Abuse of dominance: South African experience through an EU lens

1
Abuse of dominanceSouth African experience
through an EU lens

• Richard Whish
• Kings College London
• Ten Year Celebration Competition Conference
• Pretoria, September 2009

2
Abuse of dominance South African experience
through an EU lens

• It is not controversial to say that Article 82
  is controversial
• A review of the law and application of Article 82
  was commenced by the Commission in 2004
• DG COMP Discussion Paper was published in
  December 2005
• This was not a Commission document it was a DG
  COMP document
• This was not draft guidelines on Article 82

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Abuse of dominance South African experience
through an EU lens

• The publication of the Discussion Paper led to
  feverish debate, within the EU and beyond
• Solutions ranged from maintenance of status quo
  to almost the abolition of Article 82
• But between these extremes there was a fair
  degree of consensus

4
Abuse of dominance South African experience
through an EU lens

• Article 82 ought not to be appled simply to
  protect competitors as such
• Article 82 not an area that is suitable for
  formalistic or per se abuses
• Behaviour should be condemned as abusive only
  where the conduct in question could have, or be
  expected to have, a seriously anti-competitive
  effect on the market
• There should be a more economic approach to
  Article 82
• The rules on Article 82 should be administrable

5
Abuse of dominance South African experience
through an EU lens

• The problem is how to operationalise the more
  economic approach
• This is what the Commissions Guidance on
  Enforcement Priorities of February 2009 attempts
  to do
• Note that the Guidance is NOT guidelines on the
  law, but on the cases the Commission is likely to
  take on
• Only the ECJ and the CFI can determine the law
• However the Guidance might influence the future
  direction of the law

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Abuse of dominance South African experience
through an EU lens

• The Commissions Guidance seeks to identify cases
  in which there is a plausible likelihood of harm
  to consumer welfare
• Note in particular paragraph 20, which identifies
  some key factors, for example
• The position of the dominant undertaking
• The conditions on the relevant market
• The position of the dominant undertakings
  competitors
• The position of the customers and input suppliers
• The extent of the allegedly abusive conduct
• Possible evidence of actual exclusion

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Abuse of dominance South African experience
through an EU lens

• The Guidance then looks at further factors that
  might be relevant to effects analysis in the case
  of
• Exclusive purchasing and rebates
• Tying and bundling
• Predation
• Refusals to supply and margin squeeze
• Those paragraphs should be read cumulatively with
  paragraph 20

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Abuse of dominance South African experience
through an EU lens

• The EU/US debate
• What is South Africa to make of the debate?
• How wide is the Atlantic?
• Not as wide as some people suggest!
• Four particular points
• Public/private enforcement too much
  unmeritorious litigation in the US leads courts
  to adopt stricter rules
• Differences in the two economies explain
  different emphasis NB in particular significant
  state involvement in the EU, followed by
  privatisation/demonopolisation and the need for
  effective anti-monopoly rules
• US courts deference to sector-specific
  regulators reluctance to allow antitrust to be
  used to second guess the regulators answer
  (Verizon, Pacific Bell)
• Bush/Obama

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Abuse of dominance South African experience
through an EU lens

• The competition authorities in South Africa
  should carry on doing what they have been doing,
  which I understand to be
• Be aware of the trends in policy in the EU, US
  and elsewhere on unilateral behaviour
• Continue to participate in international fora
  such as the ICN
• Apply the South African Competition Act as was
  intended by the SA legislature to the specific
  circumstances of the SA economy, drawing on
  international experience as may be appropriate