#15765 - Chapter 7 Consequences Of Infringement Article 102 - Competition Law

Infringement of Article 102 Market shares as evidence of dominance: decided cases Case Market share Decision Irish Sugar 90% Dominant position Hoffman - La Roche 75% - 87% over 3 years Dominant position Warner-Lambert/Gillette/BIC 79% by value and 59% by volume in the EU; at least 50% in each member state Dominant position Hilti AG 70% - 80% Dominant position Trans-Atlantic Conference Agreement 60% (with 70% of the most important segment) Presumption of a dominant position AKZO v Commission 63% - 66% over 3 years Evidence of a dominant position (when the next largest competitors were 14.8% and 6.3%) Michelin 57% - 65% Indication of dominance (when competitors' market shares were between 4% and 8%) United Brands 40% - 45% Indication of dominance depending on strength of competitors AKZO v Commission 50% Presumption of dominance unless exceptional circumstances suggest otherwise. British Airways v Commission. 39.7% Market share combined with a number of other factors resulted in finding of dominance. Goettrup-Klim ea Grovvareforeninger v Dansk Landbrugs Grovvareselskab AMBA 36% and 32% Market shares could not on their own constitute conclusive evidence of a dominant position. Market shares as evidence of dominance: general guidelines Market share Relevance to dominance >75%, held for 3 years or more. Strong (possibly conclusive) evidence of dominance. Evidence of rebuttal has to be very powerful. 60% -75%, held for 3 years or more. Prima facie evidence of dominance. Will require modest support from other factors for dominance to be established in the absence of persuasive rebuttal. 50%- 60%. Presumption of dominance where an undertaking has a market share of 50% or above. Undertaking can adduce evidence of other factors to demonstrate it is not dominant. 1 40%- 50%. Supporting evidence of other factors likely to be required before a finding of dominance, and rebuttal may well be possible. The structure of the market as a whole will be very relevant: dominance is more likely if the rest of the market is fragmented/ there may be collective dominance if the market is divided between 2/ more players. Sole dominance is unlikely in the absence of special circumstances, but it cannot be ruled out. British Airways was dominant with a market share in the relevant market of 39.7% only and Commission fined it EUR6.8 million for abusive conduct. The Article 102 Paper creates a "soft safe harbour" for undertakings with a market share of <40%. Such a market share will be viewed as a proxy for the absence of substantial market power. < 40%. < 30% Sole dominance is very unlikely. Commission has said that it will not rule out dominance between 20% - 40%, but that it is unlikely to find dominance < 30%. 30% is set as the general start for possible market power in vertical agreements block exemption. Article 102 Paper suggests dominance unlikely <25%. Consequences of infringement of Article 102? The main sanction for infringing Article 102 is a fine. Some of the highest individual fines for breach of EU law have involved infringements of Article 102, especially in the technology sector: Finesi. Microsoft - in 2004, a fine of EUR497 million was imposed on Microsoft. Commission took the initial proposed fine, doubled it to ensure sufficient deterrent effect, and then increased it by a further 50% because Microsoft had continued its infringement for 5 years. ii. Intel - in 2009, a fine of EUR1.06 billion was imposed on Intel (4.15% of total turnover for 2008) for abusive conduct on the market for a x86 central processing units (CPUs). Commission considered Intel's high market share (80%) and the geographic scope of the infringement (the conduct covered the whole of the EEA). Considering the infringement comprised several individual abuses, the intensity of the abuse differed over the period, and that Intel had tried to hide its infringing behaviour from the Commission, Commission set 5 years 3 months as the duration of the infringement and multiplied the value of sales by 5.5. . iii. Google - in 2017, Google was fined of EUR2.42 billion as Commission found Google abused its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service. Fines cannot be imposed if the breach of Article 102 ceased > 5 years previously and there has been no repetition of the offence since. Commission may order to terminate an agreement / to cease and desist from withholding supplies. If necessary, a dominant undertaking may be ordered to adopt positive measures to bring an infringement to an end. Orders Regulation 17/62- Commission had no power to order divestment (the forced disposal of all or part of a business in which the party concerned has a high market share). Structural / 2