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EUROPEAN COMMISSION DG Competition - page 28 / 113





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Non-price based exclusion 61. Exclusionary abuses may be both price based and non-price based. Examples of non-price based abuses are contractual tying, single branding contracts and “naked” refusals to supply. In

these situations it is clear that some “foreclosure” takes place; the question is whether this foreclosure may be characterized as anticompetitive.

Similar foreclosure effects through pricing 62. It is evident that similar foreclosure effects may be achieved through pricing. High stand-alone prices in comparison to a bundled price for two products may “tie” these two products together as effectively as contractual tying. High rebates given on condition of single branding may have the same effect as contractual exclusive dealing. Asking a very high price for a product or combining a high upstream price with a low downstream price may amount to a “constructive” refusal to supply. Furthermore, predatory pricing is, of course, also a price-

based exclusionary abuse.

Pricing behavior-foreclosing only hypothetical competitor less efficient than Domco 63. As regards pricing behaviour a certain conduct may have different exclusionary effects depending on how efficient the rivals are. A very efficient rival may be able to thrive in a market where the dominant company prices in a certain way, while a less efficient rival may be excluded from the market. The more detailed principles described in this paper for assessing alleged price based exclusionary conduct are based on the premise that in general only conduct which would exclude a hypothetical “as efficient” competitor is abusive. The “as efficient” competitor is a hypothetical competitor having the same costs as the dominant company. Foreclosure of an as efficient competitor can in general only result if the dominant company prices below its own costs.

Cost Benchmarks 64. In order to apply the hypothetical as efficient competitor test the following are often mentioned as possible cost benchmarks: marginal cost (MC), average variable cost (AVC), average avoidable cost (AAC), long-run average incremental cost (LAIC) and average total cost (ATC). Marginal cost is the cost of producing the last unit of output. Average variable cost is the

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