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

Recommendations

Info

82 A Gap in the Enforcement of Article 82 prior to the adoption of the original ECMR, the Commission used Article 82 to address the anti-competitive effects arising from a merger. In Re Continental Can 16 the Commission found an abuse of Article 82 where a takeover bid was made by a dominant undertaking for a smaller competitor. The Commission argued that such an acquisition might constitute an abuse since it would adversely affect the structure of competition in a market where competition was weakened from the presence of the allegedly dominant undertaking. The ECJ annulled the Commission’s decision on the basis that it did not identify the market accurately. However, the ECJ confirmed that Article 82 could apply in a situation where a dominant undertaking was acquiring another undertaking. 17 Thus, if the dominance test in merger control cannot capture some mergers in certain types of market structure, it cannot capture unilateral conduct under Article 82 in the same types of market structure. Since the Commission addressed the gap in the original ECMR why has the Commission not addressed the same gap in Article 82? As abovementioned, the Economic Advisory Group for Competition Policy argued that the effects-based approach needs to put less weight on a separate verification of dominance and focus on sustaining a consistent and verifiable assessment of significant competitive harm. In 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, from the legal norm itself. 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. 18 A means to rectify the gap in the application of Article 82 would be to place less importance on proving whether a firm is dominant by placing unwarranted focus on the market share of the firm and focus on whether the firm has the market power to adopt anti-competitive conduct in the market. In a differentiated products market more than one firm has the ability to adopt such conduct, and following the wording of the case law, in the definition 16 Europemballage Corporation [1972] OJ L7/14. 17 As far as Article 82 is concerned, its shortcomings as regards to its application in merger assessment relate to the fact that it applies to concentrations already enjoying a dominant position. A transaction which creates a dominant position, as may be the case with a merger or acquisition falls outside the ambit of Article 82. 18 EAGCP Report.
How to Rectify the Gap 83 of the concept of dominance, 19 more than one firm may be able to behave independently of its competitors, its customers and ultimately of consumers. The definition of dominance refers to the ability of the firm to behave independently from the competitive constraints that the allegedly dominant firm faces. This definition does not necessarily imply that there can only be one dominant firm in the market. This is likely to be the case in most homogenous markets. In differentiated markets more than one firm can act independently of its competitors, its customers and ultimately of consumers, and thus in principle, more than one firm can be deemed to be dominant. According to the Commission, the market share is only an indication of dominance and is employed as an initial filter. Following this approach the Commission has found companies with high market shares as not being dominant and firms with low market shares as being dominant. What it has not been able to allege is that the non-dominant firm induces consumer harm and thus should be penalized. By attaching so much importance on the actual market shares compared to the relative market shares, the Commission has never found the second biggest firm in the market to abuse its power. By adopting a more flexible approach towards the relative market share levels of the incumbents in a market, the Commission should be able to amend this inability and thus argue that the second biggest firm is dominant/possesses substantial market power, and thus adopting anticompetitive conducts which are harmful for consumers in the market. The Commission has the chance to clarify its position and rectify the gap in the next step of the Discussion Paper. The Commission in the Guidance Paper argues that there may be specific cases below that threshold where competitors are not in a position to constrain effectively the conduct of a dominant undertaking, for example where they face serious capacity limitations. In such cases the Commission may also investigate anticompetitive conducts. Although the Commission makes an attempt to apply Article 82 on firms having low market shares which are able though to adopt anticompetitive conducts, it does not liberate the analysis from the factor of dominance. Thus, non-dominant firms having low market shares in differentiated product markets or in markets where capacity constraints are significant, can still adopt anticompetitive conducts and harm consumer welfare. 20 The Commission may instead wish to issue a Notice on the treatment of abuse of superior bargaining position/abuse of economic dependence. 19 Case 27/76, United Brands Co and United Brands Continental BV v Commission [1978], ECR I-207. 20 Changing the wording of Article 82 in the EC Treaty is the most complicated means of rectifying the gap in the application of Article 82. At present (September 2008) the EC is likely to issue administrative priority guidelines for Article 82 cases.
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 25 and 26:
Page 27 and 28:
Page 29 and 30:
Page 31 and 32: 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 61 and 62: from the legal norm itself. Article
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: How to Rectify the Gap 81 As Faull
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
Page 114 and 115: 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
show all

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

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?