Summary: Ws7 Abuse Of A Dominant Position

Read the summary and the most important questions on WS7 Abuse of a dominant position

• 2 STEP 2: Define the relevant market

• 2.1 Relevant Product Market (RPM)

• What two keywords are mentioned in the Commission Notice 1997 which define the RPM?

  The Commission defined the RPM as 'products/services that are interchangeable or substitutable by the consumer, by reasons of the products' characteristics (a very specilsits/unique, and non interchangebale product ), prices and intended use'.

• 2.1.1 Demand Substitution

• Explain what demand substitution considers in relation to the interchangeability of two products?

  Demand substitution considers whether a consumer of product A would buy product B if the price of product A increased.

• How does the SSNIP test determine whether consumers are likely to change to another product? Does it take an economic approach? 

  The SSNIP test considers whether a small but lasting increase in the relative price (5-10%) in product A would result in product A's consumers switching to substitutes such as product B 

• 2.1.2 Supply Substitution

• Is it necessary for competitors to have the ability to easily and cost-effectively switch to another related product under supply substitution?

  - Supply substitution considers how easily competitors can switch production to the relevant products of the dominant business
  
  - without incurring any significant additional costs and risks.

• Explain why a canning company for preserved food had a high degree of supply substitution with competitors and was not found to be in a dominant position in (Continental Cans)?

  A canning company was deemed to have a dominant position in the preserved food market. On appeal, the cans were highly substitutable as competitors could easily alter machinery to enter the market with little cost.

• In contrast, explain why the three different markets for computer software systems were not substitutable and very difficult to enter in (Microsoft v Commission [2007])

  Entry into this market was difficult as it involved significant time, money and research.

• 2.1.3 RPM Can Be Very Narrow/Niche (Hugin)

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• Why did Hugin - a cash register manufacturer - have a market dominance for spare parts in (Hugin)?

  Several companies have been unable to service Hugin registers due to Hugin refusing to supply parts. Hugin had a dominant position in the spare parts market since only Hugin's spare parts could be used in Hugin registers.

• 2.2 Relevant Geographic market (RGM)

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• Explain the general rule in relation to what initially constitutes the RGM and are there limiting factors that might limit the scope of the EU as a whole? Hilti?

  The general rule is to always start with the whole of the EU unless limiting factors suggest otherwise, i.e., to narrow the market.

• What are the limiting factors mentioned in (Commission/United Brands) that narrow the RGM to a more specific geographic region?

  • High transportation costs
    
  • Product characteristics - fragility and perishability prevent shipment?
  • Shipment - significant shipments of a certain product to a specific area
  • National tendencies/preferences - consumers from A states have different spending habits than consumers in B states

  
  
  
  (SHIPMENT + NATIONAL TENDENCIES CAN BE DISCUSSED TOGETHER!)

• 3 STEP 3: Does the undertaking have dominance in the market?

• 3.1 Market Share

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• Explain what is meant by 'very large market shares' in Hoffman LaRoche v Commission? Does anything below 50% count as 'large market shares' AKZO Chemie v Commission?

  'Very large market shares' are rarely below 35% and market shares above 50% frequently give rise to dominance.