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EUROPEAN COMMISSION DG Competition - page 71 / 113

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is smaller than the required share, the Commission will continue to investigate whether this estimate of the commercially viable share is not too low. It may be too low, for instance, because entry is likely to occur at a larger scale than the minimum efficient scale, because other incumbent competitors are likely to expand at a larger scale or because entrants are likely to concentrate sales on a limited number of customers to whom they can sell more per customer. Such reasons may necessitate revising the estimate upward and establish whether the revised commercial viable share is still smaller than the required share.

Terms in which the threshold is formulated 158. It is also important for the assessment in what terms the threshold is formulated. An important distinction can be made between on the one hand a formulation in terms of a percentage of total requirements of the buyer or an individualised volume target and on the other hand a standardised volume threshold. The first two allow the dominant supplier to set the threshold at which the rebate kicks in at such a level as to create a maximum loyalty enhancing effect. Setting the threshold in terms of a percentage of total requirements of the buyer is most straightforward in order to enhance loyalty. 103 Individualised volume targets allow the dominant supplier to create the same loyalty enhancing effect.104 Such requirement percentage targets and individualised volume targets are normally set in view of the purchases made by the same buyer in the previous period and may also take the form of growth targets. The loyalty enhancing effect may increase in case the threshold is adjusted to the individual demand of the customer in successive periods. In case there is some uncertainty about the optimal target to be set, for instance because of changing loyalties or because of overall demand changes, the targets are sometimes formulated in the form of a grid of targets with different rebates. In case the threshold(s) is (are) formulated in terms of a percentage of total requirements of the buyer or an individualised volume target, the Commission will normally presume that it (they) is (are) set at

103 See Case 85/76 Hoffmann-La Roche, cited in footnote 5, paragraphs 89-90; Case T-65/89 BPB Industries, cited in footnote 62, paragraphs 68 and 120; Soda-ash-Solvay (Commission Decision91/299) OJ 152, pp. 21-39, paragraphs 16-17. See Case 85/76 Hoffmann-La Roche, cited in footnote 5, paragraph 97; Case 322/81 Michelin I, cited in footnote 26, paragraphs 72-73 and 81-82; Case T-288/97 Irish Sugar, cited in footnote 38, paragraph 213; Case T-203/01 Michelin II, cited in footnote 59, paragraphs 75, 81 and 207-208; Case T- 219/99 British Airways, cited in footnote 86, paragraphs 7-11 and 270-273. 104

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