Global Competition Law is primarly a practitioner's guide presenting the most salient aspects of the major competition laws country by country, giving an overview of their structure and most charasteristic elements.
Global Competition Law also provides insight into possible future developments in the field.

Global Competition Law

Once dominance is established, it is necessary to demonstrate its abuse. Section 18 of the Competition Act 1998 sets out a list similar to that laid down in EU law on abusive practices. Further in its Guidelines on the assessment conduct (OFT 441a), the OFT - whose competition-related functions are now entrusted to the Competition and Markets Authority (CMA) - has explained its approach to each of …

Abuse

Chapter II of the Act is modeled on Article 102 TFEU. It prohibits only the abuse of a dominant position by one or more undertakings and not merely holding such a position. Contrary to several Member States (e.g. Germany and France), there are no provisions concerning economic dependency. In addition, trade within the UK must be affected for the prohibition to come into play. In terms of demonstrating there is a position of dominance, the question is whether dominance exists in the UK or any part of it.

Exclusions are more limited than those covering the Chapter I prohibition. However, the Secretary of State (SoS) may by an order provide that for “exceptional and compelling reasons of public policy”, the Chapter II prohibition should not apply.

The 2002 Act repealed the parts of the Fair Trading Act 1973 (FTA 1973) relating to monopoly inquiries and replaced them with references to the Competition Commission in order that it conducts market investigations. The purpose of these investigations is to examine markets where it appears that the structure of the market or the conduct of suppliers or customers is harming competition.

Context

The first step for establishing a dominant position consists in defining the relevant market. To this end, the authority in charge of control may rely on the OFT's Guideline on Market Definition, which adopts a similar line of reasoning that the EU guidelines. As a consequence, the product market is mostly determined by reference to the notion of substitutability. In this regard, the UK authorities have said they are in favor of the SSNIP test, i.e. whether a small but significant non-transitory increase in the price of goods would lead consumers of the product in question to switch to another. If it would, then such secondary product(s) come within the scope of the definition of the product market; if it would not, then they do not. As regards the definition of the geographic market, the CMA will address demand-side issues such as customer mobility and chains of substitution as well as supply-side issues such as transportation costs.

The test used to assess dominance is the same as that employed under EU law. The OFT Guideline actually refers to EU case law to indicate what is a dominant position. Dominance is defined as an undertaking's power to behave independently of its competitors, customers and consumers on a relevant market. The Guideline does not set any market share thresholds indicating dominance; however, it does refer to EU case-law, noting that the Court of Justice considers that a 50% market share creates a presumption of dominance.

In its assessment of dominance (see OFT Guideline 415 on assessment of market power), the CMA looks to a number of factors such as:

- market share. It should be studied over a prolonged period as it fluctuates over short time spans. Further, market share is not in itself the determining condition of market power, since much depends on other factors such as barriers to entry etc. (point 4.3);

- entry barriers. Pursuant to the Guideline, three different types of entry barrier exist. The first is one that grants what is referred to as absolute advantage, e.g. the holder of a government-granted monopoly. The second is referred to as a strategic advantage. This covers situations where one undertaking has invested so much in a particular field that it is the clear leader or benefits from incomparable economies of scale. Finally, the Guideline lists exclusionary behavior aimed at preventing market entry as behavior that may be considered as creating a barrier to entry (see paragraph 5 of the Guideline);

- miscellaneous. At paragraph 6, the Guidelines consider other factors that may be of importance to assessing market power, such as the conduct of the undertaking under investigation, i.e. whether it has acted in such a way as to demonstrate the existence of market power, e.g. raising its prices. Another important factor is whether the undertaking benefits from buying power.

Dominant position

Once dominance is established, it is necessary to demonstrate its abuse. Section 18 of the Competition Act 1998 sets out a list similar to that laid down in EU law on abusive practices. Further in its Guidelines on the assessment conduct (OFT 441a), the OFT - whose competition-related functions are now entrusted to the Competition and Markets Authority (CMA) - has explained its approach to each of the following types of behavior: refusal to supply in the context of an essential facility, discounting, vertical restraints, excessive pricing, predatory pricing, and discriminatory pricing.

There is no power to grant an exemption from the Chapter II prohibition. However, the OFT Guidelines indicate that if the undertaking's behavior involves an agreement which has been granted an individual exemption, whether at the UK or the EU level, it cannot be re-examined under the Chapter II prohibition in the absence of any change in circumstance.

Although there are no appreciability thresholds with respect to the Chapter II prohibition, the SoS considers that an undertaking with a turnover of £50 million (EUR 54.8 million) or less is, in principle, immune from penalties (SI 2000 No 262).

Global Competition Law

1390. Abuse

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Les notions juridiques connexes

1390. Abuse

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Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise