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86 A Gap in the Enforcement of Article 82 discrimination, that a non-dominant firm may be involved in, will lead to the firm rationalizing its revenues and thus being able to invest in higher innovation and improved product line, will depend on how competitive the market for the firm’s products is and more generally on the incentives that the nondominant firm may have to pass on the accrued monetary benefits to the consumers in the form of improved product line. In a differentiated product market, where the non-dominant firm possesses market power, its incentives to pass on any benefits obtained from the anti-competitive conduct to its customers are questionable. In addition, in case the anti-competitive conduct leads to efficiencies which benefit consumers the non-dominant firm can attempt to objectively justify the conduct. The same concern as regards the decrease in the innovation and of research and development (‘R&D’) of firms was raised in the debate prior to the adoption of the new ECMR. However, these fears did not materialize. There is no particular reason to expect that such fears of ‘over enforcement’ leading to a hampering of innovation and of R&D in general will materialize if the Commission rectifies the gap in Article 82. In addition, innovation is essential in industries with high R&D. Thus, in the majority of industries any mitigation in innovation is not likely to lead to consumer harm more significant than the one induced by allowing the non-dominant firms to adopt anti-competitive conduct. In addressing the anti-competitive conduct of non-dominant firms, the Commission is likely to make Type I errors and lead to creating concern amongst firms as regards the conduct that they can adopt in order to compete in the market. It is better to address conduct of non-dominant firms and risk some Type I errors (ie prohibiting a conduct which is not anti-competitive), possibly inducing a chilling effect in the innovation activities of firms, rather than accept the possible Type II errors (not capturing anti-competitive conduct of non-dominant firms). Type II errors are likely to induce more significant harm than Type I errors. The Commission is perfectly able to accurately and efficiently prohibit the anti-competitive conduct and keep Type II errors to a minimum. The possibility of some Type I errors should not prevent the Commission from having the ability to address anti-competitive conduct of non-dominant firms. Through a less rigid application of the dominance test the Commission may be able to reduce both Type I and Type II errors. The Economic Advisory Group argued that a reduction in the role of separate assessments of dominance although will depart from the tradition of case law concerning Art. 82 of the Treaty, it will not depart from the legal norm itself. 27 Thus, the Commission could in the future cases, without 27 EAGCP Report, 14.
How to Rectify the Gap 87 departing from the essence of Article 82, allege that the anti-competitive conduct of the non-dominant firms may in some circumstances (ie differentiated products market, significant market share of the firm) harm consumer welfare and thus constitutes an infringement of Article 82. Due to the absence of such cases in the current case law, the Commission should notify the legal and business community of its new approach, so as to enhance legal certainty and encourage the dissemination of information about possible gap cases. The Economic Advisory Group correctly argued that greater flexibility of an effects-based approach need not reduce the predictability of competition policy. Although this change in the Commission’s approach is radical, it is necessary in order to prevent cases such Rossignol, 28 or to address the types of anti-competitive conduct that were evident in Bayer (and other cases analysed in the preceding sections) from escaping the Commission’s assessment. We should also emphasize the fact that in five years, under the legislation on abuse of economic dependence, the Bundeskartellamt initiated more than one hundred proceedings, for abuse of purchasing power by major distributors. 29 According to the German competition authority’s response to the ICN Report-ASBP, the Bundeskartellamt has examined 39 cases (beyond preliminary investigation) and three of them ended with a decision that the conduct violated antitrust rules. In France, 25 to 30 judgments have been delivered every year since 2001. 30 This number of cases on average is higher than the average number of decisions involving abuses of Article 82 or of equivalent national legislations. 31 Thus, the corrective, and more importantly deterrence, impact of the ability of authorities to capture abusive conduct of non-dominant firms is likely to be higher and be illustrated in a larger number of cases than the number of authorities’ decisions involving abusive conduct of dominant firms. Conduct such as that addressed in these cases can also arise in the Commission’s decisional practice. Some of these cases will relate to abuse of superior bargaining position/abuse of economic dependence and some of these cases will relate to other harmful conduct of non-dominant firms inducing consumer harm. One can only wonder on the number of cases that are not caught under the current EC legislation and the application of the concept of dominance in Article 82 cases. 28 KZR 1/75, Rossignol, 20 November, 1975, WuW/E BGH, 1391. 29 See further: I Roudard, ‘The New French Legislation on Competition’ [1989] 10(2) ECLR 205–232. 30 In Korea, more than 2,380 cases were received, and corrective orders were imposed on 360 cases. 31 Since 2001 there are about 16 decisions involving investigations pursuant to Article 82.
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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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Page 35 and 36: Abuse of Superior Bargaining Positi
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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 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: How to Rectify the Gap 85 An argume
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
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