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Issues
Speech by Commissioner Mario Monti, European Commissioner for
Competition: Policy market definition as a cornerstone of EU competition
policy
Workshop on Market Definition - Helsinki Fair Centre Helsinki, 5
October 2001
DN: SPEECH/01/439
Date: 2001-10-05
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SPEECH/01/439
Speech by Commissioner Mario Monti, European Commissioner for
Competition Policy
"Market definition as a cornerstone of EU Competition Policy"
(Workshop on Market Definition - Helsinki Fair Centre, Helsinki, 5 October
2001)
Ladies and Gentlemen,
Many articles and chapters of antitrust book manuals have been and
remain to be written about market definition for antitrust purposes.
Today, I would like to focus on two aspects of this issue:
- First, I will explain how, in recent years, our increased economic
approach to competition policy has put market definition at the centre
of the process of application of the EU competition rules.
- Secondly, I will devote some time to explain how we define
geographic markets. I believe that I should use this opportunity to
reply to some criticisms that have been formulated, often in the Nordic
countries, with regard to our policy in this area. This follows our
allegedly strict market definitions in the prohibition decision in the
Volvo-Scania merger last year that re-surfaced - not very strongly,
though - after the abandonment two weeks ago of the merger between SEB
and FSB, two leading Swedish Banks.
Introduction: the purpose of market definition
Let me start by saying that, market definition is not an end it itself
but a tool to identify situations where there might be competition
concerns.
As in most other competition jurisdictions around the world, our
competitive analysis focuses on market power. We use market definition and
market shares as an easily available proxy for the measurement of the
market power enjoyed by firms. In effect, the main objective of defining a
market is to identify the competitors of the undertakings concerned by a
particular case that are capable of constraining their behaviour[1].
The necessity of defining markets, and the methodology for doing so,
have been parts of the competition policy of the EU from its inception.
Indeed, the definition of a relevant market has always been a
pre-condition both to assess dominance under Article 82 of the Treaty and
for the evaluation under Article 81(3) of whether a notified agreement
afforded the parties the possibility of eliminating competition. Most of
our current practice and expertise in recent years comes, however, from
the application of the Merger Control Regulation.
The progressive adoption of a more sophisticated economic approach in
the application of the competition law of the European Union has meant,
however, that market definition has come to play an increasingly important
role under Article 81.
For example, very substantial changes have taken place since 1999
concerning the Commission's approach to vertical and horizontal
agreements. At present, in the absence of hardcore restrictions, Article
81 can only be infringed if the parties have some degree of market power
and therefore, its application also requires a proper market definition.
The guidelines on vertical agreements[2], for instance, indicate that
competition concerns can only arise if there is some degree of market
power at the level of the supplier or the buyer or both. Furthermore, the
new block exemption regulation takes the line that vertical agreements
which do not contain hardcore restrictions are generally compatible with
Article 81, where the market share of the supplier or buyer does not
exceed 30%.
The same approach has been taken in both the horizontal guidelines[3]
and the two new block exemption regulations concerning R&D[4]
and specialisation agreements[5],
respectively[6].
In the horizontal guidelines, the market power of the parties to a
co-operation agreement, together with other factors relating to the market
structure, are crucial for the assessment of the likely market impact of
the agreement.
The new regulations also include upper thresholds to the benefit of
automatic exemption: 25% in the R&D Regulation and 20% in the
specialisation block exemption Regulation. Furthermore, the horizontal
guidelines indicate that, for purchasing/selling markets, it is unlikely
that there is market power below 15% market share in any or both markets.
The competition's standards used to define markets will soon be used
beyond the border of competition policy, in the pure regulatory field. In
effect, the draft guidelines on market analysis and the calculation of
significant market power, developed by the Commission as part of the new
telecommunications regulatory package, are built on the Commission's
experience in defining markets in the field of competition law.
The Notice on the definition of the relevant market for the purposes
of Community competition law
This increased relevance of the notion of market power and, therefore,
of the use of market definition as a tool to identify it, were bound to
require from the Commission a clarification of its policy in this area. On
October 1997, anticipating these requests, the Commission adopted a set of
guidelines on the definition of the relevant market for the purposes of
Community competition law, applicable both to mergers and to antitrust
cases under Articles 81 and 82.
By rendering public the procedures that it follows and by indicating
the criteria and evidence upon which it relies, the Commission gave clear
guidance to companies in its 1997 Notice on market definition. This Notice
increased the transparency of Commission policy and reduced compliance
costs for industry. The giving of clear guidance is particularly relevant
in view of the ongoing process of modernisation of the EU antitrust rules,
which increases the need for undertakings to self-assess their compliance
with competition rules.
Basic principles in the Notice on market definition
- The Notice on market definition follows a classical "constrains"
approach. In essence, this is based on the notion that the exercise of
market power can be constrained by demand substitutability, by supply
substitutability and by potential competition.
We look first, and above all, at demand substitutability, that is to
perfect or near perfect substitutes readily available in the geographic
area or in an alternative area, to which consumers or users can actually
switch should the price increase.
In order to measure demand substitution, we use the hypothetical
monopolist test, better known as SSNIP test, as it is referred to in the
US horizontal merger guidelines. For those of you to which these
abbreviations do not say much, as it was my case not long time ago, let me
clarify that SSNIP stands for 'small but significant non-transitory
increase in price'.
The question that this test asks is whether the parties' customers
would switch to readily available substitutes or to suppliers located
elsewhere in response to an hypothetical small (in the range 5%-10%),
permanent relative price increase in the products and areas being
considered. If substitution would be enough to make the price increase
unprofitable, because of the resulting loss of sales, additional
substitutes and areas are included in the relevant market. This
theoretical test allows us to identify a set of products and a geographic
area small enough to allow permanent increases in relative prices that
would be profitable. This set of products or this geographic area is what
we consider a relevant market for antitrust purposes[7].
Supply substitutability is considered then. It refers to producers who
are able to switch production to the relevant products as a response to a
price increase. Supply substitutability is only taken into account when
its effects are equivalent to those of demand substitution in terms of
effectiveness and immediacy. That requires that the alternative producer
has already all of the important assets (fixed inputs and distribution
networks) required. In addition, the Notice says that supply side
substitution should occur "within a period that does not imply a
significant adjustment of existing tangible and intangible assets". In
practice, this means the very short term.
Potential competition is not taken into account for market definition.
Instead competitive constraints coming from potential competition will be
assessed at a later stage of the process to identify market power.
Commission's practice
In practice, the starting hypothesis for our analysis is the market
definition provided by the notifying parties. A substantial part of Form
CO (the notification form for mergers) and Form A/B (the notification form
under Article 81) is devoted to market definition issues. Parties are
asked to define the relevant product and geographic markets and to provide
very detailed additional information to allow the Commission to check that
definition.
This position is contrasted with the experience of the Commission in
the sector as well as with the views of customers and competitors. Both
customers and competitors receive requests for information, sometimes very
detailed, so as to assist the Commission in defining both product and
geographic markets. We are, of course, aware that competitors might be
sometimes tempted to influence the Commission in one or another direction,
but I believe my services have enough experience to be able to distinguish
between objective facts and subjective opinions and are therefore not
unduly influenced in their assessments.
In some cases the parties, as well as competitors or customers, support
their views with econometric analyses that try to show whether correlation
exists between the prices of different products or that try to estimate
cross-elasticity between different products. If data is abundant and
reliable (which is normally the case for mass consumer goods) these
studies can contribute positively to our analysis. They should not
substitute, however, other more traditional aspects of it. As an
economist, I know well the limitations of our discipline!
On the basis of all this information, we are usually in a position to
establish the relevant markets concerned by the operation or, at least,
the few alternative possible relevant markets. In fact, in view of our
limited resources, we define markets only when strictly necessary. In
merger cases, for instance, if none of the conceivable alternative market
definitions for the operation in question give rise to competition
concerns, the question of market definition will normally be left open[8].
Let me conclude this brief tour of the major aspects of market
definition by indicating that before we adopt a final definition that
could lead to a finding of competition concerns, the parties always
receive a copy of our reasoning (in the form of an statement of
objections) and are given the opportunity to reply in writing and orally
to it. I hope this will reassure companies involved in our procedures: the
Commission will not reach a conclusion different from the one of the
parties without fully taking their views into account. In fact, it will
only do so if it has strong evidence and arguments that which its believes
overrides those of the opposing parties.
Relevant Geographic market definition
Let me turn now in more detail to the issue of geographic market
definition.
The Court of Justice states that "the relevant geographic market
comprises the area in which the undertakings concerned are involved in the
supply and demand of the relevant products or services, in which the
conditions of competition are sufficiently homogeneous, and which can be
distinguished from neighbouring geographic areas because, in particular,
conditions of competition are appreciably different in those areas."
In order to identify this area where conditions of competition are
sufficiently homogeneous, the Commission takes different elements into
account. Factors like past evidence of diversion of orders to other areas,
the examination of the customers' current geographic pattern of purchases
and trade flows are, of course, very relevant.
In addition, the nature of demand for the relevant product may in
itself determine the scope of the geographical market. Factors such as
national preferences or preferences for national brands, language, culture
and life style, and the need for a local presence are all important
factors in defining the appropriate relevant geographic market.
Furthermore, barriers and switching costs for companies located in
other areas are also considered. Perhaps the clearest obstacle for a
customer to divert its orders to other areas is the impact of transport
costs and transport restrictions arising from legislation or from the
nature of the relevant products. The physical geographic characteristics
of some countries or regions can have a serious impact on transport costs
and hence on the scope of the geographic market.
Finally, the existence or absence of regulatory barriers (for example,
those arising from public procurement, price regulations, quotas and
tariffs limiting trade or production, technical standards, legal
monopolies, requirements for administrative authorisations, or other
regulations), is very important for geographic market definition. For
instance, in two recently adopted decisions against Deutsche Post and in a
case against the Italian tobacco monopolist adopted in 1998[9], the scope
of the markets was defined as national because entry was impossible in
view of the existence of exclusive rights or fiscal monopolies.
I believe that the fact that the EU is a union of sovereign States
makes geographic market definition far more complex than, for instance, in
the US; where, arguably, issues like market integration,
cultural/linguistic differences, regulatory barriers or national
preferences are not so relevant.
In addition, these differences do not impede the US antitrust agencies
and courts from reaching the conclusion that markets are local. On the
contrary, there are many examples in the US of very narrow geographic
markets[10].
Geographic market definition and small Member States
Some voices, particularly in the Nordic countries, have recently
questioned the way the Commission defines geographic markets because, they
say, it could lead to discrimination towards small Member States.
The criticism could be formulated as follows: when the Commission
defines a national market in a small country it prevents companies from
that country to merge because they would quickly reach dominance in the
national market. This would prevent these companies from reaching the
dimension necessary to compete world-wide. In large Member States such a
problem would not arise because companies could reach the necessary
dimension without approaching the level of dominance.
I believe this criticism is somehow flawed and could have negative
implications. Let me explain why to you.
First of all, let me repeat one important point at this stage. The
Commission's objective in defining geographic markets is simply to
identify the competitive constraints that the companies concerned will
face. When national companies do not face serious competition constraints
from abroad, the market can only be defined as national.
That was the case, for instance in our decision on Volvo-Scania[11],
where we defined national markets for heavy trucks. In addition to
differences of prices with neighbouring countries and legal barriers (the
"crash test"), in this sector; the sale of the product is inherently
linked to the provision of after-sales services (maintenance and overhaul,
spare parts). Therefore, the geographical dimension of the market is not
only determined by the geographic scope of the manufacturing level, but
also by the conditions of competition for the provision of after-sales
services. If such services require a substantial local presence in order
to provide effective and timely support to customers and to maintain close
and frequent contact with them, the geographic market could be narrower
than that indicated on the production side[12].
To give you another example, the Commission has recently imposed a
substantial fine on Michelin[13] for abuse of its dominant position in the
French market, a "large Member State", for replacement tyres for trucks.
Again, we considered that the importance of a distribution and after sales
network across the country pointed towards a national market definition.
Hence, there was nothing exceptional about the market definition in
Volvo-Scania. We used normal market definition standards that supported
the conclusion of the existence of national markets. In view of the strong
position of the parties involved, the result of the analysis was that the
merger would have led to serious competition problems on the relevant
truck and bus markets in the Nordic countries (the parties would have held
almost 90% of the market in Sweden) as well as in Ireland and in the
United Kingdom.
The same criticisms about discrimination towards small Member States
are being made in relation of the abandoned FöreningsSparbanken/SEB[14]
bank merger in Sweden. As you probably know, the parties withdrew their
notification on 19 September last, shortly after a statement of objections
was issued, but before the hearing. I have to say that this course of
action is most unusual -in fact, it is only the second time such a
withdrawal has occurred since the entry into force of the Merger control
regulation (and out of a total of more than 1800 cases notified and of
more than 110 second phase investigations)- because two months remained
for the parties to try to convince the Commission about their approach and
to propose remedies. I believe this opens the door to speculation that
competition concerns might not have been the only reason behind the
withdrawal.
Anyway, I do not see how market definition could be at all an issue in
this case. We defined the market for banking services to households and
SME's as national, mainly because it is unrealistic to assume that
retail-banking customers would go abroad to do their day-to-day banking.
In fact, many national competition authorities, and notably those in the
US[15], have defined even narrower, i.e. local, markets for retail
banking. I want to stress that there was full agreement with the parties
on this part of the analysis.
Let me point out, in relation to this issue, that retail markets tend
to be normally of a local or, at maximum, of a national nature. This is
the case for retail banking, but also for the retail of consumer products
in general. There are several cases involving concentration in the retail
distribution markets where the Commission has taken this line. You will
probably remember the Kesko-Tuko[16] merger, which the Commission examined
at the request of the Finnish authorities, and eventually prohibited. This
is because it would have created a dominant position in the Finnish market
for retail of daily consumer goods. The Commission's prohibition decision
was subsequently confirmed by the Court of First Instance.
By way of comparison, the Commission raised objections to the Generali-
INA[17] transaction in Italy and in the case
Bank Austria-CA[18] in
Austria. In both cases the combined market shares at stake were clearly
below those in this transaction[19].
Returning to the assessment of the FSB-SEB's merger, the position of
the new entity in the Swedish retail banking market would have been
unprecedented in any EEA country, even among small economies. The parties
would have had significantly higher combined market shares than the
respective market leaders in the other more concentrated markets,
including Finland, Norway and Denmark.
I do not see, therefore, how Volvo-Scania or FSB-SEB could be presented
as examples of cases where the Commission discriminated against small
Member States. We applied to these cases the same criteria that we
normally apply, in the interest of preserving healthy competition.
It cannot be argued, either, that the Commission is biased when
defining geographic markets. We approach this exercise with an open mind,
without a preference for any particular outcome.
We have done some research on our merger decisions adopted over the
last 5 years in order to see whether any bias could be found. Out of 1295
decisions, in 184 (14.2%) markets were defined as national. In 187
(14.4%), markets were wider than national. In the remaining 924 (71.4%)
the scope of markets was left open, because competition concerns would not
arise under any alternative definition (either EEA-wide, regional or
national).
When the same exercise is repeated, this time looking only at cases
involving companies from Nordic countries, the results show a somewhat
larger predominance of 'wider than national' markets. Thus, in 24 out of
228 decisions (10.5%), markets were considered national. Wider than
national markets were found in a further 30 (13.2%) and markets were left
open in the remaining 174 (76.34%).
Of course, the majority of these cases are positive decisions adopted
in first phase. It could be argued that the proportion of narrow markets
would exceed wider markets in in-depth second phase investigations, i.e.
cases were serious doubts were raised. We have looked into second phase
investigations involving Nordic companies since 1996. Again it is
difficult to find any bias. In fact, in 6 out 12 cases serious doubts were
raised in at least one market defined as either "regional" (often covering
the entire Nordic area) or "EEA-wide". In the remaining 6, only national
markets were considered.
I hope you are now convinced that we do not have any particular
prejudice in favour of narrow market definitions in small countries and
that we, in fact, apply the same criteria all across the Union. Some of
our critics, however, believe that it is precisely the fact that we apply
the same rules everywhere that discriminates against companies from small
Member States by preventing them from merging domestically. As Mr
Persson[20], the Swedish Prime Minister, recently said
"the present rules
are disadvantageous to us since we tend to dominate our market fraction to
such a great extent". He added "there is a structural error in the EU's
competition rules".
This way of thinking seems to imply that companies can only acquire the
necessary dimension by dominating their national market. I believe
companies in small Member States have many other means to grow and become
competitive worldwide than a merger with another leading company from the
same Member State that would create competition concerns.
- First, they can grow internally. Our rules do not oppose that a company
becomes dominant in its own national market when it reaches such a
position by offering lower prices or better products and services than its
competitors. There are plenty of examples of successful international
companies from small Member States that have followed this path. Being
today in Finland, I should express my admiration for companies such as
Nokia or the paper industry, which by producing very competitive products
have become worldwide leaders.
- Secondly, companies can expand by merging with companies that operate
in other countries. The Volvo-Renault[21] operation and the strategic
partnership concluded between Scania and Volkswagen, following the
prohibition of the Volvo-Scania merger, clearly show that there were
alternative ways for these companies and less harmful for competition than
a merger of two big domestic players.
- Finally, domestic mergers are not totally excluded. We approve them
when they do not lead to excessively high market shares or, even in cases
of relatively high market shares, when the market in question is open
enough. In some of these cases, we would ask the parties to give adequate
remedies, to ensure that, if the new entity were to raise prices,
competitors from abroad would have incentives and not face strong
difficulties to enter the market. A good example of this was the
Neste-IVO[22] case relating to electricity. Some other mergers between
companies from different Nordic countries where we accepted high market
shares are Enso/Stora[23], relating to the paper industry or even
Telia/Telenor[24],
which was cleared by the Commission; but that, in the end, did not
materialise for other reasons.
Other implications of this type of criticism are more worrying. Merger
control is about protecting the competitive process in the market and
thereby aims at ensuring consumers a sufficient choice of products at
competitive prices. By preventing a merger from creating a dominant
position in a small country the Commission protects the customers who live
there.
I believe that consumers deserve a high degree of protection from
dominant suppliers irrespective of the size of the country. If we were to
approve mergers that create national champions in small markets even if
they implied the creation or strengthening of dominant positions, as our
critics seem to suggest, we would be guilty of serious discrimination. We
would, indeed, be discriminating against customers of small Member States,
who would eventually suffer from higher prices and lower quality.
Moreover, I fail to see in which way the creation of a company with
significant domestic market power will bring any benefit to the economy of
that country. Indeed, experience shows that companies that are successful
abroad are, in most cases, those facing a competitive environment back
home. They are trained to be competitive and, therefore, are better
prepared to enter new markets. I am sure that Volvo and Scania became
worldwide leaders, in part thanks to their healthy face-to-face
competition in Sweden.
Effects of EU legislation on market definition
In addition to all these reflections, let me say that market
definitions are not immutable and that they can change in time.
The opening up to competition of markets as a result of EU
liberalisation efforts or harmonisation resulting from EU harmonisation
directives will normally result in the widening of the scope of markets at
some point in time.
The telecommunications sector is a very good example of the above as
regards both equipment and services.
As regards equipment, markets were defined as national in early merger
cases[25]. However, today, several years after liberalisation of the
equipment market, many parts of this industry are being assessed on the
basis of cross-border markets that may be regional, EU-wide or even
worldwide[26].
As regards services, while most telecommunication service markets have
traditionally been defined as national, deregulation has opened up
markets. Provided that the introduction of new technology provides the
customer with an effective opportunity to source such services in an area
that is wider than national, the Commission will accept that the relevant
antitrust market is indeed wider than the traditional national service
markets.
Examples can be found in AOL/Time Warner[27] where the markets for
on-line music delivery was found to be at least EEA wide and in Vodafone Airtouch-Mannesmann[28], where an emerging market for pan-European
seamless mobile telephony services to multinational companies was found.
The widening of markets, resulting basically from EU legislative
action, can also be found in more traditional sectors, like power cables
and in steel tubes.
The Pirelli-BICC[29], case illustrates the result of a process where
deregulation and harmonisation of the power supply industry has
effectively led to a widening of the relevant antitrust markets. In this
case, the market was indeed confirmed to be EEA-wide because customers
increasingly source power cables at a European level on the basis of the
procedures provided for in the Community public procurement directives.
This case contrasted with earlier cases involving the same industry. In
1992, markets were still considered to be national in scope. In 1998 a
transition was recognised, but the assessment was still made at the
national level. It may be of interest to note that when such a transition
is detected on the basis of evidence submitted by the parties (or
elsewhere found in the investigation), the Commission will normally still
assess the market as national, but may be less concerned with moderately
high market shares.
Regarding steel tubes, in the Mannesmann/Hoesch[30] merger case, the
market for certain steel tubes used in various industrial applications was
defined as national in scope (Germany). Despite high degrees of
concentration, the merger was still cleared, inter alia, with reference to
ongoing trends towards a transition to a wider market (partly owing to
European procurement directives). These trends have subsequently been
confirmed in other cases[31] that were assessed on the basis of EEA-wide
or even worldwide markets[32].
I would like to make a final couple of points about the effects of
market integration in the EU. First, the faster barriers fall and markets
become integrated, the easier it will be for companies from small Member
States to consolidate, even domestically, without infringing competition
rules. However, until dependable data confirms that the process of
widening is truly underway, competition analysis must base itself on the
observable facts, not on wishful thinking. This essentially means that
large companies in small markets should have a strategic interest in
promoting the opening up of markets, rather than, as has often been the
tendency in the past, protecting entrenched positions.
Secondly, it is possible that restrictions of competition having as
their object or effect the partitioning of the internal market, narrow a
market that would otherwise be EEA-wide. That was the situation in the
JCB[33] case, where JCB took active measures to ensure absolute
territorial protection in exclusive territories. Another example is that
of measures intended to impede that foreigners buy cars in given countries
where they are cheaper. In Volkswagen I[34] and in
Opel Nederland[35]
national markets were considered, in particular, because the practices
were aimed at impeding cross-border sales.
Conclusion
To conclude, let me simply recall that market definition is a
cornerstone of competition policy, but not the entire building. Market
definition is a tool for the competitive assessment, not a substitute for
it. What is ultimately important is to understand the nature of the
competitive situation facing the firms involved in a certain practice or
in a proposed merger. The market definition is a first - and very
important - step in the analysis.
I hope my presentation has shed some light on how the Commission
performs this step. I will be satisfied if I have managed to convey to you
the idea that we do not have prejudices in relation to market definition,
but that we approach each case with an open mind. We do not discriminate
against companies in small and large member States. Our objective is to
protect consumers everywhere.
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[1] See Commission Notice on the definition of the relevant market for
the purposes of Community competition law. OJ n°C 372 of 9/12/1997.
[2] Commission Notice-Guidelines on Vertical Restraints. OJ n° C 291/1
of 13.10.2000.
[3] Guidelines on the applicability of Article 81 of the EC Treaty to
horizontal cooperation agreements. OJ n° C 3/2 of 06.01.01.
[4] Commission Regulation (EC) No 2659/2000 of 29 November 2000 on the
application of Article 81(3) of the Treaty to categories of research and
development agreements. OJ n° L 304/7 of 05/12/2000.
[5] Commission Regulation (EC) No 2658/2000 of 29 November 2000 on the
application of Article 81(3) of the Treaty to categories of specialisation
agreements. OJ n° L 304/3 of 05/12/2000.
[6] The same line was taken in the Notice on agreements of minor
importance which do not fall under Article 85(1)[now Article 81(1] of the
Treaty establishing the European Community. OJ n° C372 of 09.12.7997.
[7] The SSNIP test has limitations. We are for instance aware of the
cellophane fallacy-type of situation, under which a monopolist sets prices
at such a level that any further increase, would be unprofitable. The
application of the SSNIP test in that case would look as if the
theoretical price increase was not profitable and, hence, will lead to
overly wide markets being defined and to market shares that understate the
firms real market power. The Notice recognises that risk, in particular
for cases concerning abuses of a dominant position under Article 82. Thus,
prices other than prevailing market prices could be taken into account
when considering the SSNIP.
[8] That would particularly be the case when there are no affected
markets, meaning that either the combined market shares is below 15% or
that no party has a market share exceeding 25% in a vertically related or
conglomerate market.
[9] AAMS. Commission Decision of 17.6.98 relating to a proceeding
pursuant to Article 82 (ex Article 86) of the EC Treaty. OJ L252/47 of
12.9.98.Deutsche Post AG. Commission decision of 20.03.2001 relating to a
proceeding under Article 82 of the EC Treaty (case Comp/35.141). OJ
L125/27 of 5.5.2001.Deutsche Post AG - British Post Office . Commission
decision of 25.07.2001 relating to a proceeding under Article 82 of the EC
Treaty (case Comp/36.915).
[10] To name just a few: in the case Fair Allocation System Inc the FTC
decided upon a geographical market comprising only eastern Washington,
Idaho and western Montana. In the case Dairy Farmers of America Sodiaal,
the market was defined as the sales of branded stick and branded whipped
butter in the Philadelphia and New York metropolitan areas. In the Brown
Shoe case the relevant geographic markets were defined as every city with
a population exceeding 10,000 and its immediate contiguous surrounding
territory in which [both parties] sold shoes to retail through stores they
either owned or controlled. In the case Aspen Ski Company v. Aspen
Highland Skiing, the Supreme Court defined a market for skiing services in
Aspen, Colorado. Frozen dessert pie manufacturing in Utah or motion
picture exhibition in Texas are additional examples of very narrow markets
in the US.
[11] Case n° COMP/M.1672 Volvo-Scania. Commission decision of
15.03.2000 under Article 8(3) of Regulation (EEC) n° 4064/89.
[12] An additional example of the above can be found in the
Metso-Svedala case, where national markets were found to exist for A&C
products.
[13] Commission decision of 20.06.2001 relating to a proceeding
pursuant to Article 82 of the EC Treaty (case n° COMP/36.041 Michelin PO).
[14] Case COMP/M.2380. See press release IP/01/1290 of 19.09.2001.
[15] The Chittenden Corp. -- Vermont Finantial Services (see DOJs press
release of 12.05.1999) and the Firstar Corp Bancorp Inc. (see DOJs press
release of 05.02.2001) are good examples of local banking markets being
defined.
[16] Case n° COMP/M.784 KESKO-TUKO; Commission decisions of 20.11.1996
under Article 8(3) and of 19.02.1997 under Article 8(4) of Regulation
(EEC) n° 4064/89.
[17] Case n° COMP/M.1712 Generali-INA. Commission decision of
12.01.2000 under Article 6(2) of Regulation (EEC) n° 4064/89. The parties
would have reached between 30 and 40% of the Italian life insurance
market.
[18] Case n° COMP/M.873 Bank Austria-CA. Commission decision of
11.03.1997 under Article 6(2) of Regulation (EEC) n° 4064/89.
[19] In the UK, the authorities prohibited the Lloyds-Abbey National
merger on the basis of market shares in the current account market of 27%.
[20] Quoted in Dagens Industri on 20 Sept 2001.
[21] Case n° COMP/M.1980 Volvo-Renault VI. Commission decision of
01.09.2000 under Article 6(2) of Regulation (EEC) n° 4064/89.
[22] Case n° COMP/M.931 Neste-IVO. Commission decision of 02.06.1998
under Article 6(2) of Regulation (EEC) n° 4064/89. IVO had between 60-70%
of the Finnish electricity market and its leading position in this market
could have been strengthened by the operation because Neste held joint
control over the natural gas monopoly in Finland. The operation was
cleared after the parties accepted to relinquish such a controlling
position.
[23] Case n° COMP/M.1225 Enso-Stora. Commission decision of 25.11.1998
under Article 8(2) of Regulation (EEC) n° 4064/89. The new entity would
have achieved more than 60% of the EEA liquid packaging board market, but
the operation was cleared mainly in view of the existing countervailing
buyer power.
[24] Case n° COMP/M.1439 Telia-Telenor Commission decision of
13.10.1999 under Article 8(2) of Regulation (EEC) n° 4064/89. The two
parties to the operation where the former monopolists in the
telecommunication markets in Sweden and Norway respectively. The operation
would have strengthened the respective dominant positions of the parties.
It could have been cleared only after the parties agreed to open their
respective markets (inter alia, by unbundling the local loop).
[25] For instance cases M.42 - Alcatel/Telettra (Spain), decision of
April 1991 and M.468 - Siemens/Italtel (Italy, decision in February 1995).
[26] Examples include M.2056 involving Sonera, the Finnish TO, decision
in August 2000 (see also M.1880 - Minesota Mining/Quante and M.1908 -
Alcatel/Newbridge Networks, both decided in 2000).
[27] Case n° COMP/M.1845 America On Line Time Warner. Commission
decision of 11.10.2000 under Article 8(2) of Regulation (EEC) n° 4064/89.
[28] Case n° COMP/M.1795 Vodafone Airtouch-Mannesmann. Commission
decision of 12.04.2000 under Article 6(2) of Regulation (EEC) n° 4064/89.
[29] Case n° COMP/M.1882 Pirelli-BICC. Commission decision of
19.07.2000 under Article 8(2) of Regulation (EEC) n° 4064/89.
[30] Case n° COMP/M.222 Mannesmann-Hoesch. Commission decision of
12.11.1992 under Article 8(2) of Regulation (EEC) n° 4064/89.
[31] British Steel/Europipe and Salzgitter/ Mannesmanröhrenwerken.
[32] However, the existence of harmonisation directives may not be
sufficient in itself to define EEA-wide markets if other elements point to
narrower markets. That was the situation in Smith & Nephew + Beiersdor, a
joint venture to be active in certain medical supplies. In that case, the
implementation of the Medical Device Directive was not sufficient to
consider EEA-wide markets because of the existence of some national
specifications, price differences between Member States, discrepancies in
market shares and national sourcing of supplies.
[33] JCB. Commission decision of 21.12.2000 relating to a proceeding
pursuant to Article 81 of the EC Treaty (case Comp/35.918). Fine imposed:
million € 39.6.
[34] Volkswagen. Commission Decision of 28.1.98 relating to a
proceeding pursuant to Article 81 (ex Article 85) of the EC Treaty. OJ
L124/60 of 25.4.98. Fine imposed: million € 90.
[35] Opel Nederland. Commission decision of 20.09.2000 relating to a
proceeding pursuant to Article 81 of the EC Treaty (case Comp/36.653).
Fine imposed: million € 43.
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