Dominant position
Dominant position in the European Union Law
Concept of Dominant position provided by the “Glossary of terms used in EU competition policy” (Antitrust and control of concentrations, published in 2002): A firm is in a dominant position if it has the ability to behave inde-pendently of its competitors, customers, suppliers and, ultimately, the final consumer. A dominant firm holding such market power would have the ability to set prices above the competitive level, to sell products of an inferior quality or to reduce its rate of innovation below the level that would exist in a competitive market. Under EU competition law, it is not illegal to hold a dominant position, since a dominant position can be obtained by legitimate means of competi-tion, for example, by inventing and selling a better product. Instead, competition rules do not allow companies to () abuse their dominant position. The European merger control system ( Merger control procedure) differs from this principle, in so far as it prohibits merged entities from obtaining or strengthening a dominant position by way of the merger.
A dominant position may also be enjoyed jointly by two or more independent economic entities united by economic links in a specific market. This situation is called collective (or joint or oligopolistic) dominance. As the Court has ruled in the Gencor judgment, there is no reason, in legal or economic terms, to exclude from the notion of economic links the relationship of interdependence existing between the parties to a tight oligopoly within which those parties are in a position to anticipate each one another's behaviour and are therefore strongly encouraged to align their conduct in the market.
(See: Article 82 of the EC Treaty and Article 2(3) of the merger regulation; on collective dominance see also: Commission Decision No 97/26/EC of 24.4.1996 in Case IV/M.619 Gencor/Lonrho (OJ L 11, 14.1.1997, p. 30) and judgment of the Court of First Instance of 25.3.1999 in Case T-102/96 Gencor Ltd v Commission [1999] ECR, p. II-0753.)
Resources
See also
- Collusion
- Oligopoly