Hard Core Cartels Most serious attack on fair and undistorted - - PowerPoint PPT Presentation

Beijing, China 19 March 2013

The Competition Rules of the European Union and their Enforcement by the European Commission

Bernd Langeheine

Deputy Director General

• Mergers

Directorate General for Competition University of International Business and Economy

A n t i t r u s t policy Merger Control S t a t e

Aid

Control Control of behaviour Safeguarding m a r k e t P r e v e n t i

• n
• f

u n d u e

• f

c

• m

p a n i e s structure subsidisation

b y

t h e State

Restrictive

agreements

(Cartels)

• Reg. 139/2004

Art 107-1 9 TFEU Art 101 T F E U Offical

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• u

r n a l

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2 4

• f

Abuse

• f

m a r k e t 2 9 J a n u a r y 2 4 ,

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Art 102 T F E U

( u n i l a t e r a l _ c

• n

d u c t )

The Three Pilars

• f

EU

C

• m

p e t i t i

• n

Law

By object

illegal

in

themselves

and invariably harmful

to competition

• “per Se” illegal object,

no need to examine

effects,

eg.

cartels

• n

price

fixing or market sharing

By effect

• case-by-case assessment
• positive effects can
• utweigh restrictive effects
• depends on the nature of

the agreement and market conditions

• exemption requires proof
• f efficiencies or other

consumer benefits

Restrictive agreements (Art. 101)

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Hard Core Cartels

Most serious attack on fair and undistorted competition:

> Price fixing > Limiting

• r controlling

production, markets, technical

developments or investment > Dividing up markets or sources of supply.

Example: Cartel among producers of LCD panels.

I—

Abuse of dominance(Art 102)

Dominance: the ability to behave independently from customers and competitors Abuse examples:

U Charging excessive prices

. Charging unfair low prices

S

Discriminating between trading partners

. Certain forms of bundling & tying .

Unfair loyalty rebates

Examples: > Microsoft case (2004)

• Intel case (2009)

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From a centralised enforcement system to a decentralised application of EU competition rules

Creation of a forum Member

States

Competition Network

for cooperation between

and the Commission:

(ECN)

the 27 EU European > Efficient division of work > Effective enforcement of EU competition rules Further cooperation

Reform (2004)

I

Merger Control (Regulation 13912004)

• Ensure that mergers that would harm competition are

blocked or modified (by commitments) impede effective

• r strengthening a

further tightening a Mergers can be good for competition

• egg. cost savings; efficiency gains in innovation; R&D

Market players can become more competitive and

consumers can benefit from higher-quality goods at

fairer prices

mergers

may “significantly competition”, often by creating dominant player but also

by

narrow oligolpoly.

Merger E v a l u a t i

• n

EU Merger control increasingly applies an

effects-

based approach

(meaning

greater

emphasis

• n

“economics” and less reliance

• n

structural factors

s u c h

as concentration

levels

• r

market s h a r e s )

>

Could

• ther companies

enter

quickly

sufficient scale to

compensate

for th

competition

by

the merger ( c r e a t i

• n

“competitive c

• n

s t r a i n t ” ) Typical

e l e m e n t s

to

be

examined

>Are the products

• f

the

merging

substitutes? parties

c l

• s

e

• na
• ss
• f

a

new and

el

• f

L__

Prohibitions are the exception

Only 24 prohibitions in some 4600 merger reviews since

• 1990. But over 300 mergers only cleared subject to

conditions (remedies)

Recent examples:

> Financial services:Deutsche BOrse/NYSE Euronext > Airlines: Ryanair/Aer Lingus Logistical services: UPS/TNT Remedies: a proportionate solution for competition problems (normally through a structural measure, such as a divestment

• f assets)

Examples: > Panasonic/Sanyo Cisco/Tandberg > Western Diaitl/Hitachi

Competition Authorities - Enforcement

> Effective enforcement procedures > Efficient structures > Adequate resources > Independent decision-making

Focus on competition policy considerations

> Transparency and procedural rights

An

increasing number

• f

c

• m

p e t i t i

• n

cases concern

markets

w h i c h

a r e

w i d e r than n a t i

• n

a l

• r global

> A i r t r a n s p

• r

t

cartel (2010) included La. Air

British Airways,

Cathay

Pacific,

Singapore

Japan

Airlines

International cooperation

—

benefits

in

t e r m s coherence,

credibility and

convergence b e t w e e n

EU Commission and

C h i n e s e authorities

— MoUs with Mofcom, NDRC

I n t e r n a t i

• n

a l

enforcement and cooperation

Canada,

Airlines,

Cooperation competition and SAIC

• f