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EUROPEAN COMMISSION DG Competition - page 107 / 113

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257. The amount of information available to consumers is an important factor for assessing the extent to which the customers, when buying the primary product, make a

calculation of the overall cost of the bundle. The information available must enable customers to make accurate calculations. This is more likely to be so when the secondary product is a consumable used with the primary product in fixed proportions, than in the case of spare parts and services.

Life Cycle costs 258. Moreover, for this competitive constraint from the primary market to function effectively, a sufficient number of customers must engage in life cycle cost calculations, and the

supplier concerned must not be able to discriminate between customers that make such calculations and those that do not. For instance, a primary product may be purchased by both private and professional buyers. If only professional buyers make (accurate) life cycle calculations, the supplier may still have substantial market power in the aftermarket vis-à-vis private customers.

Strong competition in primary market may constrain primary supplier in secondary market 259. Strong competition in the primary market may restrain the primary product supplier in the aftermarket also if customers are not basing their choice on accurate life cycle calculations. This may be the case even if aftermarket prices are high, since lower primary market prices may compensate for this. The result would be that the margin earned on the sale of a system is competitive. This could be investigated by various methods, including the following: first, the system margin could be compared to margins in other markets or for other products, where there is no proprietary aftermarket. Second, the price of a system could be compared to the price of systems in either the same or other markets sold by other companies without a proprietary product market. Third, it could be analysed whether the system margin allows it a return on capital in the relevant market that is unusually high for the industry sector in question.

If company weak in primary market, unlikely that supplier dominant in secondary market

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