Mindmap lecture 4 & 5 PDF

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ABUSE OF A DOMINANT POSITION (ARTICLE 102) STEP 1: Undertaking? entity engaged in an economic activity and is defined as offering goods or services on the market and Elser v Macrotron GmbH) One undertaking (unilateral) More undertakings (collective dominance in a oligopolistic market) STEP 2: Defini...

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ABUSE OF A DOMINANT POSITION (ARTICLE 102) STEP 1: Undertaking? *Every entity engaged in an economic activity and is defined as offering goods or services on the market (Höfner and Elser v Macrotron GmbH) * One undertaking (unilateral) * More undertakings (collective dominance in a oligopolistic market)

STEP 2: Defining relevant market (Commission Notice) * Product/service market (para 7) Interchangeability /substitutability of the product: demand-side & supply-side 1. Characteristics & intended use 2. Price: SSNIP Test 5-10% increase price  switch to different product that is not in the dominant market? (interchangeability) * Geographical market (para 8) Conditions of competition are sufficiently homogeneous in certain territory, appreciable difference in other areas (or similar with other area in order to be same market, depends on product)Factors: diversion to other areas, pattern of purchases, trade flows, transport costs

STEP 4: Does the undertaking abuse its dominant position?  Conduct of the undertaking, so an objective concept (behavior) that influences the structure of a market when the degree of competition is weakened and hinders the maintenance of the degree of competition still existing (Hoffman La Roche) + likelihood of abuse having concrete effects in the future  What category of abuse? 1. Exclusionary abuse (anti-competitive foreclosure: criteria in para 20, towards competitors, exclude competition) 2. After exclusionary exploitative abuse towards consumers & customers  What specific from of abuse? * Price discrimination (primary line injury, horizontal, exclusionary, competitors feel the consequences, secondary line injury, vertical, exploitative: Post Danmark). Art. 102 (a &c) TFEU * Excessive high pricing (when there already is dominant position, exploitative abuse). When pricing too high? United Brands: 1. Profit-margin combination (costs-price on market, costs shared?), 2. Is the price itself fair? (comparison prices competitor other geo market) * Low/predatory pricing (to get rid of competitors, enough resources, exclusionary high prices = exploitative to compensate the low prices). Akzo, conditions: 1. Prices below AVC are presumed to be predatory  abuse of dominant position assumed, 2. Prices between AVC and ATC  looking at intend of undertaking (not for consumer but against competition)  recoupment of the losses does not have to be proven. That it didn’t work is not excusable  intend was bad (Tetra Pak/Wanadoo) * Margin squeeze in upstream market for retailers, vertical integration. Multiple abuses in one to get margin squeeze (discriminatory pricing, higher than for other than daughter retail shops  leave market in loss downstream market, or excessive high pricing, predatory pricing (for the other shops higher prices, lower prices for subsidiaries), refusing to supply). Conditions for margin squeeze: 1. Significant upstream market power (by vertical integration f.e.), 2. Profiling out of raising revivals costs (by lowering it), 3. Barriers to entry in both markets. The equally efficient competitor test (would competitor still be able to stay in market with same prices? TeliaSonera/Deutsche Telecom). Exclusionary abuse. * Refusing to supply to other retailers that are not subsidiaries (vertical integration) * Tying and bundling (exclusionary abuse) Pure bundling (only buy a product when you buy the other one as well). Mixed bundling (better price when buying them together). Tying (buy one product separately (Windows), but the other product (Media player), then you have to buy the other product (Windows)). Microsoft (para 862) if it is likely that it is an abuse & Commission (only 1 &4) if it is not likely that it is abuse: 1. 2 separate products, (2. Dominance in the market for the tying product (windows), 3. No choice for consumers to obtain the tying product (Media player) without the tied product (Windows)), 4. foreclosure of competition (exclusionary effect: consumers have no choice to choose for another media player program, so other competitors leave the market). Become big also on media player market. * Exclusive dealing & rebates, IP & litigation (Post Danmark II, Astra Zeneca/Huawei)

STEP 3: Is there a dominant position?  within internal market or substantial part of it (within MS at least)  not? To domestic competition authorities. *Definition SINGLE dominant position: 1. Position of economic strength 2. Ability to prevent effective competition 3. Power to behave independently (Hoffman La Roche/United Brands/Commission Notice on relevant market para 10) *Establishment dominant position: 1. Market share threshold met? 50%: presumption of dominance (burden of proof for company)  but always look at the structure of the market *Collective dominance (Airtours/Impala) in oligopolistic markets in order to be together dominant: 1. Sufficient degree of transparency on the market 2. Deterrent mechanisms 3. Reaction of potential competitors/consumers doesn’t jeopardize the results expected from the coordination  but always look at the structure of the market

STEP 5: Affects trade between MS? * Direct/indirect *Actual/potential  appreciable effect

YES: infringement of art. 102 TFEU

NO: no undertaking/no dominance/no abuse/no effects

STEP 6: Justification? *Efficiencies (Post Danmark & Section III D Commission Guidelines): 1. Efficiency has to be result of conduct/abuse 2. Indispensability (proportionality) 3. Balance of pros and cons (how important/how big benefits) 4. Efficiencies resulting from abuse may not eliminate competition (hard to prove, because you mostly always do) * Legitimate business behavior/meeting competition * Pursuing of public interest objectives (Post Danmark, Hilt), such as public health  meet the competition, not beat

STEP 7: Infringement of art. 102 OR No infringement/justification...