Abuse of Economic Dependence - The Centre for European Policy ...

50 A Gap in the Enforcement of Article 82
never alleged that a firm having the second highest market share in a market
can be dominant and thus that this firm abuses its dominance by adopting
anti-competitive conduct.
The practice of the Commission and the courts illustrate dependence of
the concept of dominance on the market shares of the allegedly dominant
firms. There is no case, to the author’s knowledge, where it has been alleged
that the second biggest firm is ‘dominant’ or ‘abuses its dominant position’.
The Commission ‘in theory’ (ie in the Guidance Paper, etc), argues that
market share is a first indication and is not conclusive evidence of a firm’s
dominant position. However, the relative market shares of the firms in a
market seem to constitute a safe harbour, ie if the second biggest firm has a
market share close to the allegedly dominant firm’s, it is unlikely that the
Commission and courts will ever argue that the highest market share firm
is dominant. Similarly, the Commission and courts will not argue that the
second biggest firm is dominant.
As was shown above, the Commission’s decisions and the CFI/ECJ judgments
imply that Article 82 has a consumer welfare objective. Thus, Article
82 is enforced in order to safeguard consumer welfare. The gap in the application
of Article 82 arises in all situations where the two biggest firms have
close market shares, their products are differentiated and, although the
biggest firm’s conduct would be considered abusive, the second biggest
firm’s conduct would not.
Under the assumption that the objective of Article 82 is consumer
welfare, we can argue that a firm which is dominant because it has 45 per
cent of the market by adopting an anti-competitive conduct abuses its
dominant position, and harms a significant number of customers. 28
However, we cannot argue that the second biggest firm which has 40 per
cent of the market is dominant and thus, cannot prevent it under Article 82,
from adopting an anti-competitive conduct, similar to the one that the
biggest firm adopted. This inability of Article 82 to be applied to firms
having significant (but not the highest) market share is counterintuitive,
since Article 82 has a consumer welfare objective and the second firm’s
conduct may harm a similar number of customers as the biggest firm’s
conduct. 29
28 The market shares used in this paragraph are indicative. An assumption is made that the
other factors that would indicate dominance are present (eg high barriers to entry, capacity
constraints etc). Depending, inter alia, on the differentiation of the products, the existence of
alternative, as well as the switching costs of consumers and the capacity utilization of the
rivals, the dominant firm’s (accounting for the 45 per cent market share) anti-competitive
conduct may harm a significant proportion of customers.
29 The premise behind this book and the theory analysed herein are that the second biggest
firm is not significantly smaller than the biggest firm and that the other criteria that would
render a firm dominant in a market are present (eg barriers to entry, lack of buyer power etc).
The differentiation of the products makes any likelihood of collective dominance remote. See