Unit 9 Flashcards
Double purpose for Protection of free competition
-avoid distortions to principles of supply and demand
-avoid unfair acts to competitors or to consumers themselves
importance of comeption
-low prices
-better quality
-more choice
-innovation
-better competitors in global market
Antitrust
-collusive practices:
Unlawful agreement detrimental to a third parties (market, competition)
>agreement, decision, recommendation that prevents free competition
-abuse of dominant positions:
not the dominant position but the sbuse makes it unlawful
Types of collusive practices
- Cartel: directly or indirectly fix purchase or selling prices or any other trading conditions
- Limit or control: production, distribution, technical development or investment
- Share markets or sources of supply
- Apply dissimilar conditions to equivalent transactions ->placing them at a competitive disadvantage
-signing of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts
Effects of collusive practices
- In the event of any of the prohibited collusive conducts, the LDC established these acts as null and void
- Exception: If the conducts contribute to improve the production or commercialisation and distribution of goods and services
Abuse of dominant position in market
- Business acts considered abusive person who is involved in them holds a position of dominance in a market
- dominance can be defined by market share over which an entrepreneur or corporate group has “dominance”
- not forbidden to be in a dominant position only the abuse of that position that is forbidden
The term abuse
- imposition, directly or indirectly, of prices or other unfair commercial or service conditions
-limitation of production, distribution or technical development to the unjustified detriment of enterprises or consumers - unjustified refusal to satisfy demands for the purchase of products or the provision of services
- application unequal conditions for equivalent services, places some competitors disadvantaged
- Making the signing of a contract dependent on agreeing to extra services, unrelated to the contract’s main purpose
conditions for abuse
- Existence of dominant position
- Abuse must take place
- The market must be affected
Exemptions for “abuse”
-law enforcment of application (vaccines)
-Conduct can be considered of “minor importance”
-below 10% share of the market combined/ EXCEPT AGREEMENTS REGARDING PRICE & RESALE PRICE)
Economic concentration operations
-legislator aims not to prohibit concentration operations completely, recognizing their legitimacy and strategic value
Administrative control is activated if 2 conditions are met
-results in market share equal to or greater than 30 percent
{-turnover in Spain of all the participants in the concentration exceeds the amount of 240 million euros in the last accounting period, provided that at least two of them conduct individually in Spain a turnover in excess of 60 million euros.}
For LDC control, if concentration triggers it:
-Notify CNMC before concentration.
-Suspend agreement until CNMC approval.
-CNMC decides to authorize, approve with conditions, or prohibit based on competition impact.
Public aid permitted when
- To promote economic development of certain regions
- To encourage the realization of a project of common european interest
- To remedy a serious disturbance in the economy of a member state
Organism of supervision
Spain: CNMC (only acts in Spain)
EU: European Comission
Penalty regime of LDC
- Profoundly serious 10%
- Serious
- Minor 1%
behaviour of an entrepreneur considered to be unfair when:
-Entrepreneur’s action goes against expected professional standards and honest market practices.
-Result of the action affects consumer behavior by distorting economic choices.
Specific unfair competition
-so-called “unfair competition acts”:
-“unfair commercial practices involving consumers and users”
Name all actions addressed to one specific competitor
-Defamation
-Acts of comparison
-Acts of imitation
-Taking unfair advantage of competitor’s reputation
-Violation of business secrets of another company
-Induction to breach of contract
Defamation
statements about competitor, r that harm its reputation in the market; -unless statements are true, accurate and appropriate.
Acts of comparison
explicit and implicit reference to competitor when advertising is unlawful
-unless:
>products have the same purpose
>referred to relevant aspects in objective way
>true and accurate, not intended to benefit from the competitor’s reputation
Acts of imitation
-protected by patents, distinctive signs
-imitation is unlawful due to the risk that consumers associate the imitation with the third party’s service or entails unfairly benefit from the competitor’s reputation or effort
Taking unfair advantage of competitor’s reputation
unfair act to benefit for oneself or a third party of the advantagesto the industrial, commercial, or professional reputation of ones other
Violation of business secrets of another company
disclosure of trade secrets, on which there is a duty of confidentiality normally set in contract
Induction to breach of contract
violation of the basic contractual obligations
Name all Actions disrupting the gerneral market function
-Misleading acts (false, misleading information)
-Acts of confusion (create confusion with the activity, services or establishment of a competitor)
-Misleading omissions (advertising practice inducing error: unclear, lack of, ambiguous information)
-aggressive practices( harm freedom of choice through harassment, coercion, or undue influence, affecting economic behavior)
-Infringement of laws(Gaining advantage through breaking the law)
-Sales below cost (onsidered unfair, it misleads consumers about other prices or aims to eliminate competition)
Unfair commercial practices involving consumers and users (Misleading practices)
1.Misleading practices causing confusion
2.Bait advertising and misleading promotional practices
3.Misleading practices relating to the nature and properties of goods and services
4.Pyramid selling practices
5.Cover commercial practices
Unfair commercial practices involving consumers and users (aggressive practices)
1.Coercive Practices: (Forcing consumers to believe they can’t leave a business without purchase)
2.Harassment Practices: (Examples include personal visits to the consumer’s home after being asked to leave and not return)
3.Unsolicited Proposals: Making repeated and unsolicited proposals via phone, email, etc. is considered unfair.
new prohibited ads
- Disguised influencer ads
- surreptitious advertising in online searches
- Unsolicited trips to the consumer’s home and trips to promote a good
