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Review of the application of Article 82 - in search of a sound economics
Pražský, Ondřej ; Stuna, Stanislav (advisor) ; Boháček, Martin (referee) ; Zemplinerová, Alena (referee) ; Munková, Jindřiška (referee)
European competition law originated after the end of the Second World War as a part of treaties instrumental to the European integration process and it evolved through secondary law and jurisprudence of the European Court of Justice from an international trade provision into its modern and truly general form. European Commission in it its endeavor to modernize competition law presents a review of the application of Article 82. The goal of the review is to base the policy on a sound economic framework, to aim on effects of abusive conduct rather than on its form and finally to focus mainly on the most important competition problems. This thesis advocates the necessity of an economic analysis while assessing the possible abuse of dominant position in concrete cases and therefore welcomes proclaimed goals of the review. Conversely it criticizes the insufficient fulfillment of these goals, which is in our view, mainly due to misunderstanding of the operation of market mechanism. Economics is in its most generalized form a complex science of purposeful human action. It is therefore not a toolbox, from which one could ad hoc take models or theories in order to assess the abuse of dominant position in real-world cases. This naive approach often leads authorities to make unsound or paradox rulings. We demonstrate the indispensability of correctly understanding the market mechanism in referencing the famous Microsoft case. Industries of the New Economy are characterized by strong network effects and a high portion of fixed costs, which makes the firms often compete "for the market" instead of "on the market". The corollary high market share is not in our view a manifestation of a monopoly position, which could be exploited using monopoly price. Modern economy explains how potential competition forces these highly efficient firms to continuously invest into new technologies and how it pushes down the price of final products. On the other hand, recourse to ad hoc doctrines or non adequate economic models may lead to erroneous assessment of abuse of dominant position.
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