Advanced EU Law

1. Advanced EU Law Prof.MassimilianoMontini European Internal Market: Competition law (II) Lecture 15, 5/12/2013

2. Abuse of a dominant position • According to Art. 102 TFEU: ‘Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States’ • An undertaking can restrict competition if it has a relevant ‘market power’ in a given market. A dominant position is not in itself anti-competitive, but if the company exploits this position in order to substantially reduce or eliminate competition, this is an abuse.

3. Conditions for abuse of a dominant position • In order to determine the existence of an abuse of a dominant position, the following two conditions must occur: 1) A prejudice to trade between Member States 2) The abuse (by one or more undertakings) of a dominant positionwithin the internal market or in a substantial part of it

4. Dominant position: notion • The notion of ‘dominant position’ in not defined in the Treaty, but it has been forged by the Court of Justice • A dominant position refers 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’(case United Brands) • The notion of dominant position is different from the notion of ‘monopoly’ and ‘oligopoly’

5. The relevant market • Dominant position is identified according to the relevant market. • The relevant market has two dimensions: • Relevant geographic market: ‘a clearly defined geographic area in which it is marketed and where the conditions of competition are sufficiently homogeneous for the effect of the economic power of the undertaking concerned to be able to be evaluated’ (case United Brands) • Relevant product market: encompasses all those products and/or services which are regarded as interchangeable or substitutable by the consumer by reason of the products' characteristics, their prices and their intended use

6. The relevant geographic market • When defining the relevant geographic market, the following elements should be taken into consideration: the nature and characteristics of the concerned products, the existence of barriers to entry, consumer preferences, differences among the market share of undertakings in the neighboring geographic areas • A ‘substantial part of the internal market’ can be considered as the whole national market of a Member State or a more restricted area of European relevance(ex. Genoa’s harbour)

7. The relevant product market • The relevant product market is determined according to the following criteria: • Demand-side substitution • Supply-side substitution • The relevant product market must be determined not only by referring to the same products and services, but also to substitutable products and services, taking into account their prices, features and the consumers’ trends • Ex.: in the United Brands case bananas market has been considered a different and separated market from the fresh fruit’s market

8. Abuse: notion (I) • ‘Abuse’ refers to the behaviour of an undertaking which, by using anti-competitive tools and strategies, has an appreciable influence on the competitive conditions of the market, and in any case acts largely in disregard of fair competition (case Hoffman La Roche) • The Court of Justice stated that the ‘abuse’ of a dominant position may sometimes derive directly from then creation of a consolidated dominant position due to a merger (case Continental Can)

9. Abuse: notion (II) • The ‘abuse’ of an undertaking may consist in: • excluding competitors and indirectly damaging consumers, or • exploiting consumers through specific commercial strategies • The abuse of dominant position can also occur on a different market than the one directly dominated, whch is connected to it (case Aéroports de Paris)

10. Typical cases of abuse • Art.102(2) TFEU lists some typical cases of abuse of a dominant position. In particular, they may 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.

11. Joint application of art. 101 and art. 102 TFEU • The Court of Justice clarified that art. 101 and art. 102 can be jointly applied (to the behaviour of the same undertaking). • One or more firms may infringe at the same time both provisions with their behaviour, provided that the Commission may demonstrate that all the conditions for the violation of both prohibitions are satisfied.

12. Merger Control • Mergers are controlled at EU level by reason of their possible negative impact on competition and more generally on the functioning of the internal market. • Merger control is exercised by the Commission on the basis of the provision of Regulation 139/2004 (formerly Reg. 4064/89). • The Commission has an exclusive competence for the preventive evaluation of mergers of an European relevance.