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Seminar European law Week 7
Uitwerkingen van de werkgroep voor het vak European law, week 7
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Door: ericatdeboer • 6 jaar geleden
Door: AnneLintjes • 6 jaar geleden
Door: kikiheslenfeld • 6 jaar geleden
Voorbeeld van de inhoud
WEEK 7 - ARTICLE 102 TFEU AND MARKET DEFINITIONREADING
Literature
Barnard & Peers, Chapter 17: Competton law, par. 17.7
Legislaton and cases
Commission Notce on the defniton of relevant market for the purposes of Community competton
law
Case 85/76 (Hoffman La Rochea).
Case C-62/86 (AKZO).
Case C-7/79 (Bronnar).
QUESTION 1
1A) With reference to the case-law, describe what is meant by a dominant positon in Artcle 102 TFEU.
The case in which the Court determined this for the frst tme is United Brands: “The dominant positon thus
referred to relates to a positon of economic strength enjoyed by an undertaking which enables it to prevent
effectve competton being maintained on the relevant market by affording it the power to behave to an
appreciable extent independently of its compettors, its customers and ultmately of the customers”.
1B) With reference to the prescribed case law, describe what is meant with the abuse of a dominant positon
in Artcle 102 TFEU. Look at the case Hoffman La Roche (par. 91): “The concept of abuse is an objectve
concept relatng to the behavior of an undertaking in a dominant positon which is such as to infuence the
structure of a market where, as a result of the very presence of the undertaking in queston, the degree of
competton is weakened and which, through recourse to methods different from those which conditon
normal competton in product or services on the basis of the transactons of commercial operators, has the
effect of hindering the maintenance of the degree of competton stll existng in the market or the growth of
that competton.”
Normal competton/competton on the merits means offering lower prices, beter quality of products,
improved services, wider range of products.
QUESTION 2
BrightWhite Ltd and Hospital Solutons BB both supply cleaning chemicals (namely, hospital-grade sterilizers,
disinfectants and sanitzers) to hospitals across Europe, with 15% and 55% market share respectvely. Hospital
Solutons is part of a mult-natonal conglomerate, with signifcant fnancial resources, reputaton and patents
for industrial cleaning chemicals. BrightWhite is a smaller company, run out of Austria, that has recently been
winning a lot of supply tenders for and is slowly increasing its market share. Recently, Hospital Solutons BB
won a bid to supply a special hospital-grade disinfectant to one of the largest chains of hospitals in Germany for
€0.35 per litre on a 3-year contract. Hospital Solutons BB has a market share of 42%, whereas BrightWhite has
a market share of 26% on the market for the sale of hospital-grade disinfectants in Europe.
BrightWhite Ltd makes a complaint to the Commission on the basis that it could not compete with Hospital
Solutons’ price for this tender because they are below its average variable costs of producton (which are €0.38
per litre) and is concerned that Hospital Solutons is trying to force it out of the market. BrightWhite is of the
opinion that Hospital Solutons has abused its dominant positon under Artcle 102 TFEU.
, 2A) How do you defne a relevant market? What is the relevant market in the case at issue? “It has been seen
that market power is ordinarily identfed indirectly in EU competton law. Indeed, the Court has defned
two steps in assessing dominance. First, the relevant market must be identfed (from both a product and
geographic perspectve). Secondly, it must be determined whether the undertaking is dominant on the
relevant market. This is done by looking at market shares and other factors dominance.” (p. 533 book).
If you need to determine a relevant market you will have to look at the Commission Notce on the Defniton
of Relevant Market. What are the relevant elements of a relevant market? The product market and the
geographical market. The product market comprises of two elements. The relevant product market
comprises of two sides: the demand side and the supply side. The demand side is from the perspectve of
consumers. The supply side is from the perspectve of supplies of products or services. The demand side
needs to look at what products are interchangeable or substtutable by the consumer, the products’
characteristcs, the prices and the intended use (par. 7 Commission Notce).
Demand side: You will have to do the SSNIP test; Will consumers switch to another product when the price
of this product goes up by small but signifcant means? If the answer is yes, both products are part of the
relevant market. The products are interchangeable. You start with the narrowest defniton as possible, you
contnue untl you would say the consumer would not switch to another product. The relevant market on
product side is hospital disinfectants. There are special cleaning chemicals, the hospital-grade sterilizers, and
general cleaning chemicals. You need to decide whether the hospitals would switch to the general cleaning
products if the price for special hospital disinfectants would go up. You would have to use common sense to
determine whether the hospital would switch to general cleaning chemicals.
Supply side: if it is easy to change the producton, so producing another product would be easy, it is part of
the relevant market. In this queston, it is not easy to switch producton from one product to the other, so
the general cleaning chemicals are not on the same relevant market as the special hospital-grade sterilizers.
For the geographical market, you would have to look at the transportaton costs of the product relatve to
the costs of the product. Would companies buy these products only from the local market? Where would
consumers buy the product from? -> how far will they go to buy the product.
2B) Would the Commission in the present case conclude that Artcle 102 TFEU has been violated?
1. Is there an undertaking? An undertaking is every entty engaged in an economic actvity, regardless
of the legal status of the entty and the way in which it is fnanced, economic actvity means offering
goods or services on a market (Höfner case). Both companies are undertakings.
2. Identfy the relevant market. Look at queston 2A for the relevant market.
3. Does the undertaking hold a dominant positon? A dominant positon relates to a positon of
economic strength enjoyed by an undertaking which enables it to prevent effectve competton
being maintained on the relevant market by affording it the power to behave to an appreciable
extent independently of its compettors, its customers and ultmately the consumers. Such a
positon does not preclude some competton (case Hoffman La Roche). The Court has defned two
steps in assessing dominance: frst, the relevant market must be identfed. Secondly, it must be
determined whether an undertaking is dominant on the relevant market, looking at market shares
and other factors indicatng dominance. Evidence of the existence of a dominant positon it the
situaton where there is a market share of 50% (case AKZO). A dominant positon cannot be
presumed in this case, because none of the undertakings has a market share of 50% (42% and 26%),
so we need to look at other conditons.
a. Compare undertaking’s market shares with the those of its rivals
An undertaking with a market share of 40% is less likely to be found dominant
when its nearest rival has a share of 40% than when its nearest rival has a share of
5%. Brightwhite has a market share of 26%, Hospital Solutons has a market share
of 42%. You could look at the market shares of 15% and 55%, it depends on what
you defne as relevant market -> this is the market for cleaning chemicals. The 26%
and 42% are on the relevant market for hospital-grade sterilizers.
b. Consider how the frm’s market shares have changed over tme.
This is not known, it is not given in the queston.
c. Consider the dynamics of competton on the market.
The market is not likely to develop a lot in the future.
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