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EUROPEAN COMMISSION DG Competition - page 56 / 113





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thereby eliminating the principal, and possibly only, competitor facing the liner conference.80 The collectively dominant companies in the liner conference used "fighting ships", that are vessels used by the maritime conference to sail in competition with the non-conference carrier. The "fighting ships" called at the same ports as the non-conference competitor, and they charged the same or lower rates as the outsider while such rates were well below the conference tariff.81 Financial losses or losses of revenue of the "fighting vessels" were distributed over the several members of the conference, each of whom were suffering proportionately much less than the non-conference carrier while at the same time having the advantage of obtaining higher rates on their other sailings. If in such an exceptional case it can be shown that there is a clear strategy to exclude or discipline including a mechanism to share the sacrifice in lost revenues between the collectively dominant companies and that there are negative effects on competition in the market or that there is a high likelihood that such effects will materialise, then also selective price cuts above average total costs will be assessed as predatory.

Where entry possible only below minimum scale 129. Another example of such an exceptional situation where price cuts above average total costs could be deemed predatory is where a single dominant company operates in a market where it has certain non-replicable advantages or where economies of scale are very important and entrants necessarily will have to operate for an initial period at a significant cost disadvantage because entry can practically only take place below the minimum efficient scale. In such a situation the dominant company could prevent entry or eliminate entrants by pricing temporarily below the average total cost of the entrant while staying above its own average total cost. For such price cut to be assessed as predatory it has to be shown that the incumbent dominant company has a clear strategy to exclude, that the entrant will only be less efficient

because of these non-replicable or scale advantages and that entry is being prevented because of the disincentive to enter resulting from specific price cuts.


80 81

Joined cases C-395/96P and C-396/96P Compagnie maritime belge transports, cited in footnote 4. Instead or in addition to lowering its price on the route where the rival is operating the conference could also predate by adding capacity to that route.

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