: ž 380 apterV icle 82: Abuse of Dominant Position TENTS ;cheme of Article 82..................................... ... 383 Jndertaking................................................385 C. Dominant Position...........................................383 1. Definition and Criteria.....................................388 2. Relevant Market..........................................390 3. Dominant Position........................................396 (a) Market Structure......................................397 (b) Firm Structure and Performance..........................404 (c) Firm Conduct........................................406 4. Collective Dominance.....................................407 5. Dominant Purchasers......................................4J 7 D. Abuse.....................................................417 1. Introduction.............................................417 2. Imposition of Unfair Purchase or Selling Prices or Conditions (Article 82 (a)) ..........................................425 (a) Unfairly High Prices Charged by a Dominant Seller..........425 (b) Imposition bf Unfairly Low Prices by a Dominant Purchaser: Abuse of Buying Power................................430 (c) Applying Unfairly Low Prices through Cross-Subsidization .... 431 (d) Imposition of Other Unfair Trading Conditions..............432 3. Limiting Production, Markets or Technical Development to the Prejudice of Consumers (Article 82 (b)).......................432 (a) Limitation of Production................................433 (b) Limitation of Markets..................................434 (c) Limitation of Technical Development......................440 4. Applying Dissimilar Conditions to Equivalent Transactions (Article 82 (c))...........................................443 5. Tying practices (Article 82 (d))..............................448 6. Exclusionary Abuses not Directly Covered by the Examples in Article 82 (a)-(d).........................................452 (a) Exclusionary or Predatory Pricing .. . .-....................454 (b) Exclusionary Pricing by Means of Cross-Subsidization .......458 381 - -fc CHAťiJBK V (c) Exclusionary Dealing Arrangements...... (d) Abusive (Predatory) Use of Industrial or Intellectual' Property Rights.................. (e) Abusive'Refusal of Access to an Essential Facilitv'or Network............... 7. Abusive Discrimination by Nationality.... *......' E. Effect on Trade between Member States........... H Parallel Application of Articles 81 and 82......... G. Legal Consequences of Infringement of Article 82 ... ARTICLE 82 - ABUSE OF DOMINANT POSITION ,. Scheme of Article 82 ■ omroon Aim of Articles 81 and 82: Maintaining Effective Competition. iticle 82 prohibits any abuse of a dominant position by one or more firms in a ibstantial part of the Common Market that may affect trade between member ates. Article 82 is to be applied and construed - like Article 81 - in the light of ;e task assigned to the Community by Article 3 (g) of the Treaty of instituting a 'Stem ensuring the maintenance of effective competition in the Common Marat ' Article 81 prohibits the prevention, restriction or distortion of competition by Leans of an agreement or concerted practice between firms, regardless of whether ley have market power. By contrast, Article 82 applies only to firms that have larket power and seeks to prevent the abuse of such power for anticompetitive ids. It prohibits the abuse of market power both by the unilateral conduct of a single firm, and by the interdependent action of several oligopolists. In the latter case, no agreement or concerted action between multiple actors must be proved as under Article 81. However, where the conditions of both provisions are fulfilled both Articles 81 and 82 may be applied in parallel.2 Unchanged Application of Article 82 in the Framework of the Commission's Modernization. The modernization of the EC competition rules does not-bring significant changes with respect to Article 82. In particular, there is no change to the basic approach, which is the existence and abuse of a dominant position.3 Article 82 was and remains directly applicable in parallel by the Commission, the national competition authorities and the national courts (subject to close cooperation*5). Where national authorities or national courts apply national law to any abuse prohibited by Article 82 (because it is likely to affect trade between member states), they must also apply Article 82, thereby reducing the risk of conflicting decisions.5 1. Continental Can, ECJ Feb. 12,1973,1973 ECR 215, paras 22-25; Hoßnann-La Roche, ECJ í Feb. 13, 1979, 1979 ECR 46í, 520, para. 38; Michelin, ECJ Nov. 9, 1983, 1983 ECR 346í, ^ paras 29-30. 2. See infra Section F. p™1 3. There is no application of the new standard of 'significantly impeding effective competition' f as applies under Article 2 (2) of Regulation 139/2004 on the control of concentrations, 2004 L^, OJL24/1. 4. Articles 11 and 15 of Regulation 1/2003 and the Commission's notices. 5. Article 3 of Regulation 1/2003. See Chapter I.F. [ I 383 Existence or Acquisition of Dominant Position Unobjectionable under Article 82. Ai tide 82 covers only the abuse of an .already existing dominant position. existence or attainment of a dominant position6 is in itself .unobjectionable." applies however the dominant position ;was.obtained, whether by internal gro lesulting from superior performance or technologica] prowess,7 by the acquis oi exclusive rights,5 or by merger.0 Mergers or acquisitions which have a Corr mty dimension must be assessed under a stricter standard. Regulation 139/; provides that mergers may be declared incompatible with the Common Mr wheie they significantly impede effective competition in the Common Mi or a substantial part of it, in particular, as a result of the creation or strengthe of a dominant position. Mergers and acquisitions that do not have a Commt dimension may be assessed; -: under Article 82 where they constitute an abuse of a dominant firm aln ; holdings, dominant position, .within the terms :of the Continental Can doctri i and ..... '-:'--•. -) under, ib.e-merger. provisions. of,national, competition law by national com] ; tioii- authorities,.unless the case is referred.to the Commission accordín Article 22 of Regulation 139/2004. -. Different types of Abuse. Article 82 enumerates certain types of abuses without being exhaustive, general concept of 'abuse1 is broad and comprises any type of conduct that": counter to the principle of Article 3 (g)." The main, categories of abuse are: - Exploitative Abuses: Exploiting market power in trading relationships ' customers oi suppliers by such practices as unfair purchase or selling pri tying arrangements, price discrimination, etc. 6. Michelin, ECJ Nov. 9,1983, 1983 ECR 3461, 3511, para. 57: 'A finding that an undertaking has a dominant position is not in ifself a* recrimination but simply means that, irrespective or the reasons for which it has such a dominant position, the undertaking concerned has a special responsibility not to allow its conduct to impair genuine undistorted competition on the Common Market.7 See Telecommunication Directive-Services, ECJ Nov. 17,1992, 1992 ECR T-5833, para. 35. • ■ Hoffmann-Ld Roche. BCJFtb. 13, 1979, 1979 ECR 461, 524; para. 48. British Leyland, ECJ Nov. 11, 1986, 1986 ECR 3263, paras 3-10; Renault, ECJ Oct. 5, 1988, J9S8ECR 6039, para. 15; Crespelle, ECJ Oct. 5, 1994, 1994 ECR 1-5077, paras 17, 22; Magill, ECJ April 6. 1995, 1995 ECR 1-743, para. 46; Banchew, ECJ Dec. 14, 1995, 1995 ECR 1-4663, para. 55.10; UPS Europe, CFI March 20, 2002, 2002 ECR 11-1915, para. 51. 9- Continental Can, ECJ Feb.'21, 1973, 1973 ECR 215, paras 18-27. 10. Ibid. 11. See Continental Can. ECJ Feb. 21,1973, 1973 ECR 215, 244-245, paras 24-25. 7. 8. i 384 ARTICLE 82 - ABUSE OF DOMINANT POSTTSON :clusiQnaryAbuses:'Ab.usingmaxket£o^eT:to:haTm a competitor by anticom-titive means such-as refusal.,to deal,..pi;edatory,'pricing?--or other predatory tions. --. --.-, ■; uctural Abuses Eliminating a competitoi by meiger ot acquisition. This can o be regarded as a subcategory of exclusionary abuses I k in ;nts to be Proved. lements that must be proved to establish an abuse of a dominant position / infringes Article 82 are that: : or more undertakings •■ : hold a dominant position conferring market power i bin a relevant product and geographic market bin the Common Market or in .a substantial.part thereof imit an abuse of the dominant position ;' : may affect trade-between, member states. ; chapter will discuss tlie.various.-fQrms^.of abuseunder;Article 82, with the/I ion of 'structural abuses', i.e., creating or strengthening a dominant poši-j ! takeover of a competitor, which are covered in Chapter VI dealing with the ;> I ition of mergers and joint ventures under the merger control regulation. I 1 ndertaking f>il i tion. I eaning of 'undertaking' was discussed in Chapter I.12 It refers to any entity ;d in business activities, regardless of its legal status and the way it is fi-l.13 Thus both private and state-owned or controlled firms and public bodies i igage in industrial or commercial activities may be subject to Article 82.M 12. See Chapter I.D. 13. Telecommunication Directive Services, ECJ Nov. 17, 1992, 1992 ECR 1-5833, para. 24. This may include associations or cooperatives provided they have the-iegalstatus of an undertaking: Milk Marketing Board, Gormi; com£oTtle\tev,T\vmty?secoi\d Report on Competition Policy, points 161-167; CEWAL, D.Cömm. Dec.; 23, 1992,1993--OJL 34/20, upheld in substance by CFI Oct 8; 1996,1996 ECR 11-1201 (arguing that CEWAL, the association composed by four members, acted on the market autonomously as one single unit),' qff'd ECJ March 16, 2000, 2000 ECR 1-1365; Aéropórts deParis, €H Dec. 12,2000^2000 ECR 11-3929, para. 107. qffd ECJ Oct 24, 2002,^2002 ECR 1-9297, para. 79; Deutsche. Bahn (German Railways). CFI Oct. 21,1997, 1997 ECRII-1689; off? d ECJ April 27-1999,1999 ECR 1-2387. 14. Commission/Italy, ECJ June 16,1987, =1987-ECRa599žpara."7;ířřoyiKr/Aíacro/fwi. EC1 Aprii 23, 1991,1991 ECR-I-979 para: 26;Greek-Telévisiom-Eeí June 23,1991, 1991 ECR 1-2925. para. 38; Diego Call ■& Figli/Porto di-Geneva- ECJ March-18, 1997, 1997 ECR i-1547, para. 16. Article 82 applies directly to any enterpreneurial behavior whereas governmental behavior 385 CHAPTER V The fact that a firm owes its dominant position to government measures sue the grant of monopoly rights is irrelevant.15 By contrast, entities to which an ber state has conferred a task of public interest which forms part of the esse functions of the state are not subject to Article 82,16 whereas those paríš o activities of such an entity mat can be separated from those in which it eng as a public authority (exercising sovereign powers) are subject to Articles 81 82.17 The decisive criteria is whether the undertaking acts autonomously and own initiative or whether national measures require, reinforce or encouragi undertaking's anti-competitive conduct18 (creating a situation 'where that 1 (Deutsche Post) may be led, to the detriment of users of postal service, to a its dominant position resulting from the exclusive right'19). Examples. Examples of 'undertakings3 to which Article 82 has been applied are: - The UK national telecommunications authority, British Telecommunications, which refused to allow private message-forwarding agencies to use its network to relay telex messages between foreign countries.20 is subject to a combined application of Articles 82 and 86 (because the decision has to be addressed to a member state): GT-LinkAJS v. De Dansk Statsbaner, ECJ July 17,1997,1997 ECR 1-4449; Telecommunication Directive Terminal Equipment, ECS March 19, 1991, 1991 ECR 1-1223, paras 53-57; OmailulaitosILuftfartsverket, D.Comm. Feb. 10, 1999, 1999 OJ L 69/24, points 21-23. 15. Telemarketing, ECJ Oct 3,19S5,1985 ECR 3261, paras 17-18; General Motors, ECJ Nov. 13,1975, 1975 ECR 1367, para. 9; INNO/ATAB, ECJ Nov.16, 1977, 1977 ECR 2115, paras 24-38; British Telecommunications, ECJ March 20, 1985, 1985 ECR 873, paras 16-20. See also supra Chapter I.D. and infra, section D. 1 (Article 86 (2) exception) of this chapter- 16. AOK Bundesverbandllchthyoheseüschaft Kordes, ECJ March 16, 2004, C-264/01, paras. 55-57. See also Eurocontrol, ECJ Jan. 19,1994,1994 ECR 1-43, paras 28-32; Diego Call & FiglUPorto di Genová, ECJ March 18, 1997, 1997 ECR 1-1547, paras 23-25; French Post, D.Comm. Oct. 23,2001,2002 OJ L 120/19, point 29. 17. SAT/Eurocontrol ECJ Jan. 19, 1994,1994 ECR 1-43; Portuguese Airport, D.Comm. Feb. 10, 1999,1999 OJ L 69/31 (under Article 86 (3)), aff'd ECJ March 29,2001, 2001 ECR 1-2613; Aéroports de Paris, CH Dec. 2000,' 2000 ECR 11-3929, paras 100 and 108-130 (distinction between State fees for supervisory activities and commercial fees for purely commercial activities such as groundhandling), aff'd ECJ Oct. 24,2002,2002 ECR 1-9297, para. 75. 18. Irish Sugar, CFI Oct. 7,1999,1999 ECR H-2969, para. 130; Arduino, ECJ Feb. 19,2002,2002 ECR 1-1529, paras 34-43; German Post, D.Comm. July 25, 2001, 2001 OJ L 331/40, points 99-102. 19. Deutsche Post/GVS, Citicorp, ECJ Feb. 10,2000,2000 ECR 1-825, para. 48. 20. British Telecommunications, ECJ Oct. 3, 1985, 1985 ECR 3261, paras 17-18. See the Telecommunication Directives judgments where the Court confirmed the application of Article 86 (1) and (3) to the obligations imposed by the government (responsibility of the government) but considered Article 82 directly applicable to restrictive agreements concluded by the telecommunication body (responsibility of this entity): ECJ March 19,1991,1991 ECR 1-1223, paras 53-57 and Nov. 17,1992, 1992 ECR 1-5833, para. 24. 386 ARTICLE 82 - ABUSE OF DOMINANT POSITION e monopoly Luxemburg television network which refused to sell TV adver-ing time to a private 'tele-sales' agency.21 donal posts and telecommunications administrations which wanted to ex-id their monopoly to courier services,- the supply of telecommunications minals, to the marketing and maintenance of equipment to be connected to : network,23 or to unfair trading conditions24 or discrirninatory (predatory) actices.25 e national railway administrations, which engaged in joint marketing of mbined land and sea transport of containers and abusive practices by apply- ; discriminatory tariffs.26 ie UK central bank, the Bank of England, which sponsored agreements reacting admission to the London foreign exchange market.27 The state-owned British automobile manufacturer, British Leyland, which among other measures charged excessive fees for issuing conformity certificates for imported cars in order to curb parallel imports.28 State-owned airlines, which refused to grant a competitor access to its computerized reservation system29 or applied exclusionary royalty rebates.30 ■ The state-owned airport administrations, which reserved the new terminal at Orly to national airlines whereas the other airlines were left with the old terminal,31 or which at Frankfurt refused groundhandling services.32 - Port authorities which granted preferential rights to national persons or firms.33 21. Telemarketing, ECJ Oct. 3,1985,1985 ECR 3261,3275-3276, paras 17-18. 22. Bundespost I, Fifteenth Report on Competition Policy, point 259. An Post (Irish Postal Company), Sixteenth Report on Competition Policy, point 298; French Postal Monopoly, Bull. EC 12-1985, point 2.1.79; Italian International Courier Services, Nineteenth Report on Competition Policy, point 228; Dutch Express Mail Service, D.Comm. Dec. 20, 1989,1990 OJ L 10/47. 23. RTT/GB-INNO-BM, ECJ Dec. 13,1991,1991 ECR 1-5941, paras 17-19. 24. German Post II, D.Comm, July 25,2001,2001 OJL331/40. 25. Gema«Púsŕl,D.Comm.March20,2001,2001 OJL125/27. 26. HOV-SVZ/Deutsche Balm, D.Comm. March 29, 1994,1994 OJ L 104/34, para. 47, aff'd CFI Oct. 21,1997,1997 ECR H-1689. 27. Sarabex, Eighth Report on Competition Policy, points 35-37. 28. British Leyland, ECJ Nov. 11,1986, 1986 ECR 3263, para. 9. See also General Motors, ECJ Nov. 13,1975,1975 ECR 1367, para. 9. 29. Sabena, D.Comm. Nov. 4,1988,1988 OJ L 317/47. 30. Virgin Airlines/British Airways, D.Comm. July 14,1999,2000 OJ L 30/1, points 108-111. 31. AéroportsdeParis,D.Comm.June 11,1998,1998 OJL230/10, aff'ďE.CJOct.24,2002.2002 ECR 1-9297, para. 116. 32. Airport of Frankfiirt, D.Comm. Jan. 14, 1998,1998OJL72/30. 33. Porto di Geneva, ECJ Dec. 10,1991,1991 ECR 1-5889 (application of Article 82) confirmed by Corto di Appello of Florence, Italy, of 9 Oct. 1993, Twenty-fourth Report on Competition Policy, point 102); Harbour of Roscoff(ICG/CCI Moriaix), D.Comm. May 16,1995/IVemy-fifth Report on Competition Policy, p. 120. However, a port authority entrusted with the compulsory surveillance and rapid interrvention service designed to protect the maritime 387 - Maritime confeiences applying exclusionary practices and predatory tariffs H- - The German monopoly over recruitment services which is part of the public administration and which used its exclusive rights in order to prevent 01 hers fiom furnishing these services.35 - A privately-owned funeraj services firm which was able to charge excessive ; prices thanks to the monopoly granted to it by the local authority3& C. Ööniinaiit Position I'. DEFINITION AND CRITERIA Definition. hi the Hojfinann-LM Roche judgment the Court of Justice defined a dominant position as 1 a position of economic strength enjoyed ;byán"un:dértäkiŕig wríich enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of the consumus Such a position does not preclude some competition, which it does'wheie 1 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 cd0c to act largely m disregard of it so-long as-such conduct does notoperate to its detriment.,37 The existence of a dominant position may derive from several factors, which, taken separately, are not necessarily decisive; however, extremely large market shdies aije in jtheřnselves, save exceptional circumstances, evidence of the existence of a dómirtanf position:38 'The market definition makes'it possible to calculate maikt-t 38 VC) S environment does not"exercise a commercial activity even- where port users must pay fees to finance that' activity: Diego Coli &Figli/Porto di Genová- ECJ March "IS, 1997, 1997 ECR i ij 1547-;. ....... 34. C£WAL;B.£omm. Dec; 23, 1992, 1993 OJL.34/20, qffidia substanceby CFI Oct. 8, 1996, 1996 ECR 11-1201. 35. Höfnetv'Macrotron, EC! April 23, 1991, 1993 ECR 1-1979, paras 25-31. 36. Bodson-Funeral Services, ECJ May 4, 1988, 1988 ECR 2479, paras 26-29. 37. Hoffmann-La Roche, ECJ Feb. 13, ] 979,1979 ECR 461, paras 38-39. See also Michelin, ECJ Nov. 9, 1983, ! 983 ECR 3461, para. 30; Alsatel/Novasam, ECJ Oct. 5,1988,1988 ECR 5987, para. l2:AKZO,ECJJtdy3,1991,1991 ECR 1-3359, para. 69: Irish Sugar, Oct. 7,1999,1999 ECR 11-2969. para. 70. Irish Sugar, CFI Oct. 7, 1999, 1999 ECR 11-2969, para. 70. ARTICLE 82 - ABUSE OF DOMIN ANTPOSITION iares that would convey meaningful information regarding market: powerV hus, in determining whether a firm has a dominant position on a market, the first but often most difficult - step is to define the market concerned,-theiirelevant arket both m terms of products and geography. Indeed, Article 82 presupposes link (but not necessarily a causal connection40) between the dominant:position id the allegeď abusive conduct, which must produce its effects "on-4he. dominated arket or, under special circumstances, on a distinct, but associated^market.41 i lis process of determining the relevant market is described in section 2 beiow id is based uponttiě general descriptioh'oftHe relevant market- which is common any"application of the/EC competition rules, and therefore is explained as one the''fundamentals' in Chapter I.C. above:Only after-the 'relevant market' has 'sďpropeŕlyf defined is it possible to apply the various criteria suggested by the lurt's definition of dominant position. riteria of Dominant Position. lese can be summarized under three main headings in order of decreasing im-irtahcé: market structure, firm structure and market conduct. The structure of the relevant market must be such as to give the firm the ability to act in1 a "largely unconstrained manner because of the absence of effective competition. The main elements'are the firm's market share, its lead in terms of market share over its rivals, the degree'of dependence of its customers 01 suppliers^ arid its ability to set its prices and terms and conditions of sale' without serious regard to the competitive response of smaller competitors. The evaluation of market structure is the most important in determining whether a firm holds a dominant position. The structure and characteristics of the firm itself may give it the ability to prevent effective competition due to its internal strength. Relevant factors are the firm's technological resources, production capacity, access to raw materials, financial strength and other commercial advantages over its rivals." The conduct of the firm on the market, such as overpricing or predatory acts against competitors, may indicate'that the firm is behaving in a manner largely unconstrained by competition and therefore holds a dominant position. However, caution must be exercised in drawing conclusions from market behaviour, as most'types of behaviour can be practised both by dominant and non-dominant firms. The criteria for evaluating dominance are described in-section 3 belpw. Section 4 deals with the concept of collective dominance, i.eľU'ä dominant position held collectively by several firms, while section'5 is devoted'tb dominant'purchasers. 39. Commission Notice on the definition of the relevant market, .1997 OJ C 372/3, point 2. 40. Continental Can, ECJ Feb.'2M973!J973 ECR 2J5,.para. 27. . :- -. 41. Tetra Pak II, ECJ Nov. 14, 1996,1996 ECR 1-5951, para. 27. 389 CHAPTER V 2. RELEVANT MARKET Uniform Parameters for Defining the Relevant Market The definition of the relevant market or markets is the first step in the evaluati of any alleged abuse of a dominant position under Article 82. The question of he to define the relevant market was answered by the Court of Justice in the Micke case as follows: '... the determination of the relevant market is useful in assessing whethei the undertaking concerned is in a position to prevent effective competition from being maintained and behave to an appreciable extent independently of its competitors and customers and consumers. For this purpose, therefore. an examination limited to the objective characteristics only of the relevanl products cannot be sufficient; the competitive conditions and the structure oi supply and demand on the market must also be taken into consideration-*42 The possibilities of competition must be judged in the context of the market comprising the totality of the products or services which, with respect to then characteristics, are particularly suitable for satisfying constant needs and are onlj to a limited extent interchangeable with other products or services.43 This approach has been further developed by the Commission in its 'Guidelines on the Definition of the Relevant Market for the Purposes of Community Competitior Law' j44 which provide guidance on its concept of relevant product and geographic market in its ongoing enforcement of Articles 81, 82 and the merger control regu lation. The parameters for defining the relevant market are basically the same under each of these provisions, and have therefore been discussed in Chapter." under section C. This section is limited to highlighting certain particulars whei applying Article 82. Relevant Product Market: Narrow Definitions Predominate. The relevant product market includes those products, which are actually or po tentially substitutable,45 thereby including short-terra and medium and long-tern substitutability46 on both the demand and the supply side.47 The Court of Justice and the Commission tend to define the relevant product market rather narrowly, including sub-markets, as may be shown by the following examples: 42. Michelin, ECJ Nov. 9,19S3,1983 ECR 3461, para. 37. 43. British Airways, CFI Dec. 17, 2003, T-219/99, para. 91. 44. Commission Notice, 1997 OJ C 372/3. 45. RTE(Magill},B,aApril6,1995,1995ECR 1-743,paras53-54; TierceLadbroke,CFI June 12, 1997 ECR H-923, para. 131; European Night Services, CFI Sept. 15,1998, 1998 ECR 11-3141, para. 208; Belgian Post, D.Comm. Dec. 5, 2001, 2002 OJ L 61/32, points 39-51. 46. Tetra Pak II, ECJ Nov. 14,1996,1996 ECR 1-5951, para. 19. 47. Eg. DSD ('Green Dot'), D.Comm. April 20, 2001,2001 OJ L 166/1, points 65-86- 390 ARTICLE 82 - ABUSE OF DOMINANT POSITION armaceutícals according to their therapeutic effect48 and, even if chemically intical, distinguishing markets based on different end-uses,49 emicals as raw materials as distinct from the finished products,50 Dducts supplied to reprocessors from products supplied on the merchant mar- t51 rural sugar as distinct from sugar substitutes,52 Lpulse ice cream, consisting of single-wrapped items, as distinct from other x^ice cream, such as take-home and catering ice cream,53 %i natural beet or cane sugar in granulated form (as distinct from speciality sugars, -. ■ liquid sugars and syrups) sold in two sub-markets, namely to retail and industrial customers,54 - cola-flavoured carbonated soft drinks from other soft drinks,55 - bananas as distinct from other fresh fruit,36 -■ aseptic milk filling machines from fresh milk filling machines,57 - plasterboard as distinct from wet plastering,58 - flat glass as distinct from hollow glass containers which are in competition with cans and plastic bottles,59 48. "Vitamin A to be distinct from vitamin B, etc.: Hoffmann-La Roche, ECJ 13 Feb. 1979, 1979 ECR 461, paras 21-30, and Vitamins, D.Comm. Nov. 21,2001, 2003 OJ L 6/1, points 22-73. 49. Human v. veterinary use or cosmetics in pharmacies v. cosmetics which are freely marketed:. Vichy, CFI Feb. 27,1992,1992 ECR 11-415, para. 63 (under Article SI). 50. Commercial Solvents, ECJ March 6, 1974, 1974 ECR 223, paras 19-22; Aminobutanol, Sixteenth Report on Competition Policy, point 76. See, however, Article 4 (2) of the R&D block exemption regulation, Regulation 2659/2000, which requires products in which the newly developed products are integrated as components to be considered when calculating the market share limit of 25%. 51. See, under Article 81, PhilipslOsram, D.Comm. Dec. 21, 1994, 1994 OJ L 378/37, points IS. 52. Assumed in Sugar, D.Comm. Jan. 2, 1973, 1973 OJ L 140/17, 18; Aspartame, Eighteenth Report on Competition Policy, point 53; British Sugar, D.Comm. July 18, 1988, 1988 OJ L 284/41; Irish Sugar, D.Comm. May 14,1997,1997 OJ L 258/1, points 86-90. 53. Van den Bergh Foods, D.Comm. March 11, 1998, 1998 OJ L 246/1, point 255. See under Article 81: Langnese-Iglo, CFI June 8, 1995,1995 ECR 11-1533, paras 60-72; qff'dECJ Oct 1,1998,1998 ECR 1-5609. 54. British Sugar, D.Comm. July 18,1988,1988 OJ L 284/41,50; Irish Sugar, D.Comm. May 14, 1997,1997 OJ L 258/1, paras 86-90 (aff'd CFI Oct. 7,1999,1999 ECR Ü.-2969). 55. Coca Cola I, D.Comm. IP (88)615. See also under the merger control regulation Coca Cola/ Carlsberg, D.Comm. Sept. 11,1997, Twenty-seventh Report on Competition Policy, p. 193. 56. united Brands, ECJ Feb. 14,1978,1978 ECR 207, paras 12-35. 57. TetraPakI, D.Comm. July 26,1988,1988 OJ L272/27,33-38; aff'd CFI July 10,1990,1990 ECR 11-309; o^tf ECJ Oct. 6,1994, 1994 ECR 1-5951. 58. British Plasterboard, D.Comm. Dec. 5,1988,1989 OJ L10/50,51-52,64-65, aff'd ECJ April 6,1995,1995 ECR 1-865. 59. Italian Flat Glass Ü, D.Comm. Dec. 7,1988,1989 OJ L 33/44, 65; rev 'd CFI March 10,1992, 1992 ECR Et- 1403 (for lack of evidence for anticompetitive coordination). 391 - tyres:'original-equipment-market as distinct from replacement market tyres/ replacement truck tyres as distinct from truck retreads,61 - nail güns-as a''specific-fastening system--from other fastening systems, to b< separated from the market of cartridges and nails,62 - different sizes and capacities of computers,63 motors64 and aircraft,65 - computerized airline reservation systems from non-computerized systems,66 - postal universal services'from specific services, such as collection and distnbu tion of business mail,67 - advanced weekly listings of all TV programmes in TV guides from dally listings,^ ' • "' • mobile telephone from voice telephone,59 spare parts' for particular makes of cash registers or particular car models from the 'primáry product',70 deliveries of industrial gases (oxygen, hydrogen, nitrogen) in pipelines from deliveries in bulk or in bottles,7' scheduled airline flights from charter flights and other means of transport,72 i.e., ŕneanš of transport for time-sensitive passengers (business travellers) from transport means of price-sensitive leisure passengers,73 and ' services of äir tŕavel agencies distinct from'the air transport market74 60.; Michelin I, ECJ Nov. 9, 1983, 1983 ECR 3461, paras 38 etseq, 61. Michelin ///'D.Comm. June 20, 2001, 2002 OJ L 143/1, points 109-118; aff'd CFI Sept. 30, 2003,7-203/01. Hilti, D.Comm. Dec. 22, 1987, 1988 OJ L 65/19, 31-33; aff'd CFI Dec. 12,1991,1991 ECR 11-1439, paras 66-78, and ECJ March 2, 1994, 1994 ECR 1-667. IBM, Fourteenth Report on Competition Policy, point 94. ' 64; UTClMTU, Twenty-second Report on Competition Policy, p. 415. 65.; Aerospatiale Alenia/DeHavilland, D.Comm.. Oct. 2,1991,1931 OJ L 334/42; BoeinglMcDon-', '■ \ nell Douglas, p.Comm. July-30, 1997, 19g7 OJ L 336/16; ATR/AlenialBriiish Aerospace II, ^ ; Twenty.-fifth--Report.on Competition PoKcy,.pp. 128-131 (comfort letter). 66.J Sabfina, D.Comm.Nov..4, 1988,1988 OJL-317/47,49-50., 67; Italian Post, D.Comm. Dec. 21, 2000,.20GJ.OJ h 63/59, point 17; German Post, D.Comm. • . July 25, .2001, '20.0-1. OJ L 331/40, point S4;%lgian Post, p.Comm. Dec. .5, 2001,2002 OJ L : 61/32, points 43-51. : 68,| Magill TV Guide, D.Comm. Dec. 21, 1988,J989 OJL78/43, 48- : 69/ Oninitel Pronto Italia, D.Comm. Oct, 4, 1995, 19.95 OJ L280/49, point 16. 70. HuginlLiptons, ECJ May 31, 1979, 1979.ECR 1869, paras 3-10; Renault, ECJ Oct 5, 1988,; 1988 ECR 6039, paras 15-,16. 71. Industrial Cases, Nineteenth Report on Competition Policy, point 62;.Dutch Industrial and Medical Gases.. D.Comm. July 24, 2002, 2003 OJ L 84/1, points 55-63. 72. Ahmed Saeed, ECJ April 11,1989,1989 ECR 803, paras 39^1; European Night Services, CF1 j Sept. 15, Í99S, 1998 ECR 11-3141, para. 90; 73. See the air alliances, Twenty-seventh Report on Competition Policy, point 92; European Night Services, CFI Sept. 15, 1998, 1998 ECR 11-3141, para. 90 74. British Airways, CFI Dec. 17, 2003, T-219/99, para. 100. 392 : ARTICLE 82-ABUSE OF DOMINAKT POSITION relevant Geographic Market: Difference between Analysis under Article 82 and Analysis under Merger Control Regulation. The principal purpose of Article 82 is to halt abuses of a single or a collective lominant'positiofr mat-ar&Iikely to harm competitors, customers and ultimately onsumers, whereas the objective of the merger control regulation is to control j uncompetitive structural changes in the supply of a product or service. There-ore, the methodologies of applying Article 82 and of applying the merger control egulation; may lead to different results: the analysis of abuse of a dominant posi-jon concerns essentially past and present behaviour,75 whereas the analysis of a nerger or a joint venture calls for an evaluation- of prospective anticompetitive iffects and may therefore include, :to,a greater,.extent, potential competition aris-ng from the ongoing process of market integration.76 For example, the Michelin ' case77 under Article 82 concerned the abusive application of exclusive supply ibligations imposed on Dutch distributors. Similarly, the Michelin II case71! confined the abusive application of loyalty-inducing rebates to new replacement yres and retreaded tyres in France. The relevant geographic market was the sfetherlands because that was the market in which Michelin employed abusive uractices when distributing a whole range of tyres to dealers for replacement pur-tQses. On the other hand, in the Continenthh'Michelin joint venture case dealt with inder Article 8 V9 the relevant geographic market was held to be that of the whole community because the joint venture would produce a new tyie for purposes of joth replacement and original equipment for distribution Community-wide. This Lccords with the, determination of the relevant geographic market in merger cases . vhere the Commission tends to a wider market definition in order to take into Lccount the growing 'Europeanization',80 except in cases of 'distinct markets', i:e. vhere the competitive conditions on the market are still appreciably different in 'iew of the nature and the characteristics of the products or services concerned, he existence of entry barriers, consumer preferences and the existence of appre-iable differences in market shares and prices between territories.81 The distinct uarket concept as applied by the. Commission in merger cases may sustain the endency of a rather narrow definition of the relevant geogiaphic market under Article 82.B2 75. UFEX, CFI May 25,2000, 2000 ECRII-2167, para. 49. 76. Commission Notice on: the definition of the relevant market, point32. See Airtours. CFI June 6i 2002; 2002 ECR n-2585iiPai-£L-210,. - 77. Michelin I, D.Comm. Oct. 7, 1981, 1981 OJ L 353/33, aff'd ECJ Nov. 9, 19S3, 1983 ECR 346. ■ ■ - ■ ; 78. Michelin II, D.Comm. June 20, 2001, 2002 OJ L 143/l,points 119-171. 79. D.Comm. Oct. 11,1988, 1988 OJ-L 305/33. . , -,.- 80. See Procter & GamblelSchickedanz, D.Comm. June 21, 1994. 1994 OJ L 354/32, point 104. 81. Article9 (7) of Regulation 139/2004, See Royal PhUips:Ekctronics„ CFI April 3. 2003. T-119/02, paras 335-337. 82. See Chapter VLC A(b)(iii) and VI.D. 1. 393 CHAPTER V Examples of Geographic Market Definitions. The relevant geographic market may be: - the whole Community,83 possibly including the EEA countries84 or even ■;■ tending to the whole world market;85 - several member states;85 - one single member state,87 in particular because of high costs of transpo or the nation-wide coverage of a fixed telecommunications network (It loop);89 - a part (region) of a member state;90 - an 'essential facility' within a member state such as ports91 or airports;92 am 83. See Hoffmann-La Roche, ECJ Feb. 13, 1979, 1979 ECR 461, para. 22; Hilft, ECJ Dec. 1 1991, 1991 ECR U.-14339, paras 80-81; Tetra Pak II, CH Oct 6, 1994, 1994 ECR H-75 paras 92-99. 84. Commission Notice on the definition of the relevant market, point 28. 85. Commercial Solvents, D.Comm. Dec. 14,1972,1972 OJ L 299/51 ; aff'd ECJ March 6, 197 1974 ECR 223 (world monopoly). See under Article 81 British Telecommunications/M I, D.Comm. My 27, 1994, 1994 OJ L 223/36; under the merger-control regulation Briti Telecommunications/MCI II, D.Comm. Jan. 30, 1997 M.856; Boeing/McDonnell Dough D.Comm. July 30,1997,1997 OJ L 336/16, para. 20. 86. Sugar, ECJ Dec. 16, 1975, 1975 ECR 1663, paras 370-375 (Belgium and Luxembour; United Brands, ECJ Feb. 14,1978,1978 ECR 207, paras 36-38 (Germany, Benelux-countrii Denmark and Ireland); Magill, CH July 10, 1991, 1991 ECR H-485, para. 64 (Ireland a Northern Ireland). 87. British Ley land, ECS Nov H, 1986, 1986 ECR 3263, paras 4-9:British Telecommunicatioi ECJ March 20, 1985, 1985 ECR 873, paras 21-22; RTB/SABAMII, ECJ March 27, 1974, í 974 ECR 313, para. 5; Michelin I, ECJ Nov. 9,1983,1983 ECR 3461, paras 32-61; Michetin II, D.Comm. June 20, 2001, 2002 OJ L 143/1, points 119-168, aff'd CH Sept. 30, 2003, T-203/01: BPB, CFI April 1, 1993,1993 ECR H-389, para. 66; aff'd ECJ April 6,1995,1995 ECR 1-865; Deutsche Balm (combined container traffic by rail and boat), D.Comm. March 29, 1994, 1994 OJ L 104/34, paras 191-250; aff'd CH Oct. 21, 1997, 1997 ECR 11-1689, para. 58. 88. Irish Sugar, CH Oct. 7, 1999, 1999 ECR 0-2969, paras 86-88. 89. Deutsche Telekom, D.Comm. May 21, 2003, JP/03/717; Wanadoo, D.Comm. July 16, 2003, IP/03/1025. 90. Southern part of Germany: Sugar, ECJ Dec. 16,1975,1975 ECR 1663, paras 441^48; North-em part of Ireland: Irish Sugar, D.Comm. May 14, 1997, 1997 OJ L 258/1, paras 99-113 (aff'd CH Oct 7, 1999, 1999 ECR 11-2969, paras 87-92). Under the merger control regulation: Promodes/S2I/Gruppo GS, D.Comm. March 10, 1998, M.1086 (partial referral with respect to the retail activities in certain Italian provinces whereas the other activities were dealt with by the Commission itself). 91. Porto di Genová I, ECJ Dec. 10,1991,1991 ECR 1-5889; Silvano Raso (Porto di Genová II), ECJ Feb. 12, 1998,1998 ECR 1-593, para. 26; PortofRodby, D.Comm. Dec. 21,1993,1994 OJ L 55/52; Porto di Genová (employment), D.Comm. Oct 21,1997,1997 OJ L 301/17, point 20. 92. Aéroports de Paris, CH Dec. 12,2000,2000 ECRH-3929, paras 137-143; aff'dECS Oct 24, 2002,2002 ECR 1-9297, paras 91-96; Airport of Frankfurt, D.Comm. Jan. 14.1998,1998 OJ L 72/30, point 56. 394 ARTICLE 82 - ABUSE OF DOMINANT POSITION uasport connections between two different destinations,93 ided the challenged conduct has appreciable effects on trade between mem-tates.94 I )i h oition of the Relevant Time Period. v )sition of market power may arise from an emergency like an oil shortage I :h temporarily increases the customer's dependence on its traditional sup- I I :95 Under normal conditions, however, the market must be considered over a i er period.96 Seasonal variations in demand were not accepted by the Court of r ce in the United Brands case as sufficient to consider bananas as belonging jorarily to a larger fresh fruit market.97 Such temporary changes in market 3S are nevertheless relevant considerations when evaluating the existence of minant position. II haition of the Relevant Market in Cases of Buying Power. I i ie case of an abuse of buying power by a dominant purchaser, the relevant net market is judged by similar criteria but based primarily upon the stand-t of the seller, i.e. whether the seller has realistic alternatives for distributing i roducts or to offer its services via other outlets.98 Examples of applying the :ept of buying power include: ie supply of railway rolling stock material by independent manufacturers to Dminant railways,99 te licensing of films by film distributors to television stations,'00 93. French-West'African Shipowners Committee, D.Comm. Apri] 1,1992, 1992 OJL 134/1; British Midland!Aer Lingus, D.Comm. April 10,1992,1992 OJ L 96/34; CEWAL, D.Comm. Dec. 23,1992,1993 OJ L34/20, aff'd CH Oct 8,1996,1996 ECR E-1201, para. 75; under Article 81: LufthansalSAS, D.Comm. Jan 16,1996, 1996 OJ L 54/28; Transatlantic Air Agreements, Twenty-seventh Report on Competition Policy, point 92, 94. See, in particular, Sea Containers!Stena Sealirik, D.Comm. 21 Dec. 1993, 1994 OJ L15/8, point 77. 95. BP, ECJ June 29,1978,1978 ECR 1513, paras 16-18, although the Court neither confirmed nor rejected the Commission's holding on this issue. 96. See infra section C.3 (a). 97. United Brands, ECJ Feb. 14,1978,1978 ECR 207, paras 12-35. 98. Twenty-sixth Report on Competition Policy, point 147. See with respect to countervailing effects of buying power: Commission Notice on horizontal mergers, points 64~67. 99. Eurofima, Third Report on Competition Policy, points 68-69. 100. CICCE, ECJ March 28,1985,1985 ECR 1105 (however, in this case, the question of dominant position was not discussed by the Court since it agreed with the Commission that the alleged abuse of imposing unfair prices was not proven). 395 ER V j - íhe;..>;.collective, purchasing of copyrights by ;a single copyright, collector ; .'society,!01 ;-..-.• -■■-."■ | - procuring products' services.or licences by dominant, mpstly state-owned te .ecommunication:operators,102'and -,>'.. i - procurement.of íSéŕvíces by ports103 or airports.10^ ,, i Calculation, of iMapkekShares -The Merchant Market Rule. | The total market size and market shares;of each- supplier are calculated on the b i sis; of .their, sales oŕthe relevant productS;,on.the rele-yantmarket.105 The calculaLu i müst,include;all ofethe important competitive.constraints,and exclude all tho \ products that are irrelevanttorthe analysis of the .parties' market power. Thei efor : the calculation must include those products made to independent third parti ('rherchant market sales') and exclude sales made by the suppliers to custome to whom the suppliers are linked by full or partial ownership and swaps betwee suppliers ('captive sales').106 3 DOMINANT POSITION - Criteria for Dominant Position. i The Court of Justice has defined a dominant position as 'a position of econom stiength enjoyed by an undertaking which enables.it to prevent effective coi petition being maintained on the relevant market by affording it the power behave to an appreciable extent independently of its competitors, its customě 1 and ultimately of the consumers \i07As noted above, the main criteria by which i dominant position is judged are (a) the structure of the market, (b) the structure of i the firm and (c) the firm's conduct. 101 GEMA, D Coram. June 2,1971, 1971 OJ L 134/15; BRT/SABAM, ECJ March 27,1974,1974 ECR 113, paras 3-5: 102 Commission Guidelines on the Application of.EC Competition Rules in.the Telecommunication Sector, 1991- OJ C 233/2, points 116-1,20.. 103- Porto di Geneva, ECJ Dec. 10,1991,1991 ECS. 1-5889, paras 13-15. 104. Airport of Frankfiirt, D.Comm. Jan:-14, 1998, 1998 OJ L 72/30, points 61-68; Aeroports de Pans II. D Comm. June.11, 1998, .1998..0J L 230/10, points 56-58; Portuguese Airports, D Comm Feb 10, 1999,1999 OJ L 69/34vpoint 21 [ajfd ECJ March 29, 2001, 2001 ECR 1-2613). 5ee Directive 96/67/EC on groundThandling services, 1996 OJ L 272/36. 105. Commission Notice on the definition of the relevant market, 1997 OJ G-372/3, point 53. 106. See in particular, under the merger.control-regulation: BP/£)tíó7c/iemie, D.Comm. March 22; i 2001, M.2345, point 40; SheWDEA, D.Cornm. Dec.,20,,2001-, M.2389,t points 22-23. 107. United Brands, ECJ Feb. 14, 1978, 1978 ECR 207, para.,65; Hoßhmnn-rLa Roche, ECJ Feb. 13, 1979, 1979 ECR 461, paras 38, 41; Alpha Flight/Aeroports de Paris, D.Comm. June 11, 1998, 1998 OJL230/10, point72; aff'dCFTDec. 12,2000,2000.ECRJT-3929,para. 147-150 = and ECJ Oct. 24, 2002, 2002 ECR 1-9297, para. 105; British Airways, CFI Dec. 17, 2003, T-219/99, para. 189. 396 ARTICLE 82 - ABUSE OF DOMINANT P~OSmoN" let Structure ■\1 n | )ly as Dominant Position. polist who does not face any competition at all is dominant by defini-i lie monopoly may be-based on exclusive rights, granted by government ( t,idtutary monopoly'),'09 or may be held as a result of economic or technical factors Examples include: - National copyright collecting societies, which have monopolies on their territory, owing either to reciprocal exclusive agreements with other national societies or to the economics of managing the exploitation of copyright abroad. 7'his means that copyright holders cannot turn to' foreign collecting societies to manage their copyrights:1-; -- '-.* - Undertakings to which a member state grants exclusive rights in each of its departments or states, thereby establishing a contiguous series of monopolies territorially-limited .hut together covering the entire.territory of a member state thatcreate a collectivedominant position, in aj substantial; part of the Common Market111 - • --=,-;.■.-- - -' - ■• r- - Undertakings to which member states grant exclusive rights-enjoy;a.dominant position1'2 and are subject to Article 82 insofar as its application does not obstruct the performance, in law or in fact, of the particular tasks assigned to them (article 86 (1). and (2) of the EC Treaty). Even after formal abolition of the exclusive rights (liberalization) such undertakings may, in the absence of any lealistic alternatives, continue to occupy a dominant position for a certain time period.113 108 BRT/SABAMII, ECJ March 27, 1974,1974 ECR 313, paras 3-5 109. German Post/GZS, Citicorp, ECJ Feb 10, 2001, 2001 ECR I-S25. para 38 French Post, D Comm Oct 23,2001,2002 OJ L120/19, point 60 (with fiirthei references). Sue also INNO/ ATAB, ECJ Nov 16, 1977. 1977 ECR 2115,12145, para 35; British Telecommunications. ECJ Match 20.1985. 1985 ECR 873, paras 21-22, SACEMI, ECJ April 9, 1987, 1987 ECR 1747, para 5, SACEMII. ECJ July 13, Í989, 1989 ECR 2811, paras 10-20 SACEM III. ECJ July 13, 1989, 1989 ECR 2521, paras 16-26, Deutsche Post, D Comm July 25 2001,2001 OJ L 331/40, points 88-96 110 GEMA f, D Comm June 2.1971,1971 OJ L 134/15,20; GVL ECJ March 2, 1983, 1983 ECR 483, para 44.SACEMII, ECJ July 13,1989,1989 ECR 2811, paras 10-20, SACEM III. ECJ July 13. 1989, 1989 ECR 2521, paras 16-26 111. Bodson - Funeral Services ECJ May 4, 1988,1988 ECR 2479. pata 13 (funeral services enjoying exclusive lights limited to communes); Crespelle, ECJ Nov 5.1994.1994 ECR 1-5077. para 17 (approved bovine insemination centers), Almelo, ECJ April 27 1994, 1994 ECR 1-1477, para 42 (regional electncity distributors even if vested with non exclusive rights); Porto di Genová (employment), D Comm Oct 21, 1997, 1997 OJ L 301/17. points 20-21. 112 General Motors, ECJ Nov 13,1975,1975 ECR 1367, paras 5-10. Bnti\h Le\land, ECJ Nov. 11,1986,1986 ECR 3263, paias 3-10, Deutsche Bahn, CFI Oct 21.1997 1997 ECR 11-1689, para 57, ITTIPiornedia, CFI July 17,1998.1998 ECR U-2937. paias 92-98 113. Commission Notice on Access in Telecommunications," 1997 OJ C 76/9, para. 7J. 397 CHAPTER V - Factual monopolies, such as essential facilities that may be defined as *a fa ity or infrastructure which is essential for reaching customers and/or enafe: competitors to carry on their business and which, cannot be duplicated byl reasonable means.'"4 Examples have included electricity grids, telecommi cations networks, harbours and airports."3 Importance of Market Share. A high market share is necessary, though rarely sufficient alone, to prove the ístence of a dominant position.116 In the Hilti case, the Court of First Instance ] that 'in this it is established that Hilti holds a share of between 70 and 80% ir relevant market. Such a share is, in itself, a clear indication of the exist* of a dominant position.'117 Market share is therefore always an important factor in assessing dominance.1 Hoffmann-La Roche the Court of Justice explicitly accepted a very high ma share of 75% or more maintained over a relatively long period as such strong dence of dominance that no further investigation is necessary,119 Strong evid< 114. Commission Notice on Access in Telecommunications, 1997 OJ C 76/9, para. 68. 115. See infra section D.6 (e) and Chapter VIH.C., E and F. 116. United Brands, ECS Feb. 14, 1978, 1978 ECR 207, para. 107: 'A trader can only bt dominant position on the market for a product if he has succeeded in winning a large p this market.' 117. Hilti, CFIDec. Í2,1991,1991 ECR JJ-1439, para. 92, aff'dECJ March 2, 1994,1994 E 667; reaffirmed in Van den Bergh Foods, CFI Oct. 23,2003, T-65/98, paras 90 and 154 (rr . share of 89%, the remainder being shared between several small suppliers). 118. HqffJnann-La Roche, ECJ Feb. 13, 1979, 1979 ECR 461, paras 39-41: 'The existenci dominant position may derive from several factors which, taken separately, are not neces determinative but among these factors a highly important one is the existence of very market shares. An undertaking which has a very large market share and holds it for some by means of the volume of production and the scale of the supply which it stands for - w those having much smaller market shares being able to meet rapidly the demand from who would like to break away from the undertaking which has the largest market share -virtue of that share in a position of strength which makes it an unavoidable trading partni which, already because of this secures for it, at the very least during relatively long pe that freedom of action which is the special feature of a dominant position.' On the other a decline.in market shares cannot in itself prove the absence of dominance: TACAII, D.C Sept. 16,1998,1999 OJL95/l,point533;iee, however, CETE4I, CFI 8 Oct. 1996,199f IM 201, para. 103-104 (progressive erosion of market shares does not exclude dominar 119. Hoffinann-La Roche, ECJ Feb. 13,1979, 1979 ECR 461, paras 41,53-56,59-60 and 6 British Plasterboard, D.Comm. Dec. 5, 1988, 1989 OJ L 10/50, 64, aff'd ECJ April 6, 1995 ECR 1-865, and ECJ April 6,1995, 1995 ECR 1-865. However, it has to be note under the merger regulation high market shares may, unlike the short-term view on behav iUiiu abuses under Article 82, be compensated or attenuated by a longer-term evaluation of potential competition. See e.g. Mannesmann-Hoesch, D.Comm. Nov. 12,19.92,1993 OJ L 114/34; ARTICLE 82 -ABUSE OF DOMINANT POSITION ^dominant position is also provided by market shares of between 40% and %& but this must be confirmed by data on the relative market shares of competi-t and other evidence of competitive conditions on the market and the firm's a structure, resources and conduct.'20 Further evidence is especially necessary le definition of the relevant market is complex.121 In Hoffmann-La Roche, the art found that in one vitamin market a market share varying from year to year ween 20 and 50%, with a Japanese competitor accounting for 30% in one year, 5 insufficient evidence of a dominant position in the absence of other confirma-y data.122 Under the merger control regulation the Conrmission tends to use Herimdahl-Hifschman Index (HHI) as a first indication of the competitive ssure in the relevant market, in particular for evaluating the relative size of the ding firm compared to its nearest rivals.'23 I minance Unlikely at Market Shares under 25%. irm with a market share below 25% is unlikely to have a dominant position.124 SABA U the Court of Justice found such a position virtually impossible with larket share of only 10%.!25 This is confirmed by the combined market share tit of 20-30% which the Commission has laid down for exemption under some the block exemption regulations, although it is a condition that the parties do : eliminate all competition between them at the marketing level but remain as [ependent sellers.126 Procter & GamblelSchickedanz, .Comm. June 21, 1994, 1994 OJ L 354/34; Siemenslhaltel, D.Comm Feb. 12,1995,1995 OJL 161; Nestle/Ďalgety, D.Comm. April 2,1998, M.1I27- . Hoffmann-La Roche, ECJ Feb. 13, 1979, 1979 ECR 461, paras 50-52 and 61-63 (vitamins A and C, market shares of 47% and 63-66%); united Brands, ECJ Feb. 14,1978, 1978 ECR 207, 282-285, paras 108-129 (market share of 40-45%); AKZO, ECJ July 3, 1991 ECR I-3359, para. 60 (50% market share); Sdbena, D.Comm. Nov. 4, 1988, 1988 OJ L 317/47, 52 (50% market share); Commission Notice on the Application of the Competition Rules to Access Agreements in the Telecommunications Sector, 1998 OJ C 365/2, point 73 (50%); Irish Sugar, CFI Oct. 7,1999, 1999 ECR 11-2969, para. 70 (50%); DSD, D.Comm. April 20.2001. 2001 OJL 166/1, point 94. . Michelin I, ECJ Nov. 9,1983,1983 ECR 3461, paras 32-52. . Hoffmann-la Roche, ECJ 13 Feb. 1979,1979 ECR 461,527-528, paras 57-58, vitamin B.. . Commission Notice on horizontal mergers, points 19-21. See Chapter VI. at pp. 577-578. ■- See recital 32 to Regulation 139/2004 on merger control. i. SABA II, ECJ Oct 22, 1986, 1986 ECR 3021, paras 85-86. In Grundig, D.Comm. July 10, 1985,1985 OJ L 233/1, 7, the Commission considered that market shares of 23% of the German color TV market held by the Thomson-Brandt group and 33% by Philips-Grundig did not indicate dominance. In AlsatellNovasam, ECJ Oct. 5,1988,1988 ECR 5987, paras 11 and 18~l9,AlsateIheld a market share of one third on a regional market which did not constitute a dominant position within the Common Market or in a substantial part of it. 126. See Article 3 (3) of Regulation 2659/2000 on R&D cooperation agreements (2000 OJ L 304/7). 399 (Further Marter Structure Criteria. Oíher market stí uctute variables relevant to the question of whether the leading!3 ^mip, on a market has a dominant position are: - ' -;-<_ ; -.- The relative size of the market shares of the. leading firm's neaiestiivals, or, m ^ i other words, the size of its lead over them.m *£ - Competition from surplus production capacity; Low market shares held by Jg i competitors "are not necessarily indicative of'a iackrof competition if there ig r*/z substantiafsurpfus'production capacity in the industry.'2^ ' f% t Stability:of the'leader's market share over a period of time: Although the abrí- ľJ' ity to retain a large market share over long periods despite intermittent fierce i competition from smaller rivals is not conclusive evidence of dominance be-;' cause a stable mai'ket may reflect competition'as well.as lack of competition,'29 í fluctuating- market shares are rather'an indication of the Jack of a dominant í position.130 - Vertical integration both upstream and downstream.13' - Existence of well-known trademarks,32 and a powerful distribution network m -■ Barriers to entry, such as prohibitive transport costs,'-" government regulation, l3:i technological advantages leading to high technical entry barriers,13ů and ■ high capital cost of entry.137 '*4 127. United Brands, ECJ Feb. 14, J 978, 1978 ECR 207, paras 108-1 29; Hoffmann La Roche, ECJ Feb. 13, 1979, 1979 ECR 461, paras 57-58: Hitti, D.Comm. Dec. 22, 19S7,198B OJE 65/19, 34; aff'd CFlDec. 12, 1991, 199í ECRU-1439; British Sugar, D.Comm. July 18,1988,1988 : OJ Ľ 284/4J, 52-53. : 128. Büffniam-La Roche, ECJ Feb. 13, 1979, 1979 ECR 461, paras 33-34, 48. Cf. Commercial , i Solvents, ECJ March 6,1974,1974 ECR 223, paras 13-15 (pilot plants for other processes not genuine potentiaJ competition). ■ 129. IJfiited Brands, ECJ Feb." 14, 1978,1978 ECR 207, paras 113-121; Hoffmann-La Roche, ECJ ! Feb. 13, 1979, 1979 ECR 461, paras 42-44: ECS/AJczoU, D.Comm. Dec. 14, 1985,1985 OJ-L ; i 374/1,:18. I 130. Hoffmann-La,Roche. ECJ Feb. 13, 1979, 1979 ECR 461, paras 57-58. ŕ 131;. {jpited.Brands;EGJFeb. 14, 1978, 1978 ECR 207, paras 94-96. ; 132. United Brands, ECJ Feb. 14,1978, 1978 ECR 207, paras 88-93. . J 133, Qmnitel Promo haliana, D.Comm." Oct. 4,'1995, 1995 OJ L 270/49,:poiiit 16; Michelin I/, i , DJľomm, Jíme 20. 2001, 2002 OJ L 143/1, points 193-196, aff'd CH Sept. 30, 2003, T-. 203/01. i 134; Se&supra pp. 393^395. ; 135; British Sugar, D.Comm. July 18, 19S8, 1988 OJ L 284/41, 52-53; British Telecommunica-, twos, ECJ Mardj 20, 1985, 1985 ECR 873, paras 21-22. See also supra sections 2 (a) and j J36.. Tetra Pak I, CFI July 10, 1990, 1990 ECR JJ-309, para. 23; HUH, CFI Dec, 12, 1991, 1991 ; i EGR 11-1439, para: 93; British Sugar, D.Coíŕim. July 18, 1988, 1988 OJ L 284/41,52-53. m.iHoffnann-La Roche, ECJ Feb. 13, 1979/1979 ECR 461, para. 48; DSD ('Green Dot'}, D.Comm. April 20, 2001.2001 OJ L 166/1. point 96. 400 ARTICLE S2-ABUSE OF DOMINANT POSITION _ Matme v dynamic, rapidly changing maikets On mature maikets firms may be better able and moie determined to piotect a dominant position than on „ dynamic, rapidly changing maikets nh ľ - Coumeivailmg buying power í e the ability of laige and sophisticated cus- -" tomers within a reasonable nmeframe to report to ciedible alternatives if the supplier decides to mciease prices oi detenoiate the conditions of delivery.,;!" *",_ The commercial shength of such customers is capable of couutei balancing (he dominant position, provided they absorb an substantial part of the supply."" •• - Product chaiactenstics that tic customeis to a particulai suppliei ,4' Relevance of Potential Competition. Potential competition, although not measurable m teims of maiket share and therefore not a criterion for defining the lelevant maiket,14'' is likely to reduce market powei m However, the as&essment of die abuse of a dominant position under Article 82 must considei the competitive constraints at the time the alleged abuse was committed which includes fufuie competition only if theie ate relatively short term effects which are lively to reduce the alleged firm's ability to abuse its market position,'44 whereas the assessment undei the meigei control legulation includes a prospective analysis of the foieseeable reactions of cuiient and futur competitors and consumeis i45 The Commission's prohibition decision in the case Continental Can was reversed by the Court of Justice intei aha, because it had not been pioved 'that competitors fiom other sectors of the maiket foi light metal containers are not in a position to enter this maiket, by simple adaptation, with sufficient strength to create a serious counterweight 'm i ...... Concept of 'Obligatory Trading Partner'. A dominant position can be inferred íf the supply conditions on:the.relevant market indicate that a firm is an 'obligatory trading partner' foi its customers because they depend closely on the supplier.and.do not.have sufficient, or reasonable alternative sources of supply.'47 The. concept, pf .'obligatory;trading partner' was developed under French law (lpartenaire,.obligatoire'):- Under Article 8 of Ordon- 138. HUH, CFI Dec. 12, 1991,1991 ECR 11-1439, para. 93. 139. Commission Notice on horizontal, mergers, points 64^67., T : 140. TetraPak //,CFI Oct 7. 1999, 1999 ECR 11-2969, paras 97-100. 141. E.g., the need for constant quality in plaster deliveries: ^British PlasterbocirdJD.Comm. Dec. 5, 1988, 1989 OJL 10/50, 6Í < \ 142. Ae Chapter I.C. 143. See Commission Notice on.horizontal mergers, points 58-60.--. 144. yŕ'£X,CFIMay25,2000,2Óp0ÉCRIl-2I67,para.49. ■ .: 145. Aiŕióurs, CH June 6, 2002, 2002 EČR 11-2585, para. 210. .;■ 146. Continental Can, ECJ Feb. 21,1973, 1973 ECR 215, para,33. 147. Hqffmánn-Ĺa Roche.'ECJ Feb. 13, 1979. 1979 ECR 461: paras 57-58; GVL, ECJ March 2. 1983, 1983 ECR 483, para. 42. Cf. section 20 (2) of the German Acl Against Resirainls of Competition (G WB): 'relative dominance' of firm for dependent trading partners. CHAPTER V nance No. 86-1243 on Freedom in Pricing and Competition, which is suceede by Article L.420-2 du Code de Commerce, a dominant position is tantamoutí|to situation where a client or supplier is economically dependent upon it arid^hic has no equivalent alternative. It is in this sense that the Court of First Insranc has applied the 'obligatory trading partner' concept. The. Deutsche Bahn case1 concerned the application, by the German Railways having a statutory monopo' on the sub-market for rail transport services, of discrirnínatorily low prices f< combined rail and sea transport services if the ports of origin or destination Jve: located in Germany (and not in Belgium or the Netherlands), thereby favoürir the German ports. The Court of First instance stated: 'that where, as in the present case, the services covered by the sub-mark are the subject of a statutory monopoly, placing those seeking the servici in a position of economic dependence on the supplier, the existence of dominant position on a distinct market cannot be denied, even if the servio provided under a monopoly are linked to a product which is in itself in cor petition with other products.' (emphasis added). The concept of an 'obligatory trading partner' is therefore only a means of defi ing the dominant position in a vertical or conglomerate context. The CommissK studied the possibility of employing the concept of 'obligatory trading parme as 'a supplementary tool' when considering dominant positions of a vertical conglomerate nature.149 In its Guidelines on the Application of the EC Competition Rules in the Telecommunications Sector,'50 the Commission referred to the dependence which 'could exist when the supplier cannot sell to other customers a substantial part of its production or change a production.'151 However, the Commission has not expressly used the term 'obligatory trading partner' in its decisions even when dealing with long-term economic dependence of customers on a supplier. Examples include: - A monopoly supplier of a raw material needed by a processor.152 - A manufacturer of soda ash that concludes long-term exclusive supply contracts with its most important customers.153 148- Deutsche Bakn(GermanRailways),CFlOct.2l,l997,1997ECRII-1689,para.57;a^'dECJ April 27, 1999,1999 ECR 1-2387. 149- Sixteenth Report on Competition Policy, point 340. 150. 1991 OJ C 233/2, point 82. 15Í. 'Change a production' probably means shifting production to produce other products. Í52. CommercialSolvents,BCJMaich 6,1974, 1974 ECR 223, paras 9-18. 153. Soda Ask -Solvay,!). Coram. Dec. 19,1990,1991 OJ L152/21, points 56-59, rev'd on procedura] grounds CH June 29,1995,1995 ECR H-1825 (although the Commission decision does not use the terra 'economic dependence'), and restated in the Commission decision Dec. 13, 2000,2003 OJ L 10/10. 402 ARTICLE 8Ž - ABUSE OF DOMINANT POSITION purchaser of non-interruptible gas supplies154 who depends on regular deliv- es. ;ar importer that depends on a car manufacturer that has been assigned the iction of issuing conformity certificates stating that a car meets the importing Lintry's regulatory requirements.iSS rvice providers that may depend on lines leased from a telecommunications mopoly.150 cash register or car manufacturer, for service or repair firms dependent on Dplies of its spare parts to carry on their business.157 i already established ferry service operator that depends on the continuing ;ess to the port facilities.158 vneřs of technical interface information needed to permit competitive prod- ts to be used with the owner's system.159 subcontractor or materials processor that has undertaken substantial invest- ;nt in orderto meet the specific needs of his principal (e.g., a car manufacturer) the specifications of his supplier.160 ndence on an 'obligatory trading partner' and, consequently, a dominant ion has been denied under the following circumstances: i occasional customer does not 'depend' on a particular supplier even during » oevere shortage, and therefore Article 82 does not require this supplier to allocate an equitable portion of the available supplies to it, whereas a longstanding 154. Industrial Gases, Nineteenth Report on Competition Policy, point 62. 155. General Motors, ECJ Nov. 13, 1975, 1975 ECR 1367, paras 4-10; British Leyland, ECJ Nov.ll, 1986,1986 ECR 3263, paras 3-10. 156. British Telecommunications, ECJ March 20,1985,1985 ECR 873, paras 21-22. 157. HugirULiptons, ECJ May 31, 1979, 1979 ECR 1869, paras 9-10; Renault, ECJ Oct. 5, 1988, 1988 ECR 6039, paras 15-16; Volvo/Veng, ECJ Oct 5,1988,1988 ECR 6211, para. 9; Boosey & Hawkes, D.Corara, July 29,1987,1987 OJ L 286/36,40. See also United Brands, ECJ Feb. 14, 1978, 1978 ECR 207, para. 182 (withdrawal of supplies to Olesen, a Danish ripener of bananas). 158. B&llSealink, D.Comm. (interim measure) June 11, 1992, Twenty-second Report on Competition Policy, point 219. The Commission rejected, however, an interim measure in Sea ContainerslStena Sealink, D.Comm. Dec. 21,1993,1994 OJ L15/8. 159. IBM, Fourteenth Report on Competition Policy, point 94; Microsoft, Twenty-fourth Report on Competition Policy, p. 417. 160. EUROFIMA, Third Report on Competition Policy, points 68-69. See Filtrona/Tabacalera, Nineteenth Report on Competition Policy, point 61, in which the Commission rejected a complaint by a cigarette filter manufacturer against the monopoly of the Spanish cigarette manufacturer which had begun making all its own .filters and had therefore stopped buying from the filter manufacturer. The issue was not reviewed in the appeal as this was judged to be beyond the statute of limitations: Filtrona, CFI July 10:1990,1990 ECR 11-393. 403 f k í S.....i k... í k .i i.. ..I k" J t j L CHAPTER V : ongoing.-customer may hold such a right to continued supply, of the scarce j product; such.asin. the case of an oil shortage.'61. t Ah exhibitor does-not :depend,on a,major trade fair organizer if there are alter-; natives (parallel trade fairs).163 ť Where ,the.economic-dependence of customers is the result of long-term exclusive.purchasing: agreements,: the Commission acts against .these, restraints on : turning to alternative supplies under Article-8 L-in order to reduce the duration ; and the exclusivity of the. agreements and thereby. the degree of depend- The examples show that the concept of 'obligatory trading partner' is only the other side of the coin of dominance and is not intended to extend the scope of Article 82,M .butrather to corroborate-the,evidence;or a dominant position ,03 The concept should not be used to expand the:concept of dominance, but rather to explain it m a specific factual context where, a dominant position exists vis-á-vis a puichaser that does not have viable, alternative sources of supply reasonably available J6Ů (b) Fiim Stiucture and Performance Corroborative Value. Data on the stiucture and resources of; the firm in. question-is not sufficient on its own to establish a dominant.position, .but may, corroborate, evidence of a dominant position indicated by an. analysis,of market structure.167 Relevant factors fór assessing the. commercial strength, of a firm,i6? i.e. its structure and resources, include - technological lead over competitors,169 161 BP, ECJ June 29, 1978,-1978 ECR 1513,; paras 18-34. See also Lederie-Praxis Biological, Twenty-fourth Report on Competition Policy, p. 353. 162 ANCIDES, ECJ July 9, 1987, 1987 ECR 3131, paras 12-14. i 63 Eg, Industrial. Gases, Nineteenth Report on Competition Policy, point 62. See also Chapter IVB. and C. 164 §20 (2) of the.German. Law.on Restraints of Competition is different to the extent that it adds to the provision on-,abuse of a. dominant position (§19) a prohibition that addresses to enterprises,on which small or medium-sized suppliers or purcbasersdepend 'to the extent that sufficient and reasonable possibilities to deal with other enterprises do not exist' 165 Michelm //..Ď.Comm. June 20, 2001, 2002 OJ L 143/1, points 200-208. 166 However, under national competition laws, such as the Jjrench and the German law, the concept of an 'obligatory trading partner'may be broader than the concept of dominance. 167 Hoffmann La Roche, ECJ Feb. 13, 1979/1979 ECR 461, paras 42-49; Michelm, ECJ Nov. 9, ls?83, 1983 ECR 3461, paras 53-60. 168 lush Sugar, CFI Oct. 7,1999,1999 ECR 11-2969, para. 100. 169 United Biands, ECJ Feb. 14, 1978, 1978 ECR 207, paras 82-84: "In the field of technical knowledge. ... UBC keeps on improving the productivity and yield of its plantations ... That is another factor to be borne in mind when considering UBC's position since competing firms 404 ARTICLE 82 - ABUSE OF DOMINANT POSITION - large production capacity and long-term security of supply that are effectively unattainable by competitors,170 - management of premises and services which are indispensable to the marketing1" or the exercise of groundhandling services,172 - superior access to raw materials,173 - diversification of production,174 - strong presence on adjacient markets,'"portfolio of products capable of ac^ centuating the market position to the disadvantage of competitors,m - vertical integration both upstream and downstieam,177 - existence of well-known trademarks178 and a powerful distribution network,175 thereby creating customer prefeiences,[E0 or even dependence,181 - decisive commercial advantages, for example, a well-known trademark,10 a very strong and well-organized distribution network,'83 oi an integrated transport infrastructure,184 cannot develop research at á comparable ievei and are in "this respect at a disadvantage compared with the applicant;'""See also Micke lint'EGl Nov. 9, J9S3,'l983.ECR".346l, para. 55; ■litra Pak I, D.Comm: July'26,T988,T988 OJ Ľ'272"/2V39; aý^ířCFÍ Öct! 6, 1994, 1.994 ECR n-755; HtfnVD.eornm. Dec"ř^^ 12, 1991. 1991 ECR U-1439; Michelm II, D.Comm. June 20, 2001, 2002 OJ L 143/1. points 182-í 83. Even after the expiration of a patent the patentee may keep a decisive technological advantage: RacalDecca.D.Caram. Dec. 21, 1988, 1989 OJL43/27,41. 170. United Brands, ECJ Feb 14,1978,1978 ECR 207, paras 69-77 171. British Leylaid, ECJ Nov II, 1996, 1996 ECR 3263 para, 5 172. Aewports de Pans, CFI Dec 12, 2000,2000 ECR 11-3929 para 138 173. £/rated.Brajids.ECJFeb 14,1978,1978ECR207.paras69-77,Bŕmtf/?Sííg£jr.D.Comrn.luly U8; 1988, 1988 OJL284/41, 53, Sadala* TJ, D Comm Dec 13, 2000, 20Ö3-OJ HO/10 and 33. ; 174. Michelin I, ECJ Nov 9,1983 1983 ECR 3461, para 59 175. "Michelin II, D Comm June 20, 2001, 200Í OJ L 143/1, points 186-190 aff'd CFi Sept. 30. 2003.T-203/01 176. Michelin I, Nov. 9, 1983, 1983 ECR 3461, paras 127-151. Under.the merger control regulation: BaByliss, CFI April 3,2003, T-1Í4/02, paras 354. - 177T United Brands, BCJ Feb 14, 1978, 1978 ECR 207, paras 94-96 178. 'Ibid., paras 88-93 ľ Í79. 'Omnitel Pronto Italia, D Comm Oct 4,1995, 1995 OJL 280/49, paia 16: AA MS, CFI Nov. 22,2001,2001 ECR 11-3413, para 52. 191-196 180. BritishSugar, D Comm July 18, 1988, 1988 OJL 284/41, point 44 181. Michelin II, D Comm June 20, 2001, 2001 OJ L 143/1, points 200-208 182. r/nired Brands, ECJ Feb 14, 1978, 1978 ECR 207 paras 88-93 183. Äid.,pára. 93;Hilti,D.Comm. Dec. 22, 1987,1988 OJL65/19. 34; aff'dCFI Dec. 12. 1991. 1991 ECR II 1439 See Commission Guidelines on the Application of the EC Competition Rules in the Telecommunications Sector 1991 OJ C 233/2, para 80 184. United Biands. ECJ Feb 14, 1978, 1978 ECR 207, paras 69-96, United Brands. D.Comm. Dec. 17, 1975,1976 OJL95/1,13;British Sugar, D.CommJuVy 18, 1988, 1988 OJL 284/4L 53. 405