European Competition Law provides a wide-ranging review of the European rules relating to competition: restrictive agreements, abuse of a dominant position, impact of intellectual property rights, procedure, merger control, State aid.

European Competition Law

A merger between a supplier and one of its major customers on the downstream market may lead to foreclosing the upstream market to current or potential competitors who will no longer have access to a sufficient customer-base. This applies to a transaction bringing together one of the two main manufacturers on the market and a customer of the competing manufacturer with whom that manufacturer achie …

Customer foreclosure

A merger between a supplier and one of its major customers on the downstream market may lead to foreclosing the upstream market to current or potential competitors who will no longer have access to a sufficient customer-base. This applies to a transaction bringing together one of the two main manufacturers on the market and a customer of the competing manufacturer with whom that manufacturer achieves a substantial portion of its sales .

Customer foreclosure may take various forms. It can result in the new entity adopting a preferential, exclusive, even speculative purchasing policy which allows the manufacturer to win contracts which it would not have obtained without the concentration , or in attempts to remove interoperability of its production platform with competing products or using its certification power as leverage for the sale of its own products .  In television markets, complete customer foreclosure occurs if a TV broadcaster is denied access to a distributor downstream and partial customer foreclosure occurs if a TV distributor allows a channel on its platform but degrades the quality of the viewing experience of the channel, by making the rival's content less easily accessible on its platform, e.g. by positioning rival channels lower in the channel list or electronic programming guide .

In case of economies of scale, customer foreclosure is likely to deter the entry of potential competitors on the upstream market the attractiveness of which in terms of revenue will be limited . Foreclosure may raise competition concerns only if the concentration concerns a customer which has a substantial market power on the downstream market . Competition is not significantly affected where competitors have possible supply alternatives. This is the case where the customer base remains significant, as the new entity only represents 15% to 25% of the downstream market , where the new entity cannot operate viably on the market without offering third parties' services  or where the products in question belong to two distinct categories in both technical and commercial terms . Where entities operate close to their break-even capacity, customer foreclosure has no effect on competition, as a cost increase would result in greater price competition rather than market monopolization . Lastly, competitors' cost increases on the downstream market are not profitable for the new entity where those competitors represent a considerable part of the sales of the upstream division .

Commission Decision M.1636 of 21 March 2000, MMS/DASA/Astrium, LawLex200700002006JBJ.

Case T-210/01 General Electric v Commission [2005] ECR II-5575, LawLex200600000175JBJ.

Commission Decision M.3943 of 9 November 2005, Saint-Gobain/BPB, LawLex200900000154JBJ.

Commission Decision M.3998 of 19 May 2006, Axalto/Gemplus, LawLex200700001756JBJ.

Commission Decision M. 7194 of 24 February 2015, Liberty Global/Corelio/W&W/De Vijver Media, LawLex201700000677JBJ.

For example, to enter the market for primary purchase of French rights in general literature titles, the new entrant must be able to exploit those purchase rights, and therefore have the same degree of vertical integration as the merged entity, i.e. especially marketing and distribution facilities, which guarantee a sufficient presence for its products in outlets and a pocket-format series able to give the works a second life, although the merged entity will have a dominant position or a strong presence on the various markets of the book chain: Commission Decision M.2978 of 7 January 2004, Lagardere/Natexis/VUP, LawLex200500005785JBJ.

Commission Decision M.2822 of 17 December 2002, EnBW/ENI/GVS, LawLex200700000251JBJ.

Commission Decision M.4242 of 9 November 2006, Thermo Electron/Fisher Scientific, LawLex200700001714JBJ; M.4389 of 5 December 2006, WLR/BST, LawLex200900000158JBJ.

Commission Decision M.3101 of 16 May 2003, Accor/Hilton/Six Continents/JV, LawLex200900000166JBJ.

Commission Decision M.068 of 19 July 1991, Tetra Pak/Alfa-Laval, LawLex200400002476JBJ.

Commission Decision M.1879 of 29 September 2000, Boeing/Hughes, LawLex200500004732JBJ.

European Competition Law

340. Customer foreclosure

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

340. Customer foreclosure

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise