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Enhancing Liberalisation Through Dominance and State Monopolies Panel Discussion

This panel discussion at the ICN Annual Conference explores legal presumptions and market share thresholds in dominance assessment, effective intervention levels, and competition authorities' role in liberalisation through enforcement and advocacy activities.

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Enhancing Liberalisation Through Dominance and State Monopolies Panel Discussion

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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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