Article 82 of the consolidated version of the 1997 EC Treaty, prohibits the abuse of dominance by one or more companies located in the EU or in a substantial part of it. In order to be considered, this abuse must affect trade between the member states. Article 82 is currently being reviewed by the Commission. The European Court of Justice has defined dominant position in the United Brands decision (1978) as "a position of economic strength enjoyed by an undertaking [a company], which enables it to prevent effective competition being maintained on the relevant market, by giving it the power to behave to an appreciable extent independently of its competitors, customers, and ultimately of its consumers." This dominance occurs only when there are barriers to entry to the market and it is persistent when the market is not contestable. Dominance usually implies a 40-50% market share and the market considered must be relevant.
[...] European Court of Justice has defined dominant position in the United Brands decision (1978) as position of economic strength enjoyed by an undertaking company], which enables it to prevent effective competition being maintained on the relevant market, by giving it the power to behave to an appreciable extent independently of its competitors, customers, and ultimately of its consumers.” This dominance occurs only when there are barriers to entry to the market and it is persistent when the market is not contestable. Dominance usually implies a 40-50% market share and the market considered must be relevant. When does an abuse of dominance occur ? What are the examples of such (highlighted in grey)? EU does not prohibit dominant position as such, but only an abuse of it, although it may be hard to separate the two notions. Abuse of a dominant position addresses business conduct and not the structure of the market per se. [...]
[...] Price discrimination: treating the customers in a different manner without a legally adequate or cost-based reason different price charged for the same product or the same price charged for different products) E.g. British Airways case (1999). BA offered incentives to the travel agencies that sold most of their tickets. Hence, BA treated its various customers differently, according to the amount of the BA tickets sold. It also made it difficult for other air lines to compete with BA as BA tickets were sold most frequently. [...]
[...] The unsupplied resource may be an essential facility vital for production (e.g. electricity). E.g. Commercial Solvents case (1974). Commercial Solvents refused to deliver aminobutanol (essential ingredient for a drug against tuberculosis) to an Italian medical manufacturer Yet, it continued to deliver aminobutanol to its subsidiary ICI. A refusal to supply Zoja would eliminate the only competition that Commercial Solvents' subsidiary faced. Tying: a supplier demands that a buyer buys from him or from a different seller another distinct product, in addition to the one he wants to buy already. [...]
[...] AKZO (Holland) and ECS manufactured benzoyl peroxide used in production of flour and plastics. Both operated in the flour market and only AKZO in the plastics one. Yet, when ECS decided to enter the plastics market as well, AKZO suggested lower prices (lower than the average costs) to some of the ECS customers in the flour market, weakening ECS positions considerably. Appendix Extract from 1997 consolidated version of the EC Treaty (contained in Treaty of Amsterdam) Article 82 (ex Article 86 in the Treaty of Rome) Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market in so far as it may affect trade between Member States. [...]
[...] Tetra Pak asked the customers supplied with equipment used for liquid or semi-liquid food products, to also purchase from it the cartons required for manufacturing of these packages. Rebates: charging different customers different prices by offering discounts. Unless based on cost-savings (e.g. volume discounts), these discounts force customers into purchasing loyalty to one particular producer. E.g. Hoffmann-La Roche case (1979). This producer of vitamins offered rebates for fidelity of its buyers. Predatory pricing: decreasing prices to an extent that the smaller, potential or existing, competitors do not enter the market or have to exit it respectively. E.g. [...]
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