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

76 A Gap in the Enforcement of Article 82
falling under the jurisdiction of section 5 of the FTC Act, cannot be
addressed by the Commission by applying Article 82. Thus, the gap in the
applicability of antitrust laws that section 5 rectifies, is not addressed by
Article 82. The anti-competitive conduct that escapes the application of
Sherman Act are addressed in the US, whereas the anti-competitive conduct
that escapes the application of Article 82 (and of the national equivalents)
is not addressed at all, resulting in inadequate competition enforcement.
Foyer (2008) claims that strategic unilateral withholding by a nonmonopolist
would arguably violate section 5, but possibly not the Sherman
Act, if there is highly inelastic demand at a time of peak capacity utilization
and such withholding undermines efficiency in the market. The market
structure in the example that Foyer presents (ie capacity constraints and
low elasticity of demand due, inter alia, to differentiation) to illustrate the
applicability of section 5 is very similar to the market structure that we have
analysed herein, where conduct of non-dominant firms induces harm to
consumers and cannot be addressed by Article 82. Thus, the FTC can
address anti-competitive conduct of non-dominant firms in such markets
but the Commission cannot capture such conduct under Article 82.
Specifically Foyer (2008) adds that ‘unilateral withholding may be an
example of a non-monopolist dominant firm, perhaps defined with respect
to the price sensitivity of the residual demand it faces, abusing its position
of power and engaging in an unfair method of competition, and that both
the FTC and the EU could likely agree on a statement to this effect.’ 87 The
FTC by employing section 5 would be able to address such a conduct. It is
highly questionable whether the Commission would be in a position to
address such a conduct by a non-dominant firm under Article 82.
Balto (2008) identified several industries where section 5 could be clearly
enforceable. He argues that there are a wide variety of practices that insurance
companies engage which undermine and threaten to undermine the
competitive process and ultimately harm consumers. As regards the health-
Communications, Inc., No 51-0008 (14 March 2006), available at http://www.ftc.gov/
os/caselist/0510008/060314cmp0510008.pdf). Creighton et al add that the FTC’s Ethyl case
might have been a gap filling cases. Finally, they add that patent fishing (firms acquire patents
and then demand payments from probable non-infringers, but where the payments are much
less than the costs of litigation) also constitutes a gap filling case. The authors argue that section
5 may also apply to, what they call, ‘frontier’ cases where all of the legal requirements for a
Sherman Act claim are met, but the claim involves new forms of anti-competitive conduct that
fall outside traditional categories of antitrust analysis. Former FTC Commissioner Thomas
Leary has made strong arguments for the application of section 5 in this context. In addition,
‘yes, but’ cases are ones that meet all the economic and legal requirements of a Sherman Act
claim, but cannot be brought under the Sherman Act because of legal limitations imposed for
reasons unrelated to antitrust. See further: S Creighton et al, ‘Some Thoughts About the Scope
of Section 5’ FTC Workshop on Section 5, 17 October 2008, www.ftc.gov, 2.
87 A Foyer, ‘Section 5 as Bridge Towards Convergence’, FTC Workshop on Section 5, 17
October 2008, www.ftc.gov, 7.