The concept of donminace under the European CounciThe Concept of Dominance
Under
The European Council Merger Regulation
By TU CHONG YU
Definition
    EC concentration control relies on a dominance test.However, neither the TreatyEstablishing the EU (hereinafter referred to as the Treaty) nor the EuropeanCouncil Regulations No. 4064/89 and No. 1310/97 (hereinafter referred to as the "ECMR") themselves provide any formalistic definition of what is to constitute dominance.Theoretically, dominance is essentially an economic concept rather than a legal one and therefore the application of this term necessitates an economic analysis. However, in the past merger control practice, dominance is very much a legal concept developed by the European Commission (hereinafter referred to as the "Commission") and the European Court of Justice and the European Court of First Instance (hereinafter referred to as the "ECJ"), indicating the ability of an undertaking or a group of undertakings to act without its/their competitors, actual and potential, or its/their customers, and, in particular, to set prices as it chooses.In other words, dominance is the ability to be largely free from the pressures imposed by competition as to price, quality and other conditions of business.

    A dominant position under the ECMR differs from the economists' pure concept of power over price: The existence of a dominant position is a question of fact determined by the relevant market factors.Article 2 (3) of the ECMR provides in this respect that a concentration shall be declared incompatible with the Common Market if it creates or strengthens a dominant position as a result of which effective competition would be significantly impeded in that market.The concept of dominant position corresponds to the notion used in Article 86 of the Treaty which had been interpreted by the ECJ as a position where an undertaking or group of undertakings is able to behave to an appreciable extent independently of its competitors, its customers and ultimately of its consumers. [1]The Commission also added in AKZO case that "The power to exclude effective competition is not … in all cases coterminous with independence from competitive factors but may also involve the ability to eliminate or seriously weaken existing competitors or to prevent potential competitors from entering the market." [2]

    While the concept may be easy to formulate, determining dominance in practice is less straightforward.Dominance can only be assessed in relation to three essential variables: the product market, the geographical market, and the temporal factor.This article will not go into the former two but rather focuses on the essential market power of a dominant undertaking or undertakings caught by the ECMR and illustrated by the case work of the Commission and the ECJ.Dominance occurs not only where the competitive restraints on an undertaking are absent but also where they are too weak in practice to affect its behavior.In the common situation there are 2 types of evidence to be considered in the process of determining whether an undertaking or a group of undertakings possess dominant market power, i.e., the aggregate market share enjoyed by the undertaking or a group of undertakings and the extent to which there are other factors which serve to reinforce its market strength.Nevertheless, the picture is blurred further by the recognition of degrees of market power or influence short of dominance.Additionally, the analysis of dominance under the ECMR is rather different in that the priori concentration is forward looking whereas Article 86 of the Treaty concerns the control of behavior in the past.Appraisal of a proposed concentration necessarily involves predictions about how the market will generally operate, and how the players will respond and behave, if the concentration takes place.Under the ECMR, the Commission has to assess the potential effects of a proposed concentration and cannot rely only on a static market analysis or confine its assessment simply on the potential for the undertakings concerned in the concentration to engage in abusive conduct but rather take the evolution of the relevant market as a whole into consideration. [3]

Single-Firm Dominance & Collective Dominance
    The dominance test relies in the first place on the position held by a single undertaking, i.e. the dominant position of the merged entity or the Joint Venture, which results from the notified concentration.In fact, a great majority of notification under the ECMR so far raises only the issue of individual dominance.

    Nevertheless, while again neither the Treaty nor the ECMR itself expressly and clearly put it beyond doubt that behavioral or structural controls could be used to prevent or govern collective, duopolistic or oligopolistic dominance, the dominance test also actually applies to dominant positions held collectively by an entity produced by the merger and a third undertaking or duopolistic or oligopolistic dominance led by concentrations which do not in themselves create or strengthen individual or collective dominant positions.This is so, especially, after the judgment of the ECJ in Kali und Salz in March 1998[4] in which the ECJ held that

    "… the Regulation, unlike Article 81 and 82 of the Treaty, is intended to apply to all concentration with a Community dimension in so far as they are likely, because of their effect on the structure of competition within the Community, to prove incompatible with the system of undistorted competition envisaged by the Treaty…

    A concentration which creates or strengthens a dominant position on the part of the parties concerned with an entity not involved in the concentration is liable to prove incompatible with the system of undistorted competition which the Treaty seeks to secure.Consequently, if it were accepted that only concentrations creating or strengthening a dominant position on the part of the parties to the concentration were covered by the Regulation, its purpose as indicated in particular by the above-mentioned recitals would be partially frustrated.The Regulation would thus be deprived of a not insignificant aspect of its effectiveness, without that being necessary from the perspective of the general structure of the Community system of control of concentrations… It follows…that collective dominant positions do not fall outside the scope of the Regulation."

    The Commission also indicated, long before the above judgment, in its decision of clearance subject to conditions in Nestle and Perrier that

    "…the distinction between single firm dominance and oligopolistic dominance cannot be decisive for the application or non-application of the Merger Regulation because both situations may significantly impede effective competition under certain market structure conditions.

    … The restriction of effective competition which is prohibited if it is the result of a dominant position held by one firm cannot become permissible if it is the result of more than one firm.

    …In the absence of explicit exclusion of oligopolistic dominance by Article 2 (3) it cannot be assumed that the legislator to permit the impediment of effective competition by two or more undertakings holding the power to behave together to an appreciable extent independently on the market.

    …Seen in the light of these legal and economic considerations, Article 2 (3) must be interpreted as covering both single firm and oligopolistic dominance. …"[5]

    The Commission's prohibition decision in Gencor/Lonrho in April 1996 also clarified the circumstances under which oligopolistic dominance may be created as a result of merger.According to the Commission, active collusion is not required for the member of the oligopoly to become dominant.Rather, oligopolistic dominance can occur where a mere adaptation by member of the oligopolistic group to market conditions cause anti-competitive parallel behavior as it leads to reduced output and high prices.Gencor/Lonrho illustrates the essential difference between the system of ex-ante control under the ECMR, aimed at preventing the establishment of anti-competitive market structures, and the mechanism of ex post control under Article 86 of the Treaty of anti-competitive practices. [6]

    Subsequently, the Court of First Instance acknowledged in Gencor v. Commission[7] in March 1999 that the relationship necessary between oligopolists to establish collective dominance were not limited to formal structural links but also included the economic interdependence commonly referred to as “tacit collusion” reflecting economic thinking on which the concept of oligopoly or collective dominance is founded.As stated by the Commission in one of its early decision: "…reciprocal dependency thus creates a strong common interest and incentive to maximize profits by engaging in anti-competitive parallel behavior…"[8] In fact, if prices are easily ascertained and each undertaking has spare capacity, there is little incentive to charge low prices as the other undertaking might be expect to match or beat them, with or without having an agreement.

    Naturally, in the case of collective, duopolistic or oligopolistic dominance,the Commission should establish the existence of an economic and/or legal relationship between the merged entity and the third undertaking. There should also be proof why the undertaking in question are likely to co-ordinate their market conduct or why the remaining market operators have an economic interest to behave in a parallel manner and/or not to actively compete.The degree of intensity of competition, the stability of market shares between the oligopolistics and the amount of market transparency (the existence of published price lists, price negotiations in competitive bidding processes, the variety of products and the ability of customer to require the maintenance of such heterogeneity, etc.) will always be relevant.The Commission is required to considered whether each proposed merger notified "leads to a situation in which effective competition in the relevant market is significantly impeded by the undertakings involved in the concentration and one or more other undertakings which together, in particular because of correlative factors which exist between them, are able to adopt a common policy on the market and act to a considerable extent independently of their competitors, their customers, and also consumers." [9] ????????????????

Factors Relevant for Establishing the Existence of a Dominant Position

    In order to evaluate the competition effects of a concentration, Article 2 (1) (a), (b) of the ECMR provides that the Commission shall take into account:

    "(a) the need to maintain and develop effective competition within the Common Market in view of, among other things, the structure of all the markets concerned and the actual and potential competition from undertakings located either within or out the Community;

    (b) the market position of the undertakings concerned and their economic and financial power, the alternatives available to suppliers and users, their access to suppliers and markets, any legal or other barriers to entry, supply and demand trends for the relevant goods and services, the interest of the intermediate and ultimate consumers, and the development of technical and economic progress provided that it is to consumer's advantage and does not form an obstacle to competition.

    …3. A Concentration which creates or strengthens a dominant position as a result of which effective competition would be significantly impeded in the Common Market or in a substantial part of it shall be declared incompatible with the Common Market."[10]

    The justification on non-competition grounds was removed from an earlier draft of this article.

    It is worthwhile to mention that the approach adopted by the Commission does not always correspond precisely with the considerations which are set out in the above.While the Commission is certainly obliged to take into account the listed factors, they do not constitute an exhaustive list.Nor is there any ranking of priority of the considerations listed.As a matter of fact, Article 2 (1)(a) singles out certain basic principles which flow from the compatibility test itself, while Article 2 (1)(b) lists the main factors relevant to the question of dominance.The EU merger control authority is free not only to take into account all aspects it considers relevant in its examination of compatibility in each particular case, but also to judge where the balance and emphasis should lie in any specific case;A review of its case work evidences this discretion.

-Market Share

    The application of the aforementioned criteria usually starts within the assessment of the position of the merged entity on the relevant geographic and product market and in particular of its share of that market.Market shares are meaningless unless they flow from a proper definition of the geographic and product market or market concerned.The Commission has recognized that in defining dominance for Article 86 of the Treaty purposes market share figures are a useful starting point for analysis but need to be used with caution.Generally speaking, save in exceptional circumstances, the existence of a very large market share, which was held for some time, would in itself be indicative of dominance and such very large market share would secure for the undertaking concerned the freedom of action which is the hallmark of a dominant position.Indeed, undertakings with significantly less of a market share than is commonly understood by the laymen's sense of monopoly may be deemed to have a sufficient share of the market for the purpose of the ECMR.

    "A dominant position can generally be said to exist once a market share in the order of 40 to 45 percent is reached.Although this share does not in itself automatically give control of the market, if there are large gaps between the position of the firm concerned and those of its closest competitors and also other factors likely to place it at an advantage as regards competition, a dominant position may well exist.Strengthening by means of a merger is likely to constitute an abuse if any distortion of the resulting market structure interferes with the maintenance of remaining competition (which has already been weakened by the very existence of this dominant position) or its development.Such an effect depends, in particular, on the change in the relative market strength of the participants after the merger, i.e., the position of the new unit in relation to remaining competitors".[11]

    In Akzo, the ECJ has held that a market share of 50 percent could be deemed as large enough to be indicative of a dominant position.[12] We may see that if the market share exceeds 40%, the Commission is likely to examine the concentration in greater detail and whether or not such a share give rise to a dominant position will depend to a large extent on the structure of supply; what is the strength of the remaining competitions.

    On the other hand, If this share is lower than 25%, the transaction is presumed to be compatible with the common market.[13]It is generally assumed that a market share of less than 40 percent will only rarely reveal (in combination with other factors) the possible existence of a dominant position.[14]

    In United Brands UBC's 40 to 45 percent of the market was held to be sufficient based on some other factors which were indicative of its dominance[15] while in Hoffmann-La Roche a 43 percent of market coverage for B3 vitamins was finally adjudicated as non-dominant owing to lack of other elements supporting its prima facie market strength.[16]

    In addition, the Commission will examine how the market share has evolved over time and does it reveal an upward or down trend?Even where the market shares resulting from a concentration are above the 40 percent, the Commission is careful to point out the limitations of market share figures along.Hence, a number of concentrations giving rise to aggregate market share exceeding 40 percent of the relevant market have been cleared by the Commission at stage one of the notification procedures of the said merger transactions.

    In some cases the Commission has emphasized the important of assessing market shares in the context of a market's characteristics and the nature of the competition on it.The necessary period of time in which the undertaking concerned has held its strong position in the market must be weighed as an essential element compose of a dominance.[17] The ECJ also held that "…On the other hand the relationship between the market shares of the undertaking concerned and of its competitors, especially those of the next largest, the technological lead of the undertaking over its competitors, the existence of a highly developed sales network and the absence of potential competition are relevant factors, the first because it enables the competitive strength of the undertaking in question to be assessed, the second and third because they represent in themselves technical and commercial advantages and the fourth because it is the consequence of the existence of obstacles preventing new competitors from having access to the market."[18]Thus in a heterogeneous market showing growth, innovation and rapid technological change, high market shares may provide no indication of market power, particularly if entry barriers are low.

    In American Cyanamid/Shell [19]the concentration was cleared even if Cyanamid covers 20 to 35 percent of the market partly because its products were based on an ageing and relatively unsophisticated technology compared to those of some of its competitors and partly because "an analysis focusing on market shares alone is not particularly probative in a dynamic and R & D-intensive industry".In Digital Equipment International and Mannesman Kienzle GmbH, the proposed concentration did not raise serious doubts about its compatibility with the Common Market because "…It is unlikely that the concentration will create or strengthen a dominant position because conditions of competition will not significantly change.The workstation market is a fairly new market which developed out of the PC and small computer market during the last 10 years.High market shares on a new developing market are not extraordinary, and they do not necessarily indicate market power.In fact the development of the market shares of the three leading companies over a period of time shows the dynamic nature of this market.There has been constant change including a change of market leadership."[20]

    Decisions under the ECMR also necessarily involve predictions about how markets will develop if a concentration is to be permitted and, for many reasons, the past may be an unreliable guide to the future.This is well illustrated by the Commission's decision clearing the merger of the parties' steel tube businesses in Mannesmann/Hoesch in that the imminent introduction of the utilities procurement rules had been taken into account."…High market shares represent an important factor as evidence of a dominant position provided they not only reflect current conditions but are also a reliable indicator of future conditions.If no other structural factors are identifiable which are liable in due course to change the existing conditions of competition, market shares have to be viewed as a reliable indicator of future conditions".[21]In a number of product areas the Commission found 'very high market shares" not to be indicative of dominance in the light of significant market share fluctuations, the number and strength of competitors with significant R & D capability, the pace and impact of new product launches and the disciplining effect on price of generic alternatives.Some sectors are likely to be characterized by volatility of market share, whereas others, perhaps the more traditional industries, may show a marked degree of stability.In Tetra Pak/Alfa Laval, "A market share as high as 90 percent is, in itself, a very strong indicator of the existence of a dominant position.However, in certain rare circumstances even such a high market share may not necessarily result in dominance. "[22]In
PriceWaterhouse/Coopers & Lybrand[23], the Commission also took into account the extent to which companies over the longer term switched auditors and the techniques they used to achieve competitive prices and quality in relation to auditing services.

    The extent to which market shares increase as a result of a concentration is also important.As a general principle, the Commission has dismissed concerns where the market share added to that already held by the acquiring undertaking is 5 percent or less even though the acquirer has a high market share.While in other cases where market shares have increased only by several percentage points, a concern may be raised because of the wide disparity in market shares between the merged undertaking and other competitors. The key factors are sometimes less the market shares of the merging parties than the position of remaining competitors and entry conditions in the market under scrutiny.

    In some market, however, market shares are either unavailable or completely unreliable. In Securicor/Datatrack, no appraisal could be made of the notified JV because its purpose was to introduce a vehicle tracking service to the Dutch Market where no similar service was available.Moreover, in ABB/BREL the Commission recognized in May 1992 that in relation to railway locomotives and rolling stock, market shares fluctuated wildly year to year because a few high value contracts were let in any one year among a small number of manufacturers."Of greater consequence than simple market shares, however, is the degree of competition likely to exist for future contracts, and there could not appear to be cause for concern given the competitive capability of the large European manufacturers such as AEG, Siemens, GEC Alsthom and others."[24]

    Market share figures may deliver a very different message in cases which potentially involve collective dominance.In oligopolistic markets it is the symmetry of market shares which causes concern rather than wide disparity between them.It is unsafe in such situation to rely on the rule of thumb thresholds familiar from cases under Article 86 of the Treaty or of single firm dominance.The appraisal process will also defer radically where doubts about compatibility stem from the oligopolistic nature of a market rather than from the pre-eminent position of one particular firm.

- Competitors

    As already mentioned, the power and strength of competitors of the parties of and the JV arising from a concentration notified will be another important element to be evaluated by the Commission.A small number of competitors with broadly equivalent positions in the market may be sufficient to maintain effective competition, provided that they do not act together with the JV in parallel in the market.At the same time, a considerable disparity between the shares of merging enterprises and the competitors may not in itself reach a conclusion of dominance of the market by the stronger operators.In Renault/Volvo[25], the Commission regarded Mercedes as able to exercise sufficient competitive restraint on Renault in the French bus market for it not to be concerned about the latter's 54 percent share as compared with Mercedes's much smaller 18 percent share.The Commission cleared the merger of the truck and bus divisions because it was satisfied that, big as the two parties were, they remained subject to competitive influences in a market populated by several large producers.But in Boeing/McDonnell Douglas the Commission at its sole discretion regarded Airbus's 30 percent share in the large civil jet aircraft market as an ineffective constraint on Boeing, were it permitted to acquire MDC because a competitor's position may be less significant than its market share owing to inferior technology or R & D capability or its rival's success in erecting barriers to its potential to grow and compete.[26]

    The Commission will also look at the propensity of other firms to provide effective competition as well as their ability to do so.The emergence of potential competition in a reasonable timescale is also considered.Companies may be able to react by increasing output or by refocusing production.The price level at which under-utilised or moth-balled plant could profitably be put into full production is a relevant issue.So too are the profiles of production costs faced by competitors.The potential competition sometimes critically depends upon entry barriers, and in certain cases competition from outside the EU may be relevant.We may note that from the case work of the Commission that the market for many sophisticated products, where transport costs are neglectable comparing to their high prices, are worldwide.In the case of Aerospatiale/MBB , the civil helicopter market was deemed as a unified world market and the competitive pressures from outside the Community and in particular the strength of US manufacturers was considered.Although the geographic market normally will determine the relevance of competition from outside the Community, in some rare cases the Commission accepts that potential import from outside the market may exercise a restraint upon the behavior of the merging undertakings.

Entrance Barriers

    It is clear that as a matter of principle, even if a firm does possess a relatively large market share this may be fragile because of the possibilities of new entrants on to the market."In general terms, a concentration which leads to the creation of a dominant position may however be compatible with the Common Market within the meaning of Article 2 (2) of the merger Regulation if there exists strong evidence that this position is only temporary and would be quickly eroded because of high probability of strong market entry.With such market entry the dominant position is not likely to significantly impede effective competition…"[27]The assessment of entry conditions will always be one of the crucial part of the consideration of whether a firm is dominant, or a group of firms are collectively dominant.This involves an assessment both of entry barriers and of the period of time likely to be needed for a potential entrant to overcome any barrier and establish a viable presence in the market.Among other things, the impact of entry upon the behavior of the incumbent in the market, the costs of advertising, economies of scale, the strength of established brands, patents and other intellectual property rights, tariffs, national regulations, buying preferences and the need to establish handling facilities or distribution or servicing network may well be relevant.Future developments not likely to occur during the next two or three years are too remote to be considered.As the ECJ stated in Michelin[28], if it takes too long to build a new plant for new entry to be relevant, firms that have substantial market shares but are subjected to intense competitive pressures may be held to be dominant.Even if potential competition exists on the supply side, competitors may not be able to enter the market if consumers are locked in to an existing product by the costs of switching, lack of information, contractual commitments, etc.

    Cogent evidence, certifying that entry by competitors is a realistic prospect within a relatively short period of time should the merging firm seek to raise its price or act independently, is necessary for the Commission concludes that an apparently high market share of that merging firm would not support its dominance in the market. In Eridania/Finebieticola[29], a merger that would allow control of a large slice of the Italian sugar market was not opposed because of the presence of effective potential competition from producer outside Italy.In Mannesmann/Vallourec/DMV in 1994, although it is thought that the original recommendation of the Commissioner for Competition was to block the concentration, owing to the oligopolistic dominance that would exist after the concentration in that market, the ultimate decision of the Commission was that it should be cleared because of the argument that imports form Japan and Eastern Europe into Western Europe would act as a sufficient constraint on any post-merger behavior of an anti-competitive nature by the undertaking involved.[30]Mercedes-Benz/Kassbohrer[31] involved a merger between two large bus manufacturers.The merged firm would acquire over 50 percent of the relevant market.Nevertheless the concentration was declared compatible with the Common Market.The decisive element in the Commission's approval was identification of the role of potential competition by non-German European Producers.The Commission collected evidence from German bus operators concerning the likely future importance of competition from outside Germany and concluded that the German market was in the process of opening up to external competition.The Commission also took account of the impact of the EC directives on public procurement, which require EC-wide tendering for many bus contracts.In Alcatel/Telettra[32], there was concern about the Spanish market where Telefonica, the telephone monopoly, brought some 83 percent of some products from the parties.Yet the Commission looked to specific firms outside the Common Market which made similar equipment, and other makers of telephone equipment that were already operating in Spain.Although the public procurement directive was not due to apply in Spain for several years, Telefonica stated that it favored having two sources for each item of equipment and would be willing to buy abroad.The Commission decided, therefore, that the market was contestable and that the proposed transaction would not "create…a dominant position…".After all, Integration challenges existing market power.One factor that will invariably have a bearing on the likelihood of entry is the growth, or rather the prospective growth, of a market.Entry will be more likely in a growing than in a static or declining market if only because it will be easier for an entrant to attract customers without causing a precipitous collapse of prices and profits.In this respect, hard evidence from the recent past will be more persuasive than theoretical analysis.

    Still, considerable controversy surrounds the more particular meaning to be ascribed to the concept of barriers to entry.To some extent, it is a broad idea which embraces almost anything which makes it particularly difficulty for a new undertaking to enter the market.Many are concerned about the possibility that the matter will be characterized as barriers to entry when they are merely indicative of the superior efficiency of the incumbent undertaking.It is not always easy to draw a boundary between legitimate competitive activity and winning by means that are, in some ways, deemed to be unfair or illegitimate.

Other Factors

    Besides the elements of market share, competitors and barriers to entry, other factors in connection with the strength of the undertakings concerned such as financial power[33], economies of scale[34], minimal geographic overlap, the strength of customer base, customer preference, countervailing customer bargaining power, technological advantages, rapid technological evolution, access to supplies or market, portfolio power, product range and structural link with other market operators and even the conduct of the undertakings concerned[35] will also be considered.Many of them may strengthen or otherwise offset a relatively strong position of the merged entity after the notified concentration.

1)Buyer Power

    Retailing buying power exercised, for an example, by the supermarket groups against food manufacturers was mentioned to support a clearance decision in Allied Lyons/HWE-Pedro Domecq, but the strength of brands may nullify the apparently countervailing strength of the retail buyer, as indicated in Nestle/Perrier[36], Coca Cola[37] and Guinness/GrandMet.One sector in which buyer power has been recognized as a prominent factor capable of counter-acting a high market shares is the motor industry, where the Commission has been somewhat relaxed about mergers between automotive component suppliers owing to the power wielded by the major European car manufacturers as described in the decision of Pilkington-Techint/SIV[38].A similar approach has been taken in relation to military products where the customer is a monopoly under the Ministry of Defense subject to the pre-condition that credible alternative suppliers are available.Excess capacity can also be exploited by buyers to restraint a pre-eminent manufacturer or supplier.In some situations the buyer may even be instrumental in introducing a new competitor, or may have the resources to integrate vertically as protection against an apparent strong producer.The possibility of the exercise of buyer power alone, not necessary the actual exercise of such power, is sufficient as an argument for a clearance in a merger notification.The Commission appears reluctantly to prohibit concentrations where the customer could exercise self-help.This is reflected in its clearance decisions in Tractebel/Distrigaz II[39] in 1994 and Ruhrkohle Handel/Raab Karcher Kohle in 1996 respectively.In the latter case, a market share of 75 percent was found not to reflect real market power because the German rules on subsidies to the coal industry left the undertaking with no room to maneuver in setting prices.[40]

2)Financial Power

    The financial power of a merging undertaking is another important factor to be weighed.A number of different parameters, including turnover, profitability and access to finance constitute the economic strength of the undertaking concerned.However, in practice, the Commission pays little attention to this factor but rather just refers this element in its many decisions as a general background.

3)Portfolio Power

    The Commission has identified in a number of merger decisions the risk that the breadth and depth of an undertaking's product range and specifically, a portfolio of strong brands may in itself create or strengthen a dominant position[41].In Ciba-Geigy/Sandoz,[42] the Commission considered whether the merger which would give rise to a new undertaking called Novartis, would create a dominant position in markets which did not yet exist, due to possible foreclosure effects from the merged entity's exclusive access to a number of future patents relating to gene therapies for brain and other tumors.In Guinness/Grand Metropolitan[43], the Commission attributed the increased supplier power, greater pricing flexibility, tying potential and economies of scale and scope in market and distribution to the portfolio effect.

    Regarding the competitive effects resulting from the combination of portfolios of leading brands, the Commission concluded that the inclusion of strong brands in a range of drinks belonging to separate markets could strengthen the value of each brand in that range, and thus, strengthen the position of the brands' owner in each market.In Aerospatiale SNI and Alenia-Aeritalia e Selenia SpA and de Havilland [44], the notified concentration had been blocked partly because of the possible whole-range-coverage effect after the proposed transaction.As the Commission stated:

    "…In practice the advantages of having complete coverage of the market use are only present where airlines have or intend to have a fleet consisting of aircraft in different product markets.According to figures supplied by Fokker, over half of the aircraft sold in the market of 40 seats and above for example are operated in fleets where there are also aircraft of around 30 seats.It appears therefore that at least having a more complete coverage of the market is significant…"[45]

    In determining whether dominance exists, the appeal and range of the related products will always be a relevant factor whether or not an undertaking's strength is dignified with the term of portfolio power. Sometimes foreclosure effects have been the main reasons to vet a series of JVs in a specific sector because of the dominant or very strong positions enjoyed by the JVs in adjacent market.

4)Miscellaneous

    Finally, the Commission's assessment is dynamic and includes potential market trend and technical renovations.The substitutability on the supply side originating from producers of neighboring producers and/or from producers in adjacent geographical markets are also noted and the Commission must not only examine the horizontal aspect but also its vertical impact of the concentration.Article 2 (1) of the ECMR recognizes this, and Form CO requires details to be supplied to enable the Commission to assess the vertical effects of a notified concentration on the same basis as for horizontal effects.Where any member of one merging group has at least 25 percent of a downstream or upstream market in which any member of another merging group operates, detailed market information must be given.

    Competitive structure can be affected by increased vertical integration, and in the strengthening of vertical relationships through a concentration with suppliers or customers formerly linked only by contract.Even in the absence of evident horizontal or vertical effects, concentrations may in certain special circumstances cause competition concerns.These conglomerate or range effects arising from a concentration may also create or reinforced a dominant position prohibited by the ECMR.[46]

Overview

    Proving dominance under the ECMR can be rather difficult, empirical and discretionary for the Commission, since it requires the prediction of future developments form the starting point of a present situation where some of the facts may be clear but others may be controversial.By contrast, when carrying out a similar task in an Article 86 case the Commission has only to look back at how a market has operated in the past.But even in the Article 86 cases,"The position is delicate because conduct which might in reality be competitive may be condemned as abusive under Article 86 if carried on by a firm wrongly held to be dominant.If this happens, Article 86 could have the paradoxical effect of discouraging firms, fearful of being held to be dominant, from competing on the merits."[47] The test applied under the ECMR is based essentially on a combination of economic theory and past experience.The burden of proof is on the Commission whose conclusions are often challenged successfully by the parties to the concentration before the ECJ or criticized precisely by practitioners and scholars within or outside the Community.

 

 

in Mar,2000

注释：

[1]United Brand, Case 27/76, (1978)E.C.R. 207, (1978)1 C.M.L.R. 429

[2]Akzo Chemie BV v. Commission, Case C-62/86, (1991) E.C.R. I-3359, (1993) 5 C.M.L.R. 215

[3]Digital Equipment International and Mannesman KienzleGmbH, (1992) 4 C.M.L.R. M99

[4]French Republic and others v Commission, Case C68/94 and 30/95 (1998) 4 C.M. L.R. 829

[5]Nestle SA and Source Perrier SA, Case IV/M190, (1993) 4 C.M.L.R. M17

[6]Gencor/Lonrho, Case IV/M.619, O.J. (1997), L 11/30

[7]Gencor v. Commission, www.europa.eu.int

[8]Nestle SA and Source Perrier SA, Case IV/M190, (1993) 4 C.M.L.R. M17

[9]France v Commission, Joint Cases C-68/94 and C-30/95 (1998) E.C.R. I-1375, (1998) C.M.L.R. 829

[10] ECMR, (1997)E.C.L.R. 451 , (1997) 5 C.M.L.R. 387

[11]The 10th Competition Policy Report of the Commission, Paragraph 150,

[12]Akzo Chemie BV v. Commission, Case C-62/86, (1991) E.C.R. I-3359, (1993) 5 C.M.L.R. 215

[13] Council Regulation No. 4064/89, Recital 15

[14] Jean-Yves Art and Dirk Van Liedekerke, Developments In EC Competition Law in 1996 - An Overview, (1997) C. M. L. R. 34:895-956, Kluwer Law international, 1997

[15]United Brands, Case 27/76, (1978) ECR 207, (1978) C.M.L.R. 429,

[16]Hoffmann-La Roche and Co. AG v. Commission, Case 85/76, (1979) E.C.R. 461, (1979) C.M.L.R. 211

[17] Commercial Solvents, Case 67/73 and United Brands, Case 27/76, (1978) ECR 207, (1978) C.M.L.R. 429,

[18]Hoffmann-La Roche v. Commission, Case 85/76, (1979) E.C.R. 461, (1979) 3 C.M.L.R. 211

[19]American Cyanamid/Shell, Case IV/M.354, (1993) O.J. C273/6; (1993) 5 C.M.L.R. 312

[20]Digital Equipment International and Mannesman KienzleGmbH, (1992) 4 C.M.L.R. M99

[21]Mannesmann/Hoesch, Case IV/M.222, (1992) O.J. C114/34; (1992) 5 C.M.L.R. 117

[22]Tetra Pak/Alfa-Laval, www.Europe.eu.int

[23]Price Waterhouse/Coopers & Lybrands, (1999) O.J. C56/12

[24]ABB/BREL, www.Europa.eu.int

[25]Renault/Volvo, Case IV/M.004, (1990) O.J. C281, (1994) 4 C.M.L.R. 297

[26]Boeing/McDonnell Douglas, Case IV/M.877, (1997) O.J. C336/16

[27]Aerospatiale SNI and Alenia-Aeritalia e Selenia SpA and de Havilland, Case IV/M53, (1992) 4 C.M.L.R. M2

[28]Michelin, Case 322/81 (1983) E.C.R.3461

[29]Eridania/Finebieticola, Commission Press Release IP (91) 776

[30]Mannesmann/Vallourec/DMV, Case IV/M.315, (1994) O.J. 102/15; (1994) 4 C.M.L.R. 529

[31]Mercedes-Benz/Kassbohrer, Case IV/M.477, (1995) O.J. L211/1

[32]Alcatel/Telettra, Case IV/M.042, (1991) 4 C.M.L.R. 778

[33]United Brands, Case 27/76, (1978) ECR 207, (1978) C.M.L.R. 429,

[34]United Brands, Case 27/76, (1978) ECR 207, (1978) C.M.L.R. 429,

[35]Michelin v. Commission, Case 322/81, (1983) E.C.R. 3461, (1985) C.M.L.R. 282 and United Brand, Case 27/76, (1978)E.C.R. 207, (1978)1 C.M.L.R. 429, 487

[36]Nestle SA and Source Perrier SA, Case IV/M190, (1993) 4 C.M.L.R. M17

[37]Coca Cola v. Commission, Joint Case T-125/97, T-127/97, www.Europa.eu.int

[38]Pilkington/SIV, Case IV/M.358; (1994) O.J. L158/24; (1994) 4 C.M.L.R.413

[39]Tractebel/Distrigaz II, Case IV/M.493. 32(1995) C.M.l.R.,

[40]Ruhrkohle Handel/Raab karcher Kohle, Case IV/ECSC. 1147, (1996) O.J. L 193/42

[41]Coca Cola/Amalgamated, (1997) O.J. L218/15, Coca Cola/Carlsberg(1998) O.J. L145/41

[42]Ciba-Geigy/Sandoz, Case IV/M.737, Competition Policy Newsletter (Summer 1996), 31

[43]Guinness/Grand Metropolitan, (1998) O.J. L.288/24

[44]Aerospatiale/Alenia/De Havilland, Case IV/M.053, (1991) O.J. L334/42; (1992) 4 C.M.L.R. M2

[45]Aerospatiale SNI and Alenia-Aeritalia e Selenia SpA and de Havilland, Case IV/M53, (1992) 4 C.M.L.R. M2

[46] Case IV/M.938; Case IV/M.877

[47]R.Whish, Competition Law, Butterworths, 3rd Edition, 1993, 268