Dominance and monopoly Competition law

the economist s depiction of deadweight loss efficiency monopolies cause

when firms hold large market shares, consumers risk paying higher prices , getting lower quality products compared competitive markets. however, existence of high market share not mean consumers paying excessive prices since threat of new entrants market can restrain high-market-share firm s price increases. competition law not make merely having monopoly illegal, rather abusing power monopoly may confer, instance through exclusionary practices.

first necessary determine whether firm dominant, or whether behaves appreciable extent independently of competitors, customers , of consumer. under eu law, large market shares raise presumption firm dominant, may rebuttable. if firm has dominant position, there special responsibility not allow conduct impair competition on common market. collusive conduct, market shares determined reference particular market in firm , product in question sold. although lists seldom closed, categories of abusive conduct prohibited under country s legislation. instance, limiting production @ shipping port refusing raise expenditure , update technology abusive. tying 1 product sale of can considered abuse too, being restrictive of consumer choice , depriving competitors of outlets. alleged case in microsoft v. commission leading eventual fine of million including windows media player microsoft windows platform. refusal supply facility essential businesses attempting compete use can constitute abuse. 1 example in case involving medical company named commercial solvents. when set own rival in tuberculosis drugs market, commercial solvents forced continue supplying company named zoja raw materials drug. zoja market competitor, without court forcing supply, competition have been eliminated.

forms of abuse relating directly pricing include price exploitation. difficult prove @ point dominant firm s prices become exploitative , category of abuse found. in 1 case however, french funeral service found have demanded exploitative prices, , justified on basis prices of funeral services outside region compared. more tricky issue predatory pricing. practice of dropping prices of product 1 s smaller competitors cannot cover costs , fall out of business. chicago school (economics) considers predatory pricing unlikely. however, in france telecom sa v. commission broadband internet company forced pay million dropping prices below own production costs. had no interest in applying such prices except of eliminating competitors , being cross-subsidized capture lion s share of booming market. 1 last category of pricing abuse price discrimination. example of offering rebates industrial customers export company s sugar, not customers selling goods in same market in.