{"id":9978,"date":"2022-07-03T15:23:11","date_gmt":"2022-07-03T15:23:11","guid":{"rendered":"http:\/\/legalblog.ie\/abuse-of-dominant-position-3\/"},"modified":"2022-11-19T17:12:18","modified_gmt":"2022-11-19T17:12:18","slug":"abuse-of-dominant-position-3","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/abuse-of-dominant-position-3\/","title":{"rendered":"Abuse of Dominant Position II"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/abuse-of-dominant-position-3\/#Dominance\" title=\"Dominance\">Dominance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/abuse-of-dominant-position-3\/#Market_Share\" title=\"Market Share\">Market Share<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/legalblog.ie\/abuse-of-dominant-position-3\/#Barriers_to_Entry\" title=\"Barriers to Entry\">Barriers to Entry<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/legalblog.ie\/abuse-of-dominant-position-3\/#Oligopoly\" title=\"Oligopoly\">Oligopoly<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/legalblog.ie\/abuse-of-dominant-position-3\/#Collective_Dominance\" title=\"Collective Dominance\">Collective Dominance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/legalblog.ie\/abuse-of-dominant-position-3\/#State_Bodies\" title=\"State Bodies\">State Bodies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/legalblog.ie\/abuse-of-dominant-position-3\/#Services_of_General_Economic_Interest\" title=\"Services of General Economic Interest\">Services of General Economic Interest<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Dominance\"><\/span>Dominance<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Dominance must be considered with reference to the relevant market once ascertained and defined.\u00a0 Dominance has been defined as a position of economic strength enjoyed by an undertaking, which enables it to prevent effective competition from being maintained in the relevant market by affording it the power to behave to an appreciable extent, independently of its competitors and customers.<\/p>\n<p>The dominant undertaking is typically in a position to set prices.\u00a0 It is not appreciably constrained by the market as to the prices it may charge, in the same way as applies where there is effective competition.<\/p>\n<p>This position may enable the dominant undertaking to prevent competitors from entering the market.\u00a0 It may be in a position to raise barriers to entry by potential competitors. It may, accordingly, be able to perpetuate its dominance.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Market_Share\"><\/span>Market Share<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>In ascertaining the existence of market power, the question of market share is central.\u00a0 Market share does not necessarily mean market power, but the two will commonly coincide.<\/p>\n<p>If the market share has varied over time, then this may demonstrate lesser market power. All things being equal, the higher the market share, the more likely it is that competition will be restricted.<\/p>\n<p>A share of more than 70% of the relevant market may create so-called \u201csuper dominance\u201d.\u00a0 The EU Commission require such undertakings to exercise increased responsibility so as not to manipulate or interfere with an already weak market.<\/p>\n<p>At levels of market share between 50% and 70%, is likely to lead to a finding of dominance.\u00a0 Such a very large share may even be presumptively dominant in the absence of exceptional circumstances. Exceptional circumstances may reflect competition from inside or outside the market.\u00a0 The more long-standing and enduring the market share, the more likely there is to be a finding of dominance.#<\/p>\n<p>There may be dominance with a market share considerably below 50%.\u00a0 This may occur where an entity has a share of (e.g.) 40% but where other market participants have significantly smaller shares.<\/p>\n<p>In contrast, a finding of dominance is less likely where other market participants have similar market shares or market shares approaching this level. The European Commission takes the view that dominance is not generally likely if the undertaking\u2019s market share is below 40%.<\/p>\n<p>Dominance may be temporary so that its duration or prospective duration is considered.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Barriers_to_Entry\"><\/span>Barriers to Entry<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The ease of entry of new competitors is taken into account.\u00a0 The lower the barriers to entry, whether legal, practical or cost-based, the less likely the finding of dominance.<\/p>\n<p>The lower the barriers to entry, the higher the likelihood that others may enter the market. This of itself exerts a competitive effect.\u00a0 The market is capable of being contested.<\/p>\n<p>Where there are licensing, legal, cost and other effective barriers to set up and entry, it is more likely to be the case that an existing undertaking is dominant.\u00a0 The extent of the barriers to entry is relevant.\u00a0 The Commission takes account of a short to medium-term timescale in order to consider how realistic entry to the market may be.<\/p>\n<p>Barriers may exist in terms of set-up costs, required capitalisation and risk factors. There may be economies of scale, such that the business may only be effectively undertaken with a significant share of the market.\u00a0 This may commonly arise in the case of public utilities and similar businesses.<\/p>\n<p>Some markets may need considerable finance and investment in order to become established.\u00a0 The non-availability of capital and finance may be a barrier to entry.<\/p>\n<p>There may be intellectual property barriers to entry. Most significant is the monopoly grant of intellectual rights, such as patents. There may be licensing requirements which are insurmountable, where as in commonly the case, the market incumbent owns the relevant rights. Governments may limit and ration licences for policy reasons. Patents legislation and competition law may require the compulsory grant of IP licences.<\/p>\n<p>A greater degree of product differentiation (and the corresponding diminution of interchangeability) may create a barrier to entry. This may arise from brand loyalty and other intangible features.<\/p>\n<p>The conduct of the undertaking may be indicative of dominance.\u00a0 Market participants who undertake predatory action in respect of potential competitors are more to be found to be in a dominant position.<\/p>\n<p>Dominance of itself does not attract any sanctions.\u00a0 However, the actions of a dominant undertaking are subject to particular scrutiny.\u00a0 Arguments have been made that the effect of this scrutiny and requirement to monitor actions may circumscribe it in doing that, which would otherwise be efficient and in the interest of consumers.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Oligopoly\"><\/span>Oligopoly<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>An oligopoly is where a number of market participants together have a dominant position.\u00a0 They may collectively exercise market power such that they would be deemed dominant if they were a single entity. There may be limited price competition. Oligopolies are found in many sectors which are dominated by a small number of powerful participants (e.g. the main supermarket chains).<\/p>\n<p>Oligopolists may not compete strongly on price.\u00a0 They could raise sales considerably by cutting prices, but in practice, their competitors are likely to follow them in parallel.\u00a0 Similarly, price increases may lead to a significant loss of market share and revenue. Oligopolists are frequently very cognisant of each other\\&#8217;s actions.<\/p>\n<p>Game theory describes scenarios where the conduct of one market participant has consequences for others and itself. It is used to analyse the behaviour and incentives facing oligopolists. It predicts that each participant is incentivised to maximize their profits by gradually increasing prices in tandem with others.\u00a0 Each increases revenue but maintains market share.\u00a0 Coordination may happen spontaneously, without any agreement, collusion or concerted practices, so that there would no breach of Article 101 of the EU Treaty.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Collective_Dominance\"><\/span>Collective Dominance<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The Commission has developed powers to deal with collective dominance.\u00a0 The wording of Article 102 refers to the abuse \u201cby one or more undertakings of a dominant position.\u00a0 Originally, the courts rejected this interpretation and held that abuse of a dominant required unilateral action.<\/p>\n<p>Later cases, however, held that there could be an abuse of a dominant position in the case of collective dominance. There may be collective dominance where undertakings enter the market as a single entity and not separately.\u00a0 This is in addition to the possibility that the arrangement may breach Article 101 as a cartel\/anti-competitive agreement.<\/p>\n<p>The European Court of Justice (ECJ) has held that there is nothing in principle to prevent two or more independent economic entities on a specific market from being united by such economic links such that they together hold a dominant position relative to other participants in the same market.\u00a0 The linkages may be, but need not be formalised agreements or arrangements.<\/p>\n<p>The dominant position may arise from the nature and terms of an agreement or arrangement, from the way it is implemented, and from links or practices which give rise to or result from a connection between undertakings. The existence of an agreement or other formal links is not indispensable to a finding of collective dominance.\u00a0 It may be based on other connecting factors, which may require an economic assessment of the structure of the market.<\/p>\n<p>In order to establish collective dominance, the ECJ has indicated that the following factors should be considered.\u00a0 Each member of the dominant oligopoly must know how the others are behaving. \u00a0There must be mutual monitoring of actions. There must be an incentive for the oligopolists to maintain a single policy. \u00a0The foreseeable reactions of competitors, present and future and of consumers will not generally be such as to affect the benefits of the common policy.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"State_Bodies\"><\/span>State Bodies<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Commercial State-sponsored enterprises may be dominant. \u00a0State-owned monopolies may jeopardise competition. They are doubly objectionable under EU law in that they may lead to division and segmentation of the European Union market, impeding the operation of the internal market.<\/p>\n<p>State regulation is not prohibited by Article 102.\u00a0 States are subject to obligations to refrain from measures which may just jeopardise the attainment of the EU\u2019s objective.\u00a0 The Commission has powers to enforce these obligations where they adversely affect competition.<\/p>\n<p>State bodies and undertakings which are entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly are subject to competition rules, but only insofar as this does not obstruct the functions assigned to them. In broad terms, states must not put such undertakings in a position to do that which they could not do by their own conduct without infringing Article 102.<\/p>\n<p>Article 102 (abuse of a dominant position) has been applied in respect of state monopolies. There may be a breach when state measures create rights which inevitably lead to an abuse of a dominant position.<\/p>\n<p>Where, notwithstanding unsatisfied demand, competitors are barred from entry, there may be an abuse of a dominant position. The entities must be manifestly unable to satisfy demand on the market.\u00a0 There may be statutory provisions and restrictions on competitors.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Services_of_General_Economic_Interest\"><\/span>Services of General Economic Interest<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>In the case of State undertakings, which have been entrusted with the operation of services of general economic interest or have the character of revenue-producing monopolies, competition rules apply insofar as their application does not obstruct the performance in law or in fact, of their particular task or function.<\/p>\n<p>The courts have interpreted this exception narrowly.\u00a0 The anti-competitive behaviour must be necessary for the performance of public tasks.\u00a0 It is not enough that it facilitates those tasks.<\/p>\n<p>The defence may be available or where the services of general economic importance may be threatened by competitors who seek to pick profitable elements of the business without bearing the costs of providing for the operation of a general service.\u00a0 However,\u00a0 competition law rules should prevail, except to the extent that the general service is jeopardised.<\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-9978\" data-postid=\"9978\" class=\"themify_builder_content themify_builder_content-9978 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->\n","protected":false},"excerpt":{"rendered":"<p>Dominance Dominance must be considered with reference to the relevant market once ascertained and defined.\u00a0 Dominance has been defined as a position of economic strength enjoyed by an undertaking, which enables it to prevent effective competition from being maintained in the relevant market by affording it the power to behave to an appreciable extent, independently [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[158],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/9978"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=9978"}],"version-history":[{"count":5,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/9978\/revisions"}],"predecessor-version":[{"id":20523,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/9978\/revisions\/20523"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=9978"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=9978"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=9978"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}