Distinguishing Legitimate Price Competition from Unlawful Exclusionary Behaviour: Reconciling and Rationalising the Case-Law
This paper analyses EU cases on abuse of a dominant position dealing with low cost pricing by a dominant firm to determine: (i) whether they are consistent with each other and the goals underpinning the EU competition laws: (ii) whether any evolution in the case-law can be detected and (iii) what changes can be anticipated in the future and would be desirable to ensure the law’s coherence. In particular, it considers the implications of the judgment of the General Court in Intel which has reignited the debate about the philosophical basis of EU competition law and the question of how ‘abusive’ conduct can or should be identified. The paper concludes that there is a need to rationalise the case law and for the EU Courts to explain more fully the policy underpinning the cases, when it is legitimate to rely on presumptions of illegality in the context of Article 102, how the various types of abuse relate to each other and how case-law under Article 101 can, or should, impact on the development of principles under Article 102. As the Court of Justice will have the opportunity to address many of these issues in the appeal from the General Court’s judgment in Intel, the paper examines some of the important issues which require assessment in that judgment.
Faculty of Law
As two key concepts in the Article 102 framework, competition on the merits and special responsibility suffer from a lack of concretization. As a result, the competition on the merits concept may lead the abuse assessment into an illusion of inherent impropriety, whereas the special responsibility concept is susceptible to expansive interpretations that undermine the pivotal role of dominance in the Article 102 paradigm. These issues are shown in cases concerning exclusive dealing and exclusivity rebates. This article suggests using the as efficient competitor rationale—complemented by the no economic sense rationale—to distinguish competition on the merits and abuse with respect to exclusionary conduct. The distinction can be expressed as “efficiency-based versus non-efficiency-based exclusions”. Nonetheless, the limitations of the as efficient competitor test necessitate some calibrations. To that end and to give content to the special responsibility concept, this article spotlights the notion of minimum efficient scale, which has been somewhat overlooked and mischaracterized in the law enforcement. This concept deserves more appreciation in producing more coherent theories of harm under
Linear Programming in the Allocation of Milk Resources for Cheese Making
Abstract To use linear programming, the cheese making process can be modeled as a resource conversion process. The relationship between input milk resources and output products can be analyzed using mass balance assumptions. The variables used in the linear programming model will represent the pounds of each milk resource chosen to formulate a vat of cheese milk. Additional variables will be used to represent the pounds of cream to be removed from a milk resource that has the potential to have cream removed. Three objectives that could be considered are 1) maximize net returns, 2) maximize cheese yield, or 3) minimize cost. A hypothetical example is used to illustrate how the cheese making process can be modeled. This linear programming model depends on formulas that relate ratio of casein to fat of milk to the fat on the dry basis of the cheese. Sensitivity analysis is performed to determine at what cost a milk resource not in the optimal formulation will replace a milk resource currently in the optimal formulation. The linear programming model can be an effective management tool in the allocation of milk resources for cheese making.