Legislation in any practises that will maintain

Legislation

This
legislation ensures that companies with a dominant position in a certain market,
do not abuse their position. Practically, this means that companies are not
allowed to alter competition by:

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–       
Pricing
their products excessively low, to enhance market barriers or to eliminate
small(er) competitors.

–       
Limiting
production, to negatively impact specific consumers.

–       
Handling
different prices for the same product or service, which creates unfair competition.

–       
Tying
consumers to a specific product or service, which makes it impossible for a
consumer to choose among alternatives and/or limits selling points for
competitors in a market.

General rule

Companies
with a dominant position are not allowed to engage in any practises that will
maintain or increase their position in a market and can be seen as
uncompetitive.  

Exceptions

In article
102 there are no exceptions..

Terminology

Undertaking:
an enterprise or anyone who engages in business.

Dominant position: The European Commission considers an undertaking to
be dominant when they own more than 40% of the market and when there is no
other company with 50%. (European Commission, 2013)

The Commission also
takes other factors into account in its assessment of dominance, including the
ease with which other companies can enter the market – whether there are any
barriers to this; the existence of countervailing buyer power; the overall size
and strength of the company and its resources and the extent to which it is
present at several levels of the supply chain (vertical integration.(European
Commission, 2013)

 

Relevant
product market : The relevant product market is what can be considered as a
substitute, based on characteristics, prices and function.            

Geographic market:
The geographic market can be described as a region in which the conditions for
a specific product are the same(homogenous). 

Market definition

Market
definition literally means defining the market that is relevant for the company.
This is done by determining the geographic market and the relevant product
market.

Market
definition is important for article 102, because to be able to see if a company
is dominant in a  market, the relevant
market needs to be defined.

 

3.1        
Case
– Intel

 

a.     
Which
parties are involved?

The parties
involved in this case are the European Commission and Intel.

b.     
Which
party is an undertaking?

Intel is
the undertaking.

c.     
Which
party is an institution of the European Union?

The
European Commission is an institution of the EU.

d.     
What
are the relevant facts of the case?

The
relevant Facts:

–       
Computer
companies received price reductions from Intel if they bought all or almost
every x86 CPU that they needed from Intel.

–       
Intel
directly payed big retailers if they would only stock computers with a x86 CPU
from Intel.

–       
Intel
directly payed original equipment manufacturers(OEM) if they would stop or slow
down the introduction of competitors their x86 CPU’s and if they limited the
sales channels for competitors.

 

e.      What are the legal issues of the
case?

The legal
issues are that Intel is paying for loyalty of companies which restricts
competition & innovation and leads to a decreased choice in price and
quality for consumers.

Also, by
paying OEM’s and big retailers on specific uncompetitive conditions, Intel minimizes
the option for competitors to enter or compete in the market.

f.      
What
is the relevant product market?

The market
for x86 CPU’s for computers.

g.     
What
is the relevant geographic market?

The world.

h.     
What
is the decision in this case?

The
decision is that Intel is guilty of abusing their dominant position, because of
the payments that were based on conditions and the agreements that were made to
restrict competition and to limit the choice of consumers.

Therefore,
Intel had to stop their abuse immediately and received a fine of  €1 060 000 000.

 

 

 

i.      
Is
the decision made in accordance with the relevant legislation?

Yes,
because the European Commission first investigated whether Intel had a dominant
position in the market. To do this, they established the relevant geographic
market and the relevant product market of Intel’s  CPU’s. After concluding that Intel had a
dominant position, they started to investigate if Intel has abused this
position. By comparing the relevant facts to the law it is easy to conclude
that Intel has abused its dominant position in order to obstruct competitors
and increase and/or maintain their position in the market.  

j.      
Why
is this case appropriate to use for this essay?

This case is appropriate to use,
because Intel is a company with a dominant position that abuses their position
multiple times and in different ways. It demonstrates the importance of
competition law and the European Commission, because a well-known international
company does not take their responsibility and abuses their dominant position
quite easily.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.2        
Case
– Lithuanian Railways

 

a.     
Which
parties are involved?

The
European Commission and Lithuanian Railways are involved.

b.     
Which
party is an undertaking?

Lithuanian Railways is an
undertaking.

c.     
Which
party is an institution of the European Union?

The
European Commission is an institution of the EU.

d.     
What
are the relevant facts of the case?

The
relevant facts:

–       
Lithuanian
Railways is vertically integrated, meaning that it is responsible for both
railway infrastructure and rail transport (European Commission, 2018).

–       
As
shown in the figure below, Lithuanian Railways has removed 19km of railway
which prevented one of their major customers to make use of the services of a
competitor. This also forced their major customer to take a much longer route
to Latvia. 

–       
Lithuanian
Railways had no valid reason to remove the track.

 

 

 

 

 

 

 

 

 

(European Commission, 2018)

e.     
What
are the legal issues of the case?

The legal issue is that Lithuanian
Railways deliberately removed the 19 km of railway to protect itself from
competition, which is not allowed.

f.      
What
is the relevant product market?

Rail freight transport is the relevant
product market.

g.     
What
is the relevant geographic market?

The European Union is the relevant
geographic market.

 

h.     
What
is the decision in this case?

Since Lithuanian Railways had no
valid reason for removing the railway other than distorting competition, the
European Commission found Lithuanian Railways guilty of abusing their dominant
position and fined them for €27 873 000.

i.      
Is
the decision made in accordance with the relevant legislation?

Yes, because Lithuanian Railways has
a dominant position and by removing the 19 km of rails Lithuanian Railways also
removed a competitor, which meant that Lithuanian Railways their major customer
was bound to use their service. According to article  102 this is forbidden and it is therefore
justified for the European Commission to give Lithuanian Railways a fine for
distorting competition.

j.      
Why
is this case appropriate to use for this essay?

This case is appropriate to use for
this essay, because it shows the importance of the legislation in order for the
EU to create a single market for rail services. Without the legislation the EU
would have wasted their time on eliminating regulatory barriers, because this
company would have substituted these with unfair competition.