice in United Brands a dominant firm is entitled to protect its legitimate commercial interests in a proportional manner.
Which are the 5 questions you must ask with refusal to deal?
1) Is there a refusal to deal?
2) Does the firm has a dominant position in the upstream market?
3) Is the product indispensable to someone wishing to compete in the downstream market?
4) Would the refusal to grant access lead to the elimination of effective competition in the downstream market?
5) Is there an objective justification?
1) Is there a refusal to supply?
A refusal can be outright or constructive according to the Commission’s Guidance on Art. 102 Enforcement Priorities.
An offer of supplies on terms that are unreasonable will be treated as a constructive refusal to supply (found in Polish Telekom and Slovak Telekom).
2) Does the firm has a dominant position in the upstream market?
For there to be an infringement of art. 102 TFEU, the accused must hold a dominant position in the upstream market.
3) Is the product indispensable to someone wishing to compete in the downstream market?
Dominance in itself is not enough. It is necessary that the input is indispensable (objectively necessary/essential facility) to be able to compete in the downstream market.
The Court of Justice established that one needs to establish indispensability (next to the requirement of establishing elimination of all competition) in Oscar Bronner.
One needs to show that there are no other means of distribution; furthermore, that there are no technical, legal or economic obstacles that make it impossible or unreasonable difficult to duplicate in a foreseeable future.
The requirement of indispensability means that it is not sufficient that it would be convenient or useful to have access: access must be essential.
4) Would the refusal to grant access lead to the elimination of effective competition in the downstream market?
° Commercial Solvents: “elimination of all competition.”
But to limit the application of refusal to deal to the elimination of all competition would restrict the application of refusal to deal significantly.
° Microsoft: It is not necessary for the commission to demonstrate that all competition on the market would be eliminated; it was sufficient to show that the refusal is liable, or likely, to eliminate all effective competition.
Commission points out in its Guidance that harm to competition is greater how higher its market share.
5) Is there an objective justification?
The dominant firm is required to show that its refusal to deal is objectively necessary in the sense that it
- pursues a legitimate interest other than its own commercial advantage.
- that it has behaved in a proportionate way.
An example is when a customer has failed to observe its contractual obligations.
