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EUROPEAN COMMISSION DG Competition - page 94 / 113

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9.2.1 TERMINATION OF AN EXISTING SUPPLY RELATIONSHIP

Domco must have found supply efficient & customers have sunk cost 217. That the dominant company in the past has found it in its interest to supply an input to one or more customers shows that the dominant company at a certain point in time considered it efficient to engage in such supply relationships. This and the fact that its customers are likely to have made investments connected to these supply relationships create a rebuttable presumption that continuing these relationships is pro-competitive.

4 Conditions for Abuse 218. The following four conditions normally have to be fulfilled in order to find the termination of a supply relationship abusive: (i) the behaviour can be properly characterised as termination; (ii) the refusing undertaking is dominant; (iii) the refusal is likely to have a negative

effect on competition; (iv) the refusal is not justified objectively or by efficiencies

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9.2.1.1 BEHAVIOUR PROPERLY CHARACTERIZED AS TERMINATION

What counts as refusal? 219. In many cases it is evident that an undertaking is terminating a supply relationship. In other situations it will have to be established that a certain type of behaviour in reality amounts to a termination. This can involve evaluating practices such as, for instance, delaying tactics in supplying, imposing unfair trading conditions, or charging excessive prices for the input.133

Margin or price squeeze 2 2 0 . A p a r t i c u l a r b e h a v i o u r , w h i c h c a n a m o u n t t o a t e r m i n a t i o n , i s a m a r g i n o r p r i c e

squeeze”. This may occur when the upstream input owner is integrated downstream and thus competing with actual or potential buyers of the input, and the margin between the price for the upstream input charged to competitors on the downstream market and the downstream price charged by the input owner is insufficient to allow a reasonably efficient competitor to obtain a normal profit. The typical benchmark for a reasonably efficient competitor is the integrated

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Such practices are sometimes called “constructive” refusals to supply.

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