Abuse of Dominance and Monopolisation: How to Protect Competition Without Protecting Competitors

Abuse of Dominance and Monopolisation: How to Protect Competition Without Protecting Competitors

Description

Ever since the early 1980s, US antitrust law has steered a narrow path. It protects consumers from price increases resulting from anticompetitive conduct that increases market power, and otherwise (except for rare cases), it protects consumer welfare by not intervening in the marketplace. US antitrust law does not protect competitors from hard or rough competition; it does not protect them from unfair, even fraudulent, competition. Rather, it stays its hand, lest it err on the side of interfering with the presumed efficiency of the marketplace. Not all US cases fit this paradigm. When lower courts diverge, however, appeals seek to keep them in their place. Thus, in Law Offices of Curtis V Trinko v. Bell Atlantic, the amicus brief for the United States Department of Justice and the Federal Trade Commission argued to the Supreme Court that Section 2 of the Sherman Act is not an abuse of dominance law, and that even a monopolist controlling a facility that competitors need in order to compete (the local telephone loop) have no affirmative antitrust duty other than to refrain from increasing their monopoly power by anticompetitive means. They have no duty not to leverage their power. They have no duty of non-discrimination and fair dealing. They have no duty to provide a level playing field for competitors. Article 82 EC has a different center of gravity. While it would condemn all conduct that Section 2 of the Sherman Act condemns, it reaches more broadly to regulate abuses by a dominant firm, including uses of power that may not increase power. A dominant firm has affirmative duties not to exclude competitors by acts not on competitive merits. Thus, if Microsoft demands exclusive contracts from personal computer makers and internet service providers merely in order to shift substantial market share from the Netscape browser to the Microsoft browser, this conduct would presumably run afoul of Article 82 EC even while it would be seen as competitively neutral under Sherman 2 (absent additional facts showing, for example, as in the US case, that the conduct also conferred or preserved power of Microsoft). ‘Mere’ unjustified use of monopoly power that significantly suppresses the chances of competitors is probably illegal in the EU. It is probably not illegal in the United States. To be sure, in many circumstances, applications of Article 82 EC and Sherman Section 2 converge. When a dominant firm uses market power to block competition in ways that directly and immediately harm consumers, it violates both sets of law. Such a restraint both preserves or increases power and harms competitors. Italy v. Commission (British Telecom) is a paradigmatic example. British Telecom, a state-owned enterprise, barred private telecom agencies from forwarding international calls. Article (ex) 86 EEC unblocked the restraint. Where, however, a restraint is exclusionary of competitors, but not exploitative of consumers, most US courts demur. In the face of a European prohibition against such conduct, Americans might be heard to proclaim: ‘We protect competition; you protect competitors.’ This essay explores the taxonomy of exclusionary restraints, from those with the purpose and effect to lessen output and increase prices (these are power-increasing and are consensus wrongs), to those that are significantly exclusionary but may not augment power, to those that are likely to reflect firm efficiencies and result in lower prices. It explores also the legal formulations, predominantly from the United States and the European Union, that condemn or encourage the conduct.

Source Publication

European Competition Law Annual 2003: What Is an Abuse of a Dominant Position?

Source Editors/Authors

Claus-Dieter Ehlermann, Isabela Atanasiu

Publication Date

2006

Abuse of Dominance and Monopolisation: How to Protect Competition Without Protecting Competitors

Find @ NYU

Share

COinS