What Is Abuse of Dominant Position

With the aim to protect competition the Antimonopoly Office of the Slovak Republic also intervenes against undertakings which abuse their dominant position. The purpose is to prevent the dominant undertakings from abusing their strong market position and the Office focuses on those kinds of conduct which are most harmful to consumers. Abuse of dominance cases must be therefore built on so the called “theory of harm”, it means on economically logical and consistent explanation of negative impact of the assessed conduct on consumer.

Precondition for the procedure under the Act on Protection of Competition is to prove the existence of a dominant position on the relevant market. We may talk about dominant position of an undertaking if the undertaking has a space for independent behaviour in relation to competitors, customers and consumers what enables it to influence the market parameters such as price, outputs, innovations etc. Determining dominance is based on the market share of the undertaking in the relevant market, its development, but also other factors such as market structure, barriers to entry the market and countervailing buying power. It is evident that determination of a dominant position is assessed on case-by-case basis according to the aforementioned characteristics.

Dominant position as such is not prohibited. Undertakings are naturally trying to "win the market" by increasing efficiency, innovations, higher quality and lower prices. However, undertakings must not abuse their dominant position and thus restrict competition pressure and hinder the entry to the market for competitors.

The most frequent forms of abuse of a dominant position

Abuse of dominant position can take several forms. Exclusionary practices are aimed at restriction or exclusion of competitors, for example on liberalized markets the undertakings try to hinder the entry of new players and thus losing the effects of liberalization and competition pressure. Exploitative practices lead to a direct reduction of consumers´ benefit, it means collection of “rent” to consumers´ detriment which the non-dominant firm could not gain. The Act on Protection of Competition (§ 8 par. 2) specifies the most frequent forms of abuse of a dominant position: enforcement of unfair trade conditions, including prices; restriction of production, sale or technological development to the detriment of consumers; refusal to supply; discrimination of other undertakings; tying the conclusion of a contract to various other commitments. A dominant may also try to exclude its competitors from the market by predatory behaviour.

Since it is not possible to list all practices of abuse of a dominant position in the Act on Protection of Competition, list of these practices is only demonstrative. It means that the undertaking could be sanctioned also for the form of abuse of a dominant position which is not explicitly mentioned in the Act on Protection of Competition.
 

Last update: 01.12.2013