When defining the relevant market for the purpose of applying Article 86 of the Treaty, the competitive conditions and the structure of supply and demand on the market are relevant criteria for determining whether certain products are interchangeable with others. Application of Article 86 presupposes a link between the dominant position and the alleged abusive conduct, which is normally not present where conduct on a market distinct from the dominated market produces effects on that distinct market. In the case of distinct, but associated, markets, application of Article 86 to conduct found on the associated, non-dominated, market and having effects on that associated market can only be justified by special circumstances. An undertaking which enjoys a quasi-monopoly on certain markets and a leading position on distinct, though closely associated, markets is placed in a situation comparable to that of holding a dominant position on those markets as a whole. Conduct by such an undertaking on those distinct markets which is alleged to be abusive may therefore be covered by Article 86 of the Treaty without any need to show that it is dominant on them. The list of abusive practices set out in the second paragraph of Article 86 of the Treaty is not exhaustive. Consequently, even where tied sales of two products are in accordance with commercial usage or there is a natural link between the two products in question, such sales may still constitute abuse within the meaning of Article 86 unless they are objectively justified. When determining whether an undertaking has practised predatory pricing for the purposes of applying Article 86 of the Treaty, a distinction must be drawn between prices below average variable costs, which must always be considered abusive, and prices below average total costs but above average variable costs, which are only to be considered abusive if an intention to eliminate can be shown. It would not be appropriate to require in addition, in order to categorize its pricing as predatory, proof that the undertaking concerned had a realistic chance of recouping its losses. It must be possible to penalize predatory pricing whenever there is a risk that competitors will be eliminated.
Citations:
C-333/94, [1997] 4 CMLR 662, [1996] EUECJ C-333/94P
Links:
Jurisdiction:
European
Cited by:
Cited – Carter Holt Harvey Building Products Group Ltd v The Commerce Commission PC 14-Jul-2004
(New Zealand) The company had been found guilty under the Act of abusing its dominant position. The appeal was restricted to whether the dominant position was being used in the way suggested. Would the company have introduced its price cuts if it . .
Lists of cited by and citing cases may be incomplete.
Commercial
Updated: 03 June 2022; Ref: scu.161482
