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78 A Gap in the Enforcement of Article 82 The argument made herein as regards the need for Article 82 to apply to non-dominant firms is echoed in the comments of Albert Foyer, president of the American Antitrust Institute. 89 In the context of the Sherman Act, Foyer argues that a firm which is dominant in practice and which engages in an unfair method of competition should be subject to section 5 even if its market share is less than the 70 per cent that often characterizes Sherman Act decisions. 90 He adds that section 5 can and should be applied with a realistic and practical assessment of a firm’s ability and incentives to exercise market power and its effects. We echo this argument and emphasize the need for the ability of Article 82 to address anti-competitive conduct by firms which have the ability and incentives to exploit their market power. In providing some examples of violations of section 5 which are not considered to be violations of Sherman Act, he mentions unilateral withholding and argues that a successful withholding strategy ‘appears to require highly inelastic demand on the part of consumers and a temporary situation that can be exploited by a strategically situated, but not necessarily monopolistic, firm.’ 91 In this chapter we have addressed the gap in the application of Article 82, which is principally based on the differentiation of products leading to low elasticity for the demand of the product. Due to the fact that the differentiation of products induces customer inertia, customers are likely to continue buying them even if their price increases. As mentioned above, customer inertia bestows market power to the non-dominant undertaking and allows it to adopt anti-competitive conduct. 89 A Foyer, ‘Section 5 as Bridge Towards Convergence’, FTC Workshop on Section 5, 17 October 2008, www.ftc.gov. 90 The US Supreme Court has indicated that market shares above 66 per cent indicate monopoly power without clearly specifying the lower boundary. See US v DuPont (1956) 351 US 377, 379. 91 A Foyer, ‘Section 5 as Bridge Towards Convergence’, FTC Workshop on Section 45, 17 October 2008, www.ftc.gov, 5.
CHAPTER 5 How to Rectify the Gap Germany in its response to the questionnaire of the ICN on abuse of superior bargaining position argued that ‘[t]he German legislator, when incorporating the section 20 (2) ARC into antitrust law in 1973, held the view that not only conduct by those undertakings holding a dominant position could distort competition. In fact, the conduct of undertakings, which were able to exercise market power only to a certain extent and in relation to certain undertakings was also deemed to be capable of having negative effects on competition.’ 1 We should note, as abovementioned, that the origins of the notion of dominance can be traced back to German competition law. The German competition law (Gesetz gegen Wettbewerbsbeschränkungen (GWB) 2 ) used the term ‘dominance’ in section 22(1); it was a familiar concept due to the previous Abuse Regulation of 1923. 3 Thus, 50 years after the inclusion of the concept of dominance in the legislation, the German legislator identified the lack in the enforcement ability and decided to address the concept of abuse of economic dependence/abuse of superior bargaining position. Italy argued that underpinning the abuse of economic dependence provisions is that in long-term contractual relations characterized by a significant imbalance in the bargaining position of the parties, some firms may indeed be in the same position as end consumers vis-à-vis their contractual counterpart and should therefore be granted some protection against the risk of exploitation.’ 4 Japan argued that its willingness to address the ASBP stems from the idea that ASBP undermines ‘the foundation of the free competition’ in cases where a party in a superior bargaining position, by making use of that position, restrains the independent business activities of the other party and forces the other party to accept disadvantages that it would not if the competition worked properly. 1 ‘ICN Special Program for Kyoto Annual Conference Report on Abuse of Superior Bargaining Position’, www.internationalcompetitionnetwork.org. (‘ICN Kyoto-ASBP’) 15. 2 Available from the Bundeskartellamt website http://www.bundeskartellamt.de/wDeutsch/ index.shtml?navid=27. 3 Verordnung Gegen Missbrauch Wirtschaftlicher Machtstellungen, 1923, Reichsbesetzblatt, [R6B.1] I, 1067, 2 November 1923. 4 ‘ICN Special Program for Kyoto Annual Conference Report on Abuse of Superior Bargaining Position’, www.internationalcompetitionnetwork.org 15.
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Introduction The Treaty of Rome 195
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Introduction 3 tion of this concept
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CHAPTER 1 Objectives of Article 82
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Objectives of Article 82 7 economic
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Objectives of Article 82 9 Director
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Objectives of Article 82 11 Virtual
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Objectives of Article 82 13 product
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CHAPTER 2 Concept of Dominance The
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Concept of Dominance 17 The stateme
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Concept of Dominance 19 criticisms
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CHAPTER 3 Abuse of Superior Bargain
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Abuse of Superior Bargaining Positi
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Abuse of Superior Bargaining Positi
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Page 81 and 82: How to Rectify the Gap 81 As Faull
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Page 89 and 90: How to Rectify the Gap 89 mentioned
Page 91 and 92: How to Rectify the Gap 91 proportio
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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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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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