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EUROPEAN COMMISSION DG Competition - page 54 / 113

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124. In certain sectors the decisional practice of the Commission has deviated from the cost benchmark based on AAC and has chosen to use LAIC as the benchmark. In these cases the LAIC benchmark is used as the benchmark below which predation is presumed. Pricing above LAIC but below ATC in these sectors is assessed like pricing above AAC but below ATC in all other sectors (see section 6.2.2).

Presume predatory if protected by legal monopoly 125. Firstly, it is presumed that pricing below LAIC is predatory in cases concerning activities protected by a legal monopoly. In such cases it is considered that a company dominant in the protected market should not be allowed to use the profits made in that market to establish itself or defend its position in another, often related, market which is open to competition. In order to prevent such cross-subsidisation the decisional practice requires the dominant company to cover with its pricing in the free market at least all the variable and fixed costs it makes in order to be active on that market, in other words to price above LAIC.75 In these cases pricing below LAIC is presumed to be an abuse under Article 82, not only if the dominant company is in addition dominant in the free market but also if it is not dominant in that market and the predation will only have effects in that market (see paragraph 101 above).

Presume predatory if market recently liberalised 126. Secondly, it is presumed that pricing below LAIC is predatory in cases concerning sectors which recently have been liberalised or which are undergoing liberalisation, such as the telecom sector.76 It is considered important that the liberalisation efforts in these sectors are not undermined by predatory behaviour by the incumbent dominant companies, which may try to protect and maintain their monopoly positions that resulted from their previous legal monopoly or access to state funds. These sectors concern network industries, with very high fixed costs and very low variable costs, where it is considered that the use of an AVC or AAC benchmark would not reflect the specific economic realities of these industries. The Commission in its policy

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See Case COMP/35.141-Deutsche Post AG (Commission Decision 2001/354/EC of 20.03.2001, OJ L125, 05.5.2001, p. 27). See also Notice from the Commission on the application of the competition rules to the postal sector, cited in footnote 2, in particular paragraphs 3.1-3.4. See Access Notice, cited in footnote 2, in particular paragraphs 110-115.

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