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EUROPEAN COMMISSION DG Competition - page 70 / 113

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156. Where it is not clear from the required share itself whether or not the rebate system is likely to have a foreclosure effect, the Commission will endeavour to assess the commercially viable share an efficient competitor or entrant can be expected to supply and to compare this with the required share. The required share is the share of customers’ requirements an entrant should capture so that the effective price resulting from the rebate would equal the average total cost of the dominant company. The commercially viable share is the share of customers’ requirements an efficient entrant can reasonably be expected to capture and determines over which part of the customers’ demand the effect of the rebate needs to be assessed. Where the required share exceeds the commercially viable share the rebate system is likely to have a foreclosure effect which reduces competition as the effective price that results from the rebate system over this commercially viable share will be below the average total cost of the dominant company.102

Box: comparing commercially viable share and required share

If CVS = RQS and thus CVS = R x P/(P – ATC), then Pe = ATC If CVS < RQS and thus CVS < R x P/(P – ATC), then Pe < ATC If CVS > RQS and thus CVS > R x P/(P – ATC), then Pe > ATC

To assess commercially viable share in context of specific market and sector 157. The commercially viable share that is appropriate in a particular case will have to be assessed in its specific market and sector context. In its assessment the Commission will in particular be attentive that the rebate system does not foreclose potential competitors. As to the latter, the Commission will in general first assess what is the effect of the rebate system on a company that wants to enter at minimum efficient scale. The Commission will establish the effect on an entrant that would enter at minimum efficient scale and which would sell the same percentage to each customer in the market. If this first estimate of the commercially viable share

102 In case rebate percentages differ between customers the required share may exceed the commercially viable share for certain customers but not for others. In such a case the Commission will take the ratio and importance of these two groups of customers into account in the assessment. The same holds if, in case of a grid of rebates, the required share is above the commercially viable amount for some rebates but not for others.

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