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Margin squeeze encompasses practices whereby a vertically integrated firm with dominant position on the upstream market for an input, sets its prices at such a level that prevents the downstream rivals to compete with it. In such a situation, “the dominant firm applies a margin squeeze by setting a high price for the input, charging low prices on the downstream market, or by a combination of the two”.Margin squeeze cases involve price discrimination in the sense that a dominant firm discriminates in favour of its own downstream business, to the detriment of rivals.Loyalty (or fidelity) rebates can be described as“pricing structures offering lower prices in return for a buyer’s agreed or de facto commitment to source a large and/or increasing share of his requirements with the discounter”. They grants a financial advantage so as to prevent costumers from obtaining their supplies from competitors[14].
Refusal to supply is in principle not forbidden under the EU competition law. Only in exceptional circumstances a dominant firm would be charged with a duty to supply goods or provide services where that is necessary for another firm to carry on its business.[15] A firm endowed with dominant position may discriminate against its competitors, non-competitors and its customers. This would happen not only by refusing to supply but also by applying discriminatory conditions between its own downstream business and rivals, or deciding to supply one rival, but not another[16].
In particular, in United Brands case the Court found that the refusal of United Brands to supply bananas to Olesen, a long-standing distributor in Denmark, “would limit markets to the prejudice of consumers and would amount to discrimination which might in the end eliminate a trading party from the relevant market”[17].
Tying and bundling. There are different forms of tying and bundling.
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Tying can be described as a situation in which costumers that purchase a primary product are also required to purchase a secondary product.[18]Pursuant to Art. 82 Guidance, “an undertaking which is dominant in one product market (or more) of a tie or bundle (referred to as the tying market) can harm consumers through tying or bundling by foreclosing the market for the other products that are part of the tie or bundle (referred to as the tied market) and, indirectly, the tying market”.[19] The conduct in question may have also elements of price discrimination because of the consumer surplus that the dominant firm extracts from other competitors.[20]
III. Conclusion
As has been seen, discrimination can arise in many cases under Article 102 TFEU, given the confusion that has been created by practice and case law.[21]
[14]Case 85/76, Hoffman-La Roche v. Commission [1979] ECR 461, para 90
[15]A.Jones and B.Sufrin, EU Competition Law, 5th edition,2013, Oxford, p. 510
[16]R.O’Donoghue and J.Padilla, The Law and Economics of Article 102 TFEU, 2nd edition, 2013, Oxford and Portland, Oregon, p.248
[17]Case 27/76, United Brands v Commission, [1978] ECR 207, 14 February 1978, para 183
[18]R.O’Donoghue and J.Padilla, The Law and Economics of Article 102 TFEU, 2nd edition, 2013, Oxford and Portland, Oregon, p.596
[19]Communication from the Commission — Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings, (2009/C 45/02), para 49
[20] R.O’Donoghue and J.Padilla, The Law and Economics of Article 102 TFEU, 2nd edition, 2013, Oxford and Portland, Oregon, p.246, A.Jones and B.Sufrin, p.EU Competition Law, 5th edition,2013, Oxford, p. 487
[21]R.O’Donoghue and J.Padilla,The Law and Economics of Article 102 TFEU, 2nd edition, 2013, Oxford and Portland, Oregon p.246
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Responsible: Freie Universität Berlin |
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