Sunday, December 30, 2007

Some Economics on Abuse of Dominance

Posted by D. Daniel Sokol

Vickersj John Vickers of the University of Oxford's Department of Economics has written the very helpful and insightful Some Economics on Abuse of Dominance.  He begins his paper with what I believe to be the best analysis of the state of Article 82 jurisprudence, "European competition law and policy towards mergers and anti-competitive agreements have become much more soundly based in economic principles over the past decade. The law on abuse of dominance has not."

ABSTRACT: The aim of this paper is to appraise from an economic perspective selected aspects of current law and policy on Article 82 (see box) concerning exclusionary abuse of dominance. The topic of exploitative abuse, important though it is, lies beyond its scope. Ideally, especially at a conference celebrating fifty years of the Treaty, the paper would trace the evolution of lines of case law on Article 82 (formerly 86) but here too I will be selective, and focus on three cases on which judgment has been given this year. Since, quite unlike the US, the evolution of EC law on abuse of dominance has been rather limited, history will not be lost from view.  Two of the exclusionary abuses to be discussed involve pricing. Section 4 below looks at predatory pricing from the perspective of the Wanadoo case.3 Section 5 concerns discounts and rebates, which were at issue in British Airways.4 The Microsoft case concerned the "non-price" abuses of refusal to supply and tying and bundling, which are considered in section 6. As will be seen, "non-price" abuses often involve prices especially when it comes to remedies. The discussion of these abuses is preceded, in Section 3, by a quick tour of the economics of anti-competitive exclusion. However, since there is no abuse without market dominance, a word on that is due first.

Download VickersIESE.pdf

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