Competition: Commission publishes discussion paper on abuse of dominance
European Commission - IP/05/1626 19/12/2005
Brussels, 19th December 2005
The European Commission has published a Staff Discussion Paper on the application of EC Treaty competition rules on the abuse of a dominant market position (Article 82). The Discussion Paper is designed to promote a debate as to how EU markets are best protected from dominant companies’ exclusionary conduct, conduct which risks weakening competition on a market. The paper suggests a framework for the continued rigorous enforcement of Article 82, building on the economic analysis carried out in recent cases, and setting out one possible methodology for the assessment of some of the most common abusive practices, such as tying, and rebates and discounts. Other forms of abuse, such as discriminatory and exploitative conduct, will be the subject of further work by the Commission in 2006. The Commission is inviting comments on the present discussion paper by 31 March 2006.
Competition Commissioner Neelie Kroes said “I will rigorously enforce the Treaty’s prohibition on abusive conduct. Dominant companies should be allowed to compete effectively. Putting this policy objective into a consistent legal and economic framework is an ambitious project, but it is worthwhile for the clarity it will give to companies and their advisers. Our fundamental aim is to ensure that the EU’s powers to intervene against monopoly abuses are applied consistently and effectively, not only by the Commission but also by national competition agencies and courts throughout the EU which also now apply EU competition law. This discussion paper is the first step, and I want a wide discussion before taking a firm view on the proposals in the paper and before deciding how best to apply the results of these discussions.”
Article 82 of the EC Treaty prohibits the abuse of a dominant position. Abuses are commonly divided into exclusionary abuses, those which exclude competitors from the market, and exploitative abuses, those where the dominant company exploits its market power by – for example – charging excessive prices. The discussion paper deals only with exclusionary abuses.
The paper describes a general framework for analysing abusive exclusionary conduct by a dominant company. Where a dominant company is present on a market, competition on that market is already weak. The concern of the competition rules is therefore to prevent conduct by that dominant company which risks weakening competition still further, and harming consumers, whether that harm is likely to occur in the short, medium or long term.
For price based conduct, such as rebates, the paper sets out arguments as to whether only that conduct which would risk the exclusion of equally efficient competitors should be considered as abusive.
The paper also considers whether efficiencies should be taken into account under Article 82, and, if so, how. If taken into account the claimed efficiencies would have to outweigh the restrictive effect of the conduct in question.
The Commission wants to concentrate its resources on those anti-competitive practices that are most likely to cause harm to consumers. As a result it has recently increased its enforcement activities against cartels. The proposals made in the Discussion Paper on Article 82 would in a similar way imply a strong focus on those abuses of dominant positions most likely to harm consumers.
The Commission is consulting widely on the discussion paper. It has already discussed the paper with representatives of Member States and is now opening the consultation to the public. As part of this consultation process the Commission will hold a public hearing in Spring 2006 on abuse of dominance, and in particular the suggested framework set out in the discussion paper.
Interested parties are invited to submit comments on the discussion paper
before 31 March 2006.
For further information, see MEMO/05/486.