Monday, October 26, 2009
Collective Dominance Through Tacit Coordination: The Case for Non-Coordination Between Article 82 and Merger Control "Collective Dominance" Concept
Posted by D. Daniel Sokol
ABSTRACT: Intervention in oligopolistic markets or—to be more precise—oligopolistic markets in which firms appear to be coordinating their actions, is a multifaceted topic; aspects of which have sparked some of the most intense debates in competition policy.
The oligopoly problem, as it is often termed, refers to firms acting in a parallel manner in the market in such a way that competition between these firms is dampened with the ultimate effect of the consumer being harmed. Oligopolies may be targeted by EC competition laws through the application of Article 81 (where behavior is explicitly coordinated), Article 82 (where behavior is explicitly or implicitly coordinated) or, prospectively, through the application of merger control rules to concentrations which are likely to enable or further facilitate coordination in a given market. The analytical issues surrounding competition law intervention in oligopolistic markets entail theoretical and practical difficulties; it is notable that the Commission's new guidance on Article 82 has explicitly excluded collective dominance from the ambit of its application.
This article will briefly outline the application of EC competition law to oligopolistic markets, with particular focus on tacit collusion between firms, the relationship between Article 82 and merger control in this respect, and the judicial pronouncement in Airtours of the conditions under which tacit coordination exists. The recent European Court of Justice (“ECJ’) Impala judgment will be examined; in particular, as regards the implications for the standard of proof in collective dominance cases and whether a different approach to collective dominance is required for merger control and Article 82 following the decision. In addition, the application of the Airtours criteria to collective dominance under Article 82 where exclusionary abuses are concerned will be discussed.