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102 TFEU: “ General C lause ”

ABUSE OF DOMINANT POSITION (102 TFEU, ex 82 ECT) Doc. dr. Aleš Ferčič University of Maribor. 102 TFEU: “ General C lause ”

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102 TFEU: “ General C lause ”

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  1. ABUSE OF DOMINANT POSITION (102 TFEU, ex 82 ECT) Doc. dr. Aleš Ferčič University of Maribor

  2. 102 TFEU: “General Clause” Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of itshall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States. 2

  3. Elements of “General Clause” • Undertaking • Dominant position (dominance) • Internal market or substantial part thereof • Abuse (of dominant position) • Effect on trade between MS

  4. Undertaking (In principle) any entity engaged in an economic activity, regardless of its legal form, source of financing and ownership. Note: single economic unit

  5. Dominant position (dominance) Two-steps test: 1) Relevant market • Product • Geographical • Temporal 2) Market power Assessment of market power on case by case basis

  6. United Brands “The dominant position referred to in this article relates to a position of economic strength enjoyed by an undertaking 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.” Hoffman-la Roche “Such a position does not preclude some competition, which it does where there is a monopoly or a quasi-monopoly, but enables the undertaking which profits by it, if not to determine, at least to have an appreciable influence on the conditions under which that competition will develop, and in any case to act largely in disregard of it so long as such conduct does not operate to its detriment.”

  7. Relevant factors • Market share • Other: • the number and strength of the competitors, • their ability (forthcoming from unused capacities) to respond promptly to output or price changes of the market leader; • entry barriers, which can be inherent in the nature of the market (e.g. legal barriers imposed by the EC or relevant Member States, large initial (sunk) investments) or caused by the dominant undertaking (e.g. use of intellectual property rights, limited access to raw materials, closed distribution channels).

  8. . Market share 75 25 50

  9. Abuse (of dominant position) Such abuse may, in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) limiting production, markets or technical development to the prejudice of consumers; (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

  10. Certain examples Predatory pricing, Discriminatory pricing, Excessive pricing, Cross-subsidized pricing, Refusal to deal. etc. 10

  11. Notes • It is not unlawful to have a dominant position, unlawful is the abuse of such a position. • A firm in a dominant position has a special responsibility not to allow its conduct to impair undistorted competition on the common market • Case 322/81 Michelin v Commission

  12. Internal market or a substantial part thereof MS or part of MS Sugar Cartel: “For the purpose of determining whether a specific territory is large enough to amount to 'a substantial part of the common market' within the meaning of [Article102] of the Treaty the pattern and volume of the production and consumption of the said product as well as the habits and economic opportunities of vendors and purchasers must be considered.” Already smallpart is in principle sufficient – Port of Holyhead 12

  13. Appreciable effect on trade between MS • “Trade”: wide sense, i. e. any cross-border economic activity. • At least between two MS. • (Sufficient) influence on a pattern or model of (existent) trade.

  14. Additional remarks • Regulation 1/2003. • Public vs. private enforcement • (legal consequences: • -administrative, • -criminal and • -civil law).

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