Understanding competition law - PDF document

Understanding competition law Competitionlaw 2004 Fair Trading (OFT) has the power to apply and enforce Articles 81 and 82 ofthe EC Treaty in the United Kingdom. The OFT also has the power to applysame provisions are applied and enforced, concurrently with the OFT, by theregulators for communications matters, g

as, electricity, water and sewerage,railway and air trafÞc services (under section 54 and schedule 10 of theto the OFT should be taken to include the Regulators in relation to their¥the OfÞce of Communications (OFCOM)¥the Gas and Electricity Markets Authority (OFGEM)¥the Northern Ireland Authority for Energy Re

gulation (OFREG NI)¥the Director General of Water Services (OFWAT)¥the OfÞce of Rail Regulation (ORR), and ¥the Civil Aviation Authority (CAA).enforcement by the OFT of Articles 81 and 82 of the EC Treaty and theto be affected by them and to indicate how the OFT expects them to operate.Further information on ho

w the OFT has applied and enforced competitionlaw in particular cases may be found in the OFTÕs decisions, as available onThis guideline is not a substitute for the EC Treaty nor forCommunity case law and United Kingdom case law. Anyone in doubtabout how they may be affected by the EC Treaty, the CompetitionIn

addition to its obligations under Community law, when dealing with COMPETITION LAW GUIDELINE PartPageIntroduction2Abuse of a dominant position: the provisions3Relationship between EC and national competition law8Dominance11Abuse18Informal advice and opinions20 COMPETITION LAW GUIDELINE1Introduction The TreatyEu

ropean Community.and 82 of the Treaty The EC Treatyout in Article 82 of the EC Treaty (Article 82) and section 18(1) of thewith the relationship between EC and national competition law. Parts4 and 5 consider the definitions of dominance and abuse respectively.The OFT offers confidential informal advice to under

takings, and may, COMPETITION LAW GUIDELINE2Abuse of a dominant defined in the EC Treatyout in Community law.economic activity, this phrase broadly. Given the breadth of this interpretation, it is likelyapply, the dominant position must be held within the appropriateterritory. In the case of Article 82, the dom

inant position must be held COMPETITION LAW GUIDELINE 4Section 18(2) of theAct. Council Regulation(EC) No 139/2004 onconcentrationsbetween undertakings. (a)directly or indirectly imposing unfair purchase or selling prices or(b)limiting production, markets or technical development to the(c)applying dissimilar co

nditions to equivalent transactions with(d)making the conclusion of contracts subject to acceptance by thedominant position in an abusive way. This may occur if it useswhich it faces, or of exploiting its market position unjustifiably. COMPETITION LAW GUIDELINE does not, however,applicable EC law. Any2.13 belo

w will follow, a revenue producing monopoly, insofar as the application of Article(OFT506) for further detail)a revenue-producing monopoly, insofar as the prohibition would COMPETITION LAW GUIDELINE penalty, the OFT must have regard to its COMPETITION LAW GUIDELINE 7Section 40 of theAct.Full details of howturn

over is to beSignificance)Regulations 2000 Third party actioninfringes Article 82 and/or the Chapter II prohibition may, in addition toor instead of making a complaint to the OFT, take action in the courtsWhere a decision of the OFT or the Competition Appeal Tribunal (theCAT) on appeal from a decision of the O

FT has already found anundertaking or undertakings concerned, in the CAT or the courts. TheCAT and the courts will be bound, in such proceedings, by the COMPETITION LAW GUIDELINE3Relationship between EC 9Article 82. Trading's Rules) Order prohibition. Equally, however, it is open to the OFT to apply Article 82u

nilateral conduct of undertakings may, for example, be examined, the OFT may, at any time prior to making an COMPETITION LAW GUIDELINE 11OJ C101, 27.4.04, p. 81Ð96. prohibition and Article 82. However, in such cases, when Treaty(the Effect on Trade Notice) to assist with the assessment asbetween Member States.

The Effect on Trade Notice sets out theTrade Notice is set out in the competition law guideline Trade Notice when considering whether particular conduct may havelaw. National law can, however, be stricter than Article 82 so thatlaw. The Modernisation Regulation also makes further provision toensure consistency

in the application of EC law. Article 16(2) of the In addition to its obligations under EC law, the OFT is under an COMPETITION LAW GUIDELINE COMPETITION LAW GUIDELINE4Dominance 12See the EuropeanCommission's Noticeon the definition of prohibition apply, it is necessary to consider in which territory the COMPET

ITION LAW GUIDELINE 13For further details,see competition lawguideline Marketdefinition(OFT403).Sunk costs are costswhich cannot bemarket. Similar methods are used to define the geographic market. Usually,would consider whether, in response to the hypothetical situation COMPETITION LAW GUIDELINE 15Case 27/76 Un

itedBrands v Commission defined by the OFT or by another competition authority. While suchpower.market power. However, for clarity, market power will in this guidelinerefer to supplier market power. Where buyer market power is themarket power from supplier market power. Market power and buyerentry barriers or s

lowing innovation. However, although market power COMPETITION LAW GUIDELINE 16Case C62/86, AKZO Chemie BV vCommission[1993] 5CMLR 215. independently. The most important constraints are existing COMPETITION LAW GUIDELINE 17An undertaking withstrong buyer power Radio Telefis Eireann v industry sector regulator. I

n this situation an undertaking may still beconsidered to be dominant. Economic regulation may, however, limitIntellectual property rights (IPRs) COMPETITION LAW GUIDELINE Cases T-68/69 etcSocietˆ Italiano Vetro Territorial scopeapply, it is necessary to consider the territory within which a dominantwithin a su

bstantial part of the common market. In particular, where a COMPETITION LAW GUIDELINE 21Case 40/73 SuikerUnie v Commission22Case C-179/90Merci convenzionale market.The analysis for determining whether a market constitutes a4.28Whether an area will constitute a substantial part of the common21. In the same case

the EuropeanCourt also found that southern Germany was a substantial part of the22the purposes of applying Article 82. COMPETITION LAW GUIDELINE5Abuse 23Section 18(2) of theAct. and Article 82 list broad categories of business behaviour,the customer. However, it will still be necessary for a dominantinnovative

activity. The legitimate exercise of an IPR by a dominantundertaking is not an abuse. It is, however, possible that the way in COMPETITION LAW GUIDELINE Case T-83/91 TetraetraECR II-755. In this casethe European Courtfound that Tetra Pak's conduct which amounts to exclusionary behaviour, because itto) foreclos

e markets or dampen competition. However, whatever theTetra Pak II COMPETITION LAW GUIDELINE6Informal advice and and 82 of the EC Treaty of the law. basis. Views given by way of informal advice cannot bind the OFT orenquiries@oft.gsi.gov.uk.Further, where a case raises novel or unresolved questions of law, itfr

om the European Commission or from the OFT. See the competition date list of guidance booklets check the OFT website at www.oft.gov.ukwww.oft.gov.uk Or you can request them by:phone0800 389 3158fax 0870 60 70 321post EC Group, PO Box 366, Hayes UB3 1XB Published by the OfÞce of Fair TradingEdition 12/04 Printe