183 / 473
NEWSLETTER 2013
170
Elimination of Effective Competition in Downstream Market.
Once the objective necessity of the input in the downstream market is
established, it should be considered whether a dominant undertaking’s
refusal to supply is liable to eliminate, immediately or over time, effective
competition in the downstream market.
The term “downstream market” is used to refer to the market for
which the refused input is needed in order to manufacture a product or
provide a service.
The likelihood of effective competition being eliminated is generally
greater the higher the market share of the dominant undertaking in
the downstream market. The less capacity-constrained the dominant
undertaking is relative to competitors in the downstream market, the
closer the substitutability between the dominant undertaking’s output
and that of its competitors in the downstream market, the greater the
proportion of competitors in the downstream market that are affected, and
the more likely it is that the demand that could be served by the foreclosed
competitors would be diverted away from them to the advantage of the
dominant undertaking.
Consumer Harm.
In evaluating the likely impact of a refusal to supply
on consumer welfare, it should be examined whether, for consumers,
the likely negative consequences of the refusal to supply in the relevant
market outweigh over time the negative consequences of imposing an
obligation to supply. For instance, it is considered that consumer harm
may arise where the competitors that the dominant undertaking forecloses
are, as a result of the refusal, prevented from bringing innovative goods
or services to market and/or where follow-on innovation is likely to
be stifled. Similarly, it is also considered that a refusal to supply may
lead to consumer harm where the price in the upstream input market is
regulated, the price in the downstream market is not regulated and the
dominant undertaking, by excluding competitors on the downstream
market through a refusal to supply, is able to extract more profits in the
unregulated downstream market than it would otherwise.
Efficiency Grounds.
Even though the above-stated three conditions
are fulfilled, the Board will consider the claims put forward by the
dominant undertaking that its conduct is justified and if the Board