Article 102 Flashcards
(30 cards)
Exclusionary abuse - commission guideline?
Commissions guidance on the commission’s enforcement priorities in applying article 82 of the EC treaty to abusive exclusionary conduct by dominant UTs 2009
Commissions guidance on the commission’s enforcement priorities in applying article 82 of the EC treaty to abusive exclusionary conduct by dominant UTs
Forclose their competitors
Diverse effect on consumer welfare
- different approach taken by the courts
Anti- competitive foreclosure
Being the situation where effective access of actual or potential competitors to supplies or markets is hampered or eliminated - para 19 of guidance
Commission take into account what factors when considering foreclosure to competitors or reduction in consumer welfare
- position of the dominant undertaking
- conditions on the relevant market
- position of the dominant undertakings competitors m
- position of the customers or input suppliers
- extent of alleged abusive conduct
- evidence of actual foreclosure
- evidence of any exclusionary strategy
Guidelines at para 28
Commission may not challenge behaviour which is objectively necessary or in a situation where substantial efficiencies that outweigh anti-competitive effects
Exclusionary abuse -
majority of abuses under article 102
Michelin case - exclusionary abuse
Article 102 covers practices which are likely to effect the structure of the market where as a direct result of the presence of a particular UT on the market the competition has already been weakened and have the effect of hindering the development or maintainence of level of competition existing on the market
British Midland v Aer Lingus
Made aer lingus interline and allow BM to use their computer systems to sell tickets for the same route - uncommon to do this for new competitors
Microsoft v commission 2007 - exclusionary abuse
Commission made Microsoft provide interoperable information available to its competitors to allow them to make technology that would work on microsoft’s servers so that the continuance of M’s strength would not continue and the risk of elimination of competition in a second market
Exclusionary abuse - Pricing strategies
Most important cases concern discounting, rebates and predatory pricing
- discounts: Hoffman la Roche case: loyalty rebates - clause that allowed customers to receive discounted prices where they told HLR about the lower pricing allowing them to react and maintain their market share
Michelin: discounts
Annual discounts awarded to Michelin on basis of sales targets for dealers amounted to abuse as the dealers couldn’t deal with another supplier without heavy fear of economic loss
Discounts - Irish sugar case
Targeted discounts will always be unlawful as they’re aimed at tying customers closely to dominant company
British airways v commission
The commissions fine of €6.8 million imposed on BA for offering commission bonuses to travel agents who exceeded BA sales targets was confirmed
- “performance reward scheme” was fidelity building because of its progressive nature
Michelin 2 decision
Court of first instance held that one it is established that the dominant undertaking was taking part in loyalty inducing discounts, it was not necessary to show that the discounting practice actually created anti competitive effects
- supported by the CJEU in Tomra Systems = no need to show “negative prices” I.e prices below cost, as a prerequisite to finding abuse
What does the commission’s guidance say on the discount or rebate
Paras 23-27 concentrate on whether the discount or rebate would hamper competition from an ‘as efficient’ competitor - whether they could still compete or the dominant UT is engaging in below costs pricing through the operation of the scheme
Predatory pricing
Selective price reduction intended to harm competitor
- levels at or below cost of making
- because of dominant position undertaking will be able to sustain loss for a certain period of time but the weaker competitor with little resources will be driven from the market
AKZO case - predatory pricing
Formula to calculate whether pricing is predatory
- if they fall below average variable costs (which vary according to quantity produced) predatory pricing is presumed
- if prices are between AVC and average total costs (variable costs + fixed costs) pricing will be predatory when part of a plan to eliminate competition
- difficult to apply but first case to apply a cost based approach to challenge illegitimate price competition by a dominating undertaking
Tetra Park 2 - predatory pricing
- liquid food packaging - tetra was dominant UT in aseptic packaging and had been involved in non-aseptic packaging market which is was not dominant
- novel extension to the doctrine but seems only possible where there is a link between the dominant market and the non dominant market
Irish sugar - predatory pricing
Different approach taken than in AKZO and tetra park = IR was cutting prices to Percy sugar market in Ireland from imports from Northern Ireland
- where price cuts are targeted at customers who might seek supplies from a competitor this may be enough to found a finding of predatory pricing unless all customers are offered favourable terms
France Telecom v Commission
CFI made it clear that dominant undertakings had no right to align their prices with those of a competitor, especially where they are potentially abusive being below cost
- also rejected the argument that a price below cost would be predatory unless it was necessary for the undertaking to recoup its losses
= difficult to ascertain when a dominant UT crosses the line
Predatory pricing - Commission guidance on
Commission doesn’t need to show that competitors have existed the market a dominant undertaking may well prefer to discipline an existing competitor so that it remains in the market but follows the dominant undertaking’s pricing and refrains from vigorous competition in the future (para 69)
Margin squeeze - dutsche telekom and TeliaSonera
Court of Justice - the key to abuse within a margin squeeze is the spread between the wholesale and retail price
- court doesn’t need to establish that either is too high or low
- only that the margin has been squeezed
- if an effective competitor couldn’t compete or only at a loss or reduced profitability based on input price = may be abuse
- proof of an anti-competitive effect is not necessary for the finding of an infringement but margin squeeze can effect the entry into the market being more difficult or growth of products being stifled
Tying or bundling
An undertaking can be dominant in one market and abuse its position in another
- extend or leverage its market power from the market its dominant in to another
- usually customers obtain secondary product when they buy the first
Tying - Hilti v Commission
Manufacturer of nail guns refused to supply cartridge strips containing the charge which fired the nails and over which it had IP rights without customers needing to buy the nails too
Comm focused on 2 consequences of the abuse
- the extension of monopoly power into a new market m”
- foreclosure of competitors
