2020/21 - LPC Notes - COMPETITION LAW - Exam Ready Notes (Distinction Grade) - COMPLETE SET
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LPC - Legal Practice Course
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LPC - Legal Practice Course
Extensive revision notes for the LPC Competition elective at the University of Law. Distinction worthy as of academic year 2020/21 (October 2021 specifically). Document includes various flowcharts, exam tips on what to include in exam questions and revision notes about the following topics: Article...
, 1. Introduction to Competition Law: Market
Definition
Find the judgment of the Court of First Instance (‘CFI’ - now the General
Court) in the case relating to market definition that was discussed in the
Demonstration, ‘Anti-Trust Case Research and Report Writing’ – Case T-
30/89 Hilti AG v Commission [1991] ECR II-1439, [1992] 4 CMLR 16. The ECJ
upheld the CFI’s decision; however, as the ECJ’s judgment was confined to
points of law, the CFI’s judgment contained a fuller analysis of the facts
and most commentators regard it as authoritative. You should
concentrate in particular on paragraphs 66-68 of the CFI’s judgment.
NOTE: Importance of Market Definition – a lot of competition law is based on size in
marketplace. Larger companies may have a greater problem in this area than smaller
companies. But how to define the market? Are you a large fish in a small pond or vice versa?
QUESTIONS:
1. The breach of competition law that Hilti had been accused of committing.
Hilti was a manufacturer of nail guns for the construction industry that required
uses of its nail guns and nail cartridges to purchase nails exclusively from it was
therefore accused of abusing its dominant position in the market.
Considering: Article 102 of the EU Treaty, which basically punishes or offers the
possibility of punishing parties who:
(1) who are in a dominant position in the marketplace; and
(2) who abuse that dominant position.
SO:
What behaviour did Hilti commit which was arguably an abuse of alleged
dominance?
TIE-IN SALE: Hilti made the purchase its nail guns and nail cartridges to purchase
nails exclusively from it. TIS = if you want to buy product A, you also have to buy
product B, which you may not have wanted. In this case, there were other campies
who also produced the nails and customers should have had the option to buy
them, but Hilti had made it so you could only buy nails from them if you wanted
to buy their nail guns and nail cartridges.
Such an instance has often been seen as abusive behaviour in other cases.
NOTE: this activity would only be a breach of Art 102 if the company were
dominant in the marketplace.
, 2. The Commission’s definition of the relevant product market.
This question is necessary when it comes to determining dominance in the
marketplace (and subsequently, whether behaviour like that described above was
in breach of Art 102).
Here, the Commission found that the nail gun, cartridge stripes and the nails were
three distinct product market, with the cartridge strips and the nails being
described as consumables.
As such, Hilti would be dominant as they are the only ones who produce their nail
guns and are therefore completely dominant in the market for Hilti nail guns. So,
it is possible to have 100% market share because you are the only producer of
that product.
3. Hilti’s argument relating to the definition of the relevant product market.
Hilti argued that the nail guns, the cartridge strips and the nails were not, in fact,
three distinct product markets, but merely formed one indivisible product (calling
it a power actuated fastening system), comprising of the nail guns and their
consumables.
They argued that, as a package, this competed with other fastening systems, the
nail guns, the cartridges and the nails if they're not distinct and form one
indivisible product.
As such, Hilti was arguing that they were not dominant, according to the given
definition.
If you considered their percentage market share of the combined system it was
not sufficient to be deemed dominant.
NOTE: the argument is an economic one (dealing with Art 102’s second element
- dominance) as there isn’t much debate with regard to their behaviour (which
was well established). This argument centred on how the market is defined,
making it clear that an economic argument can indeed affect liability.
4. What the CFI decided on Hilti’s appeal from the Commission.
THE COURT: heeded the fact that nails which were compatible with Hilti nail guns
were made not only by Hilti, but also by various independent manufacturers
(some of whom specialised in making nails for Hilti nail guns).
As such, the CFI believed that this meant that the nails formed a distinct market
(as did the cartridge strips and the nail guns).
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