1. Anti-competitive agreements at this moment arethe most serious violation of the antimonopoly law. Most often, they findexpression in the form of anticompetitive agreements.
These relationships areregulated by such law as an anti-competitive law.In the given situation, thelegislation on economic competition is violated.In the principles ofentrepreneurial law and on the real practice, a lot of attention is paid to thefeatures of the legal regime of economic entities that occupy a dominantposition in the market of one or another commodity, since this provision allowsthem to carry out monopolistic activities on the market in both ways,individually and in association with other economic entities.
The position of the economicentity in the market, in which it acquires independence from other economicentities, and the possibility of unilaterally determining the generalconditions for the circulation of goods, is called dominant in theanti-monopoly law.The cartel is one of the forms ofmonopoly – the unification of large enterprises of the same or differentbranches, that maintain commercial and production autonomy, and are organizedfor the purpose of regulating production, ensuring market dominance,controlling prices and making profits because of the monopoly 1.It is possible to recognize acartel in the given situation, as the company gave some requirements to itsdistributor’s companies: the prohibition to give discounts on selling anygoods, a boycott of one of the distributors for his disobedience to actaccording to the wishes of a company. In addition, they should refuse any tradedeals with this distributor. Most of them have accepted these conditions and,and it means that a cartel agreement was formed. The formation of cartelsrestricts competition and turns economic development into a slower process. Thepublic danger of cartels consists in limiting competition by concluding secretand unlawful agreements between competitors aimed at infringing consumerinterests and extracting excess profits from this.Competition law of the EuropeanUnion concerns the regulation of competitive markets in the European Union,especially that corporations will not create cartels and monopolies that wouldor could damage the economic interests of the community.
The history of thisbranch of law is traced to prohibitions on the restriction of freedom of tradein Anglo-Saxon law. It was also formed under the influence of the United Statesexperience (Sherman’s act and Clayton’s law). Nowadays, the European Union’scompetitive law is based on the Articles 101 – 109 of the Treaty on theFunctioning of the European Union, as well as a number of regulations anddirectives.
“Article 82 of the Treatyestablishing the European Community (“Article 82”) prohibits abuse ofa dominant position. According to the case law, it is not illegal for thecompany to be dominant, and such a dominant company still has the right tocompete on the market. However, this company has a particular responsibility toprevent and not to allow a violation genuine undistorted competition in thecommon market by its behavior. “Article 82″ is the legal basis for the mostimportant component of competition policy, and its effective provision helpsthe markets to work better for the benefit of companies, economies, andconsumers. This is particularly important in the context of achieving anintegrated internal market.” 2″Article 82″ applies toenterprises that occupy a dominant position in one or more relevant markets.Such position can be carried out by one enterprise (sole domination) or by twoor more enterprises (collective domination). This document concerns only abusescommitted by a single-dominant enterprise.
Examining the European Union’santi-competitive acts and cartels, we have to distinguish the provisions ofArticle 102 of the TFEU (ex Article 82 EC, ex Article 86 EC), especially:”Any abuse by one or moredominant company within the internal market or in a substantial part of itshould be prohibited as incompatible with the internal market, as this mayaffect trade between the Member States.Such abuse may consist of:(a) directly or indirectly imposeunfair purchase or sale prices, or unfair trading conditions;(b) limiting the production,limiting markets or technical development to the damage of the consumer;(c) the application of variousconditions for equivalent transactions with other parties, thereby placing themat the disadvantage;(d) the conclusion of contractscontaining an obligatory condition for the acceptance by the other parties ofsupplementary obligations which, by their nature or in accordance withcommercial use, are not related to the subject of such contracts. “So, it is obvious that theactions of the company are the same as it is described in the provisions ofparagraphs c and d, and the court may appeal to this article of the law inorder to recognize the company as an offender of anti-competitive legislationand the one that is dominant and is also abuses this position on the market2.Each company or firm that is partof the cartel, preserves financial and production independence.
The points ofthe cartel’s agreement can lead to: price fixing, spheres of influence, termsand conditions of sale, use of patents, regulation of production volumes,agreement about equal conditions for the sale of products, employment ofworkers. Usually these agreements are working within the framework of oneindustry. It can create some difficulties for the normal functioning of themarket mechanisms. In some countries (where cartels are prohibited) it is asubject to anti-monopoly law; in other countries, the creation of cartels isencouraged by the government for the purpose of restructuring the industry,standardizing materials and components, restricting competition between small firms,and is made for economic growth of certain industries. 2.The meaning of a dominantposition is not defined in the EU memorandum. But the definition given by theEU Court in «27/76 United Brands v.
Commission» 1978 case, is given in mostdecisions of the EU Commission and the EU Court of Justice, regarding the applicationof Art. 102 in TFEU: a provision that allows companies to use their economicpotential in order to prevent from effective competition in the market for therelevant goods and services and to act independently from their competitors,customers, and consumers.The ability to act independentlyof competitors, customers and consumers is a characteristic feature of thisconcept. In addition, the EU Commission, the EU Court, for the determining thedominant position, pay particular attention to how effectively certain companyprevents entry into the market of new competitors, the market share of thatcompany, the economic potential and the access to the market capital.To determine whether the companytakes a dominant position, it is necessary to perform four consecutiveobservations and analysis:- establish an appropriate market(goods and services, geographical location);- establish whether this companypermanently owns a major share on this market;- to establish is there a smallchance that the existing or potential competitors will be able to overtakecurrent position of the company;- to establish that the dominantposition exists within the general market or its essential part.
Under the relevant market isunderstood certain products or services, the production or distribution ofwhich provides the company with a dominant position. The main criteria for thedetermining the relevant market are the so-called”interchangeability” test, and courts determine the level to whichgoods or services can be replaced by other goods or services, taking intoaccount their characteristics, prices, and reasons of usage, based on thistest.A market where there is adominant company is often an oligopoly because there is a small number offirms. However, this is an asymmetric oligopoly, because companies are ofdifferent sizes. Usually, the dominant company faces a huge number of smallcompetitors, a so-called competitive environment. Usually, it happens that in acompetitive environment, potential future competitors are present.
In suchcase, this dominant company can be a monopolist facing potential dominants.The dominant company, as amonopolist of the market, usually face a demand curve. However, unlike amonopolist, this dominant company must take into account competing for othersmaller firms in price and output decisions. The company has some competitiveadvantages (for example, lower costs) in comparison with other representativesof the competitive environment. 3.
For understanding how to replacesmartphone on the market, you need to have economic seeing of this market. Agreement on the exclusion ofsales refers to the agreement that the manufacturer provides a specific dealeronly the right to sell the product in a certain area. In an exclusive purchase agreement,the buyer undertakes to buy a particular product from only one specific dealer.The General idea in variousexclusive agreements is to create obligations or incentives, with the resultthat the buyer makes all purchases on a particular market from only one dealer.For the enterprise occupying a dominant position, such mechanisms often have animpact that is harmful to competition, particularly in situations where defacto and potential competitors are unable to fairly compete for the entire demandof an individual customer. The need of the dominant undertaking as anobligatory trading partner may be due to, for example, the preferences of theend users or the bandwidth limitation of other vendors.That is, the exclusive agreementwith the dominant company (in this case, the importer of smartphones) are notprohibited automatically and under all circumstances, but often it is highlylikely that they have the nature of abuse of dominant position, depending onthe context in which they are applied.The notion of a dominant positionin the EU constituent treaty has not been interpreted.
The definition given bythe EU Court in case 27/76 United Brands v. Commission 1978, is given in mostdecisions of the Commission of the EU and the Court of Justice regarding theapplication of Art. 102 DFES: a provision that allows an enterprise to use itseconomic potential in order to hinder effective competition in the market forthe relevant goods and services and to act largely independently ofcompetitors, customers and, finally, consumers.
Considering this situation on themarket and the position of the firm, we can say the following.The firm takes a dominantposition if it has the ability to behave independently of its competitors,customers, suppliers and, ultimately, the final consumer.A dominant company, which ownssuch market power will have the opportunity to set prices above the competitivelevel to sell products of lower quality or to lower the rate of innovationbelow the level that would exist in a competitive market.According to EU competition law,it is not illegal to occupy a dominant position, since a dominant position canbe achieved by legal means of competition, for example, by inventing andselling the best product. Instead of this, competition rules do not allowcompanies to abuse their dominant position 5.The dominant company is thecompany, which has a significant share of this market and it has asignificantly larger market share than its next largest competitor.
Dominantfirms tend to believe that the market share is 40% or more. Dominant firms canraise competition problems when they have the low to set prices on their own.Thus, on the one hand, inaccordance with European norms, this firm does not have a sufficient amount(40% of the national market), but on the other hand, it should be clearinformation about amount of percent, which other companies have, becauseexactly from this factor depends on recognition as a dominant company. 4.In the practice of Europeancountries, it is considered that companies based on freedom (and theiragreements) can freely base their choice on their contracting partners andfreely use their property. This may also imply the possibility of not enteringinto business relations with some participants.
The threshold for imposing asupply obligation is high, since imposing an obligation can weaken theincentives of both the dominant enterprise and competitors to invest andinnovate, which is detrimental to consumersThat is, it turns out, in thecase of a dominant position, the refusal to supply products may take the formof abuse of a dominant position.Refusal of supply usually limitscompetition in situations where the dominant enterprise competes with the buyerin the secondary market, the offer of which it does not accept.The criteria for a prohibitedrefusal of delivery can be met when the dominant enterprise terminatesdeliveries to the client or refuses an agreement with the potential client. Therejection of a proposal may take the form of a direct refusal or an indirectrefusal when such requirements are imposed on pricing or other terms that arealready known that the other party cannot accept them.The termination of deliveries toold customers is more likely to be considered abuse in court practice than thedenial of the opportunity for new distributors. In addition, the right torefuse to provide a new client is usually limited if the company sells the sameproduct to other participants, being in the same legal position.For such situations, it istypical that the dominant employee company in one way or another hinderscompetition, refusing to provide a resource to competitors that are extremelycomplex or uneconomical for the company’s economic performance and which arenecessary to provide a particular product or service.In this case, the most likelysolution to the situation may be the following.
The court considers itadvisable to force the dominant company to offer competitors a resource ofnarrow services classified as a key product (in the above case, smartphones).However, this company even beforethe lawsuits has a chance to get out of the situation in this way and then,even considering its dominant position, it will not be recognized as aconstraint to economic competition in this sector of the economy.It should also be noted thatfailure can eliminate or can eliminate all effective competition with themarket. In this regard, it should be pointed out that it is not enough toidentify the existence of such competition, that competitors of the dominantenterprise remain insignificant in the market in certain narrow segments of themarket. 5. The term “competitiveboundary” appeared in this case from the basic theory of dominant firmpricing.
It is usually believed that the dominant firm sets its price afterattributing a portion of the market to the competitive boundary, which thenaccepts this price as indicated.As in the classical model ofmonopoly, the profit of the cartel is maximized with a decrease in the volumeof sales from the equilibrium level. This volume is the coordinate of theintersection of the marginal revenue curves and marginal costs.The projection of this point onthe price axis determines the optimal price of the cartel, which is above theequilibrium price.
As a result, the cartel agreement is optimal for theparticipants of the cartel, but not optimal for the world economy.It should also be noted that in anumber of cases the positive effects of the cartel may also be highlighted,however, the definition of this is the competence of the court. These effectsare associated with solving the problems of the restructuring of the industry,the standardization of materials and components. In these cases, the creationof cartels can be encouraged. Refferences: 1. “Antimonopoly regulation ofanticompetitive agreements” 2.
Official Journal of the European Union,Communication from the Commission — Guidance on the Commission’s enforcementpriorities in applying Article 82 of the EC Treaty to abusive exclusionaryconduct by dominant undertakings (2009/C 45/02)http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:52009XC0224%2801%29 3. EU Competition Law – Abuse of Dominance(Article 102 TFEU)http://www.uio.no/studier/emner/jus/jus/JUS5310/h12/undervisningsmateriale/abuse_-of_-dominance-_.
pdf 4. Summary of the Judgmenthttp://www.uio.
no/studier/emner/jus/jus/JUS5310/h12/undervisningsmateriale/abuse_-of_-dominance-_.pdf 5. Abuse of a dominant positionhttp://ec.europa.eu/competition/consumers/abuse_en.html