W7 - Art 102 Flashcards
Art 102
Dominant position -
Prohibits ‘any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it’ if this abuse ‘may affect trade between member states’
Dominance
Def = undertaking is in a position where it can behave and act independently of its competitors (United Brands) BUT not precise enough and doesn’t give a measurement as to what amounts to dominance => need to look at relevant market and market share/power
Relevant market = Relevant product market + relevant geographic market (Commission Market Notice)
- joint dominance possible (Italian Flat Glass)
- after defining relevant market, must check that it constitutes a substantial part of the market (Stena Sealink)
RPM
RPM = all the products that are regarded as interchangeable or substitutable by the consumer, by reasons of the products’ characteristics, their prices and their intended use (United Brands)
2 tests - Demand substitutability (physical characteristics; availability; price eg SSNIP test - whether a small but significant non-transitory increase in price would cause consumers to switch to a substitute; United Brands; Hugin) and Supply substitutability (can competitors reproduce your product without incurring significant extra costs - Continental Can)
RGM
= area of common market in which the conditions of competition are sufficiently homogenous (United Brands)
Assume whole of EU when product can be transported across whole of EU without excessive cost (Hilti) unless other factors eg product characteristics, regional tastes, legal controls, technical constraints, transportation costs, colonial links (United Brands) establish extent of RGM being narrower
Market share
- large market shares in themselves evidence of dominant position (Hoffman-La Roche)
- more than 50% => presumed dominant (AKZO Chemie)
- market share of nearest competitors also relevant (40-45% sufficient if others much lower- United Brands)
Abuse
= ‘influence structure of the market… such that competition is weakened…has effect of hindering maintenance of the degree of competition or its growth’ (Hoffman-La Roche)
- MAY affect trade, doesn’t have to actually (United Brands)
- examples in art 102(a-d)
- may be exploitative abuses (harm consumers)
- exclusionary abuses (harm competitors)
eg:
- Unfair pricing (high - United Brands; low is predatory pricing- AKZO Chemie)
- price discrimination (United Brands)
- refusal to supply (United Brands; Hugin)
- Tying (two products are distinct rather than components of a single product - need only be dominant in the first product - Hilti)
- abusive discount/fidelity rebate policy - customers forced to purchase greater amounts of goods from that supplier to the detriment of others (Hoffman-la Roche); must review all economic arguments to assess whether they have anti-competitive effects (intel) as some are prima facie legal and will not violate competition rules eg those based on volumes purchased or individualised per order (Post Danmark II)
Effect on trade
Conduct that ‘may affect trade between MSs’ => cross-border element needed (Commercial Solvents)
Other indicators of market power
- Developed distributional network (UB)
- Technologically advanced production (Hoffman La Roche)
- Access to capital (AKZO)
- IP protection (Microsoft)
- Length of time in position
- High barriers of entry to market
Consequences
Art 102 does not have any avoidance methods => there will be an infringement unless there is an objective justification available to the undertaking
- consequences differ depending on whether a public authority or private body (ind or business) is taking action
- Public action => formal complaint to Commission or National Competition Authorities (UK= Competition and Markets Authority); impose a fine (up to 10% of annual worldwide turnover); issue a ‘cease and desist’ order (stop order)
- Private action => sue for damages in tort (for breach of statutory duty as Art 102 has direct effect - BRT v Sabam); apply for an injunction (or equiv) to stop the abuse
