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

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60 A Gap in the Enforcement of Article 82 inefficient. Anti-competitive practices by non-dominant firms illustrate the inability of the European Commission to address the competitive harm induced by this conduct. The OECD in its policy brief on Substantial Market Power and Competition 47 argued that there is substantial agreement that single firm conduct provisions should apply only to firms with a high degree of market power. Unilateral acts by a firm with a high degree of market power are much more likely to harm consumer welfare and distort the competitive process than are unilateral act by firms with little or no power. The OECD adds that there is no single, clear economic test that can be used to distinguish between market power that is of concern in unilateral conduct cases and the lesser degree of market power that should not be. It all depends on the ability of undertakings to adversely influence competition. Thus, it is clear that non-dominant firms can also have an adverse impact on consumer welfare by adopting unilateral acts. The importance of the dominance test lies in the fact that a screening based on a legal concept similar to the economic notion of market power prevents the prohibition of pro-competitive unilateral practices, thus reducing Type I errors (ie prohibiting a conduct which is not anti-competitive). Competition authorities and courts could focus their assessment on the economic impact of an allegedly anti-competitive conduct, and apply competition legislation to genuinely anti-competitive unilateral conduct, without having to first analyse whether a dominant position exists. The Economic Advisory Group argued that the economic approach towards Article 82 implies that there is no need to establish a preliminary and separate assessment of dominance. The emphasis should be on establishing significant competitive harm which is already proof of dominance. Although the Economic Advisory Group specifically refers to proof of dominance, we can apply its argument to firms not being dominant but being able to harm a significant number of consumers. Such conduct should be caught under Article 82 since in the type of market analysed above, the non-dominant firm can induce consumer harm. We should draw attention to an argument made by the Economic Advisory Group: 48 [I]n proposing to reduce the role of separate assessments of dominance and to integrate the substantive assessment of dominance with the procedure for establishing competitive harm itself, we depart from the tradition of case law concerning Art. 82 of the Treaty, but not, we believe, 47 OECD brief, ‘Substantial Market Power’ http://www.oecd.org/dataoecd/58/ 28/41257462.pdf. September 2008. 48 § 14.
from the legal norm itself. Article 82 of the Treaty is concerned not just with dominance as such, but with abuses of dominance. The case law tradition of having separate assessments of dominance and of abusiveness of behaviour simplifies procedures, but this simplification involves a loss of precision in the implementation of the legal norm. The structural indicators which traditionally serve as proxies for ‘dominance’ provide an appropriate measure of power in some markets, but not in others. In a market where these indicators do not properly measure the firm’s ability to impose abusive behaviour on others, the competition authority’s intervention under traditional modes of procedure is likely to be inappropriate, too harsh in some cases and too lenient in others. Given that the Treaty itself does not provide a separate definition of dominance, let alone call for any of the traditionally used indicators as such, it seems more appropriate to have the implementation of the Treaty itself focus on the abuses and to treat the assessment of dominance in this context. 49 They also argue that: 50 The Gap in the Application of Article 82 61 This approach also allows us to capture in a balanced and meaningful way the notion of special responsibility of a dominant firm… Since in this analysis we do not need to assess the existence of dominance separately, the special responsibility implicitly applies to any conduct and firm that (is able to) interfere and distort the competitive process of entry into the market. 51 Both these arguments illustrate a generalization of the application of Article 82 to any conduct and firm that (is able to) interfere and distort the competitive process of entry into the market. Such will be the cases of non-dominant firms in a differentiated market, which will not be constrained by the presence of other firms in the market. The Commission has received criticism for focusing on market shares for a finding of alleged anti-competitive conduct. Such a structural approach towards the definition of dominance protects competitors rather than competition. Such an approach induces harm to consumers. According to Dethmers and Dodoo (2006) the Commission should not focus merely on 49 Emphasis is by the author. 50 § 15. Underlining is by the author. 51 Thus, more than one firm can have this special responsibility since more than one nondominant firm may have the ability to interfere and distort the competitive process of entry into the market.
Page 1 and 2:
Introduction The Treaty of Rome 195
Page 3 and 4:
Introduction 3 tion of this concept
Page 5 and 6:
CHAPTER 1 Objectives of Article 82
Page 7 and 8:
Objectives of Article 82 7 economic
Page 9 and 10: Objectives of Article 82 9 Director
Page 11 and 12: Objectives of Article 82 11 Virtual
Page 13 and 14: Objectives of Article 82 13 product
Page 15 and 16: CHAPTER 2 Concept of Dominance The
Page 17 and 18: Concept of Dominance 17 The stateme
Page 19 and 20: Concept of Dominance 19 criticisms
Page 21 and 22: CHAPTER 3 Abuse of Superior Bargain
Page 23 and 24: Abuse of Superior Bargaining Positi
Page 43 and 44: CHAPTER 4 The Gap in the Applicatio
Page 45 and 46: The Gap in the Application of Artic
Page 59: The Gap in the Application of Artic
Page 63 and 64: In this book we are focusing on the
Page 79 and 80: CHAPTER 5 How to Rectify the Gap Ge
Page 81 and 82: How to Rectify the Gap 81 As Faull
Page 83 and 84: How to Rectify the Gap 83 of the co
Page 85 and 86: How to Rectify the Gap 85 An argume
Page 87 and 88: How to Rectify the Gap 87 departing
Page 89 and 90: How to Rectify the Gap 89 mentioned
Page 91 and 92: How to Rectify the Gap 91 proportio
Page 93 and 94: How to Rectify the Gap 93 Depending
Page 95: How to Rectify the Gap 95 cases is
Page 98 and 99: 98 A Gap in the Enforcement of Arti
Page 100 and 101: 100 A Gap in the Enforcement of Art
Page 102 and 103: 102 A Gap in the Enforcement of Art
Page 105 and 106: Annex 1 REPORT PREPARED BY THE ICN
Page 107 and 108: Annex 2 REPORT PREPARED BY THE ICN
Page 109: Annex 4 Appendix C of the ICN Kyoto
Page 112 and 113:
112 Bibliography P Callol, P Pignat
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114 Bibliography Guidance on the Co
Page 116 and 117:
116 Bibliography J Leibowitz, ‘Ta
Page 118 and 119:
118 Bibliography I Roudard (1989),
Page 120:
120 Bibliography The Distillers Com
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