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ICN Annual Conference

ICN Annual Conference. UCWG: Panel on Dominance and State Created Monopolies 30 May 2007 Emil Paulis DG Competition. Overview of presentation. Merits of legal presumptions and market share thresholds in dominance assessment: - Dominance thresholds - Safe harbors

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ICN Annual Conference

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  1. ICN Annual Conference UCWG: Panel on Dominance and State Created Monopolies 30 May 2007 Emil Paulis DG Competition

  2. Overview of presentation • Merits of legal presumptions and market share thresholds in dominance assessment: - Dominance thresholds - Safe harbors • Finding the right intervention level: - Dominance or below? - Can conduct be relevant in finding on a dominant position? • Competition authorities’ role in liberalisation: - Contributions through enforcement - Contributions through advocacy activities

  3. Dominance presumptions • EC approach: • Dominance/SMP = ability to profitably raise prices above the competitive level • Market shares (MS) are first useful indication. • But MS alone do not determine whether there is dominance. • Focus of the assessment is on competitive contraints. • Therefore: dominance presumptions based on MS have to be used with caution.

  4. Safe harbours • Market share thresholds in the form of safe harbours can enhance legal security. • They help companies in assessing their market position and the likelihood of agency intervention. • However, an individual assessment is always required. • Legal presumptions should be thus be rebuttable.

  5. Intervention levels (I) • EC law: Dominance triggers the Commission's competence: below that threshold, Article 82 EC-Treaty does not apply. • ICN report: Dominance as a filter for intervention against specific anti-competitive conduct. • Should dominance be a prerequisite for the finding of an abuse?

  6. Intervention levels (II) • EC law calls for a two-step approach (this also facilitates self-assessment by companies). • Question raised during the Article 82 review: • To what extent can evidence of successful exclusionary conduct over an extended period of time be taken into account for finding dominance? • DG COMP approach: • Conduct may be relevant but caution is applied to avoid circular arguments. • Basic definition of dominance remains the ability of an undertaking to profitably raise prices.

  7. Competition authorities’ role in liberalisation (I) • ICN report: Agencies play important role in ensuring a competitive environment. • Participation in the liberalisation process provides opportunity to shape the competitive market conditions. • Early involvement of agencies is fundamental to avoid complex post-liberalisation competition problems. • Relevant ministries and sector regulators should become more familiar with competition issues. • Useful tool in this respect: OECD toolkit for competition assessment.

  8. Competition authorities’ role in liberalisation (II) • DG COMP has successfully supported the liberalisation process in the EU in several industries. • Two important tools are applied to achieve this aim: • Advocacy: take competition effects into account ex ante, when designing or reviewing EC legislation on liberalisation. • Competition law enforcement (in particular in the area of abuse of dominance, but also state aid and merger rules). • Examples: i.e. telecom sector or air transport sector. New challenge: energy sector! • Sometimes enforcement activities (even pending ones) may enhance market opening or accelerate the effect of the relevant legislation on liberalisation.

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