Competition Law and Anti-Trust: Abuse of Dominant Position (Video Notes)

Vocabulary flashcards covering key concepts, definitions, and case-law related to abuse of a dominant position under Article 102 TFEU from the lecture notes.

Article 102 TFEU

Prohibits abuse by one or more undertakings of a dominant position in the internal market that may affect trade between Member States; abuses include unfair prices, restricting production or development, discriminating between trading parties, or imposing unrelated contract terms.

Abuse of a dominant position

Prohibited conduct by a dominant undertaking that may affect trade between Member States; includes unfair prices, limiting development, discriminatory terms, or imposing supplementary obligations without connection to the contract.

Dominant position

A position of economic strength that enables an undertaking to prevent effective competition and act with appreciable independence from competitors, customers, and consumers.

Undertaking (EU competition law)

An economic unit engaged in economic activity, which may be a natural person, a legal person, or a group; can operate alone or jointly (e.g., JV); not always identical to legal personality.

Special responsibility of dominant undertakings

Once dominant, the firm has a special duty not to distort competition and to uphold the aims of the internal market and competition rules.

General definition of abuse (Hoffmann-La Roche framework)

Abuse is objective, affects market structure, runs counter to normal competition, and may have effects on the growth of competition; evidence of anti-competitive effects need not be de minimis.

Predatory pricing

Pricing that aims to drive competitors out by charging prices below costs or below relevant cost benchmarks; often tested against costs such as AVC (Areeda-Turner framework).

Areeda-Turner test

A test for predatory pricing comparing price to average variable costs; prices below AVC are typically abusive.

Margin squeeze

An exclusionary price-related abuse where a vertically integrated incumbent controls both upstream input prices and downstream retail prices, making it hard for competitors to compete; assessed by comparing upstream vs downstream prices.

Refusals to deal

Abuse when a dominant firm refuses to supply inputs or services that are indispensable for market entry or activity, subject to objective justification and proportionality.

Essential facilities

Access to facilities or IP rights that cannot be duplicated; refusals to grant access can be abusive if four cumulative conditions are met (objective justification and reasons tied to competition).

Tying

A dominant firm makes the sale of one product conditional on the purchase of another product; historically treated as per se abuse in some cases, though jurisprudence uses a nuanced test.

Exclusive dealing

Dominant supplier requires customers to buy all or most of their needs from the dominant firm; treated as abusive under per se or near-per se approach in Hoffmann-La Roche and subsequent cases.

Rebates

Anti-competitive rebates providing cost advantages to customers to encourage exclusive dealing with the dominant supplier; varied forms (retroactive, turnover-based, etc.) and assessed under abuse analysis.

Market share as a dominance indicator

Market shares are a useful first indicator of market power; very large shares suggest dominance but are not definitive proof; AKZO and Hoffmann-La Roche provide benchmarks.

Very large market shares

High market shares can strongly indicate dominance, but context matters; used as evidence of dominance in several cases (e.g., AKZO reference around 50%).

US vs EU distinction on dominance

EU law does not punish mere creation of dominance; punishment arises from abusive conduct; US antitrust emphasizes different approaches, including per se rules in some contexts.

United Brands (excessive pricing)

Case establishing a test for excessive prices: price difference relative to economic value; two-stage test to determine whether price is excessive or unfair.

Hoffmann-La Roche v Commission

Key case defining dominance as a combination of structural strength and behavioral independence; emphasizes the ability to influence competition and market conditions.

Case law on undertaking boundaries

Undertaking boundaries can be complex (parent/subsidiary, agents, joint ventures); courts assess whether entities act as a single economic unit or as independent competitors.

Single economic unit concept (parent and subsidiary)

Parent and subsidiary can be treated as a single economic unit if the subsidiary has no real economic independence or is controlled by the parent.

Joint venture vs. single economic unit

JV can be treated as a single economic unit with parents or as a separate undertaking depending on structure and control.

Consent and control in undertakings

Control (de facto or de jure) over strategic decisions or market conduct can make entities part of the same economic unit for competition law purposes.

Dominance assessment steps

Typically: define relevant market, assess the undertaking’s position, evaluate barriers to entry, and consider countervailing buyer power; market definition affects dominance findings.

Exclusionary abuses – overview

Abuses that harm competition by excluding rivals from the market; include predation, margin squeezes, refusals to deal, tying, exclusive dealing, and rebates.

Exclusionary abuses – predatory pricing (detailed)

Pricing intended to exclude rivals by setting prices to eliminate competition, often involves prices below costs with long-term strategic aims.

Exclusionary abuses – post-Danmark pricing cases

Cases like Post Danmark address pricing on different markets (addressed vs unaddressed mail) to assess whether pricing constitutes an exclusionary abuse.