CAPACITY BUILDING – INDIA; ABUSE OF DOMINANCE Eleanor M. Fox Professor, New York University School of Law CUTS-CIRC New Delhi 18 Jan 06

OUTLINE THE CHALLENGES OF CAPACITY BUILDING Commitment, infrastructure, tasks, priorities, strategies TAKING A PERSPECTIVE ON SUBSTANTIVE LAW What is harm to competition Abuse of dominance The example of Microsoft

I. THE CHALLENGES OF CAPACITY BUILDING Belief in the market, unfettered by power Resources Structure, infrastructure Autonomy to do what is right for competition and consumers Knowledge and skills Procedural and substantive Outreach:inward and outward, nation+world

Priorities and Strategies For India – much “low-lying” fruit What initiatives will make the most difference; clearest gains to consumers Cartels Mergers Monopolistic abuses Careful choices, as examples Most gains, most credibility, least backlash

Choices for India Advocacy, autonomy Following thru studies Trucking Cement + steel Telecom, Mfg. Are there cartels? Also check timber, tires, pharmaceutical Trade associations Forum for cartels? Big mergers, acq. Airlines Cement Running shoes Acqs. in course of privatizations Abuse of dominance

II. SUBSTANTIVE LAW: ABUSE OF DOMINANCE Abuse of dominance as a touchstone for defining what is harm to competition Protecting competitors versus protecting competition Leveling the playing field v. letting hard competition play its course Mandate not to protect firms from competition itself Examples from U.S.

What is harm to competition? Does the law protect competition process or does it intervene only to prevent lessening of aggregate consumer surplus (or, output limitation) Nations have choices of presumptions US – presumes markets are efficient; errs on side of non-intervention EU – presumes market access is efficient

Microsoft as example The US case – conduct that did not make sense except to destroy challenges to Microsoft’s OS; IP Europe -

Duties to Deal, Bundling: US IP cases – no duty to license, except in rare circumstances – Intel Duty to deal – telecoms Verizon v. Trinko – no duty to aid rival Bundling – Microsoft Browser + operating system May be efficient no negative presumption from foreclosure But some acts- no purpose except To harm competition - Microsoft

Duties to deal, bundling: EU IP – a limited duty to deal where access is indispensable, refusal unjustified Microsoft Media player story – bundling Foreclosure limits innovation by rivals Work Group Server story – interoperability Denial of full interoperability limits innovation No IP justification – Microsoft has appealed

Summary on Abuse 1. Competition law should not protect competitors from competition on merits But what is competition on merits? We want efficient, robust competition 2. Is it better to err on side of non- intervention? Or on side of access? 3. For analytical capacity building, Point 1 is more important; point 2 can be decided case by case

CONCLUSIONS The challenges of capacity building A grip on the world