The reform of Article

The Commission’s reliance on precedent has been accused of expressing excess concern over the effect on competitors, while neglecting the effect on competition. However, such criticisms often fail to determine whether any harm was caused to competition. If the level of dominance is at the highest level, then it is termed as super – dominance. In such situations, any adverse effect on competitors would also have an adverse effect on the competition as a whole. Microsoft had invoked the defence of intellectual property rights against the decision of the Commission .

In the two earlier cases of Magill and IMS Health the European courts had dealt with the issue of intellectual property rights licensing, and they had developed the concept of exceptional circumstances in such cases. Under this test, the holder of the intellectual property rights, who is in a dominant position in the relevant market, must license those rights to the clients of the owner of intellectual property rights. If the holder fails or refuses to license his intellectual property rights to the clients, then it could constitute an infringement of Article 82 by the holder .

The courts developed four conditions in those two cases, in the context of breach of Article 82. First, the requested information about the product must be absolutely necessary for the business of the requesting party. Second, there should be no prevention, regarding the introduction of a new product by the competitor; if there is substantial demand from the consumers for that new product. Third, exclusion of any competition on the secondary market by the dominant undertaking and lastly, lack of objective justification .

The ruling in the case of Microsoft constitutes a landmark decision, in respect of dominant undertakings. The case was not heard before the ECJ, which constitutes the driving force behind European integration. The ECJ strives hard for the development of EC law through its interpretation of the Treaty Articles in its case law. The ECJ had modernised the laws relating to mergers and restrictive agreements between firms. However, this particular case had not been referred to the ECJ for the interpretation and application of Article 82 on matters relating to abuse of dominant position by undertakings .

The economics – based approach, which deals with consumer welfare, necessitates a critical study of the patterns of competition in each relevant market. Economic effects emerging from competitive behaviour can be gauged by an economic appraisal of the entire market. Thus, the economic assessment of any market will be the actual analysis of the outcomes of the varied behaviour of the markets. Hindrances and restrictions to healthy competition are proved independently, on the basis of individual cases .

Criticism is often levelled at resorting to precedent, while applying Article 82, because it mainly concentrates on the effect on competitors in the market and does not take into consideration any actual harm caused to the competition. This is because the effect on competitors can serve as an alternative to the effect on competition. In cases of super – dominance the standard for dominance is fixed at a higher level and such an approach is unsuitable for the present day’s market conditions where the standard for dominance is set at a very low level .

Article 82 EC prohibits the abuse of a dominant position by undertakings within the common market. Under the provisions of this Article, no company shall abuse its dominant position within the common market or any part of the market. Such practice is incompatible and against the spirit of the common market and hence should be prohibited. Abuse of dominant position by undertakings would serve to hamper the trade between Member States of the EU .

Practices that abuse a dominant position can be witnessed in unfair trade conditions; imposition of direct or indirect unfair prices for selling and buying; reduced production by industries, unfavourable market conditions for consumers; technical development that promotes unfairness to consumers; application of discriminatory trade practices in similar business transactions between trading parties, which may place some parties at a competitively disadvantageous position; and forcing parties to conclude sale contracts with supplementary obligations.

These obligations may not have any relation to the original subject matter of the contracts for commercial viability. Such practices fall under the definition of the abuse of dominant position by undertakings . Ambiguity and uncertainty surrounded the application of Article 82. There are difficulties that are inherent in the treaty provisions, regarding the clear definition of markets, in order to apply the rules that enforce competition. There are disagreements with regard to the usual competitive behaviour and anti – competitive behaviour.

As such, dominance is not a violation of Article 82; moreover, dominant undertakings have to bear additional responsibilities in the markets, where they enjoy such dominant position. It is incorrect to assume that under normal circumstances or in other than exceptional circumstances, such additional duties will be in force, even in markets, where the undertakings do not enjoy a dominant position. In addition, the concept of exceptional circumstances should not be employed to establish abuse of dominant position where there is no actual dominance .

List of References

Amelia Fletcher, Office of Fair Trading. 15 March 2005. The reform of Article 82: recommendations on key policy objectives. Retrieved 9 June 2008 from http://www. oft. gov. uk/shared_oft/speeches/spe0205. pdf Business: A matter of sovereignty: Microsoft. The Economist. London: Sep 22, 2007. Vol. 384. Iss 8547; P 80 Competition Law Forum. The Reform of Article 82: Recommendations on key Policy Objectives. Retrieved 8 June 2008 from http://www. biicl. org/files/53_the_reform_of_article_82_recommendations_on_key_policy_objectives. pdf