1. ICN Annual Conference UCWG: Panel on Dominance and State Created Monopolies 30 May 2007 Emil Paulis DG Competition

2. 30 May 20072 Overview of presentation 1. Merits of legal presumptions and market share thresholds in dominance assessment: - Dominance thresholds - Dominance thresholds - Safe harbors - Safe harbors 2. Finding the right intervention level: - Dominance or below? - Can conduct be relevant in finding on a dominant position? 3. Competition authorities’ role in liberalisation: - Contributions through enforcement - Contributions through advocacy activities

3. 30 May 20073 Dominance presumptions EC approach: EC approach: Dominance/SMP = ability toDominance/SMP = ability to profitably raise prices above the competitive level Market shares (MS) are first useful indication. Market shares (MS) are first useful indication. But MS alone do not determine whether there is dominance. But MS alone do not determine whether there is dominance. Focus of the assessment is on competitive contraints. Focus of the assessment is on competitive contraints. Therefore: dominance presumptions based on MS have to be used with caution. Therefore: dominance presumptions based on MS have to be used with caution.

4. 30 May 20074 Safe harbours Market share thresholds in the form of Market share thresholds in the form of safe harbours can enhance legal security. They help companies in assessing their market position and the likelihood of agency intervention. They help companies in assessing their market position and the likelihood of agency intervention. However, an individual assessment is always required. However, an individual assessment is always required. Legal presumptions should be thus be rebuttable. Legal presumptions should be thus be rebuttable.

5. 30 May 20075 Intervention levels (I) EC law: Dominance triggers the Commission's competence: below that threshold, Article 82 EC- Treaty does not apply. EC law: Dominance triggers the Commission's competence: below that threshold, Article 82 EC- Treaty does not apply. ICN report: Dominance as a filter for intervention against specific anti-competitive conduct. ICN report: Dominance as a filter for intervention against specific anti-competitive conduct. Should dominance be a prerequisite for the finding of an abuse? Should dominance be a prerequisite for the finding of an abuse?

6. 30 May 20076 Intervention levels (II) EC law calls for a two-step approach (this also facilitates self-assessment by companies). Question raised during the Article 82 review: To what extent can evidence of successful exclusionary conduct over an extended period of time be taken into account for finding dominance?To what extent can evidence of successful exclusionary conduct over an extended period of time be taken into account for finding dominance? DG COMP approach:DG COMP approach: Conduct may be relevant but caution is applied to avoid circular arguments. Conduct may be relevant but caution is applied to avoid circular arguments. Basic definition of dominance remains the ability of an undertaking to profitably raise prices. Basic definition of dominance remains the ability of an undertaking to profitably raise prices.

7. 30 May 20077 Competition authorities’ role in liberalisation (I) ICN report: Agencies play important role in ensuring a competitive environment. ICN report: Agencies play important role in ensuring a competitive environment. Participation in the liberalisation process provides opportunity to shape the competitive market conditions. Participation in the liberalisation process provides opportunity to shape the competitive market conditions. Early involvement of agencies is fundamental to avoid complex post-liberalisation competition problems. Early involvement of agencies is fundamental to avoid complex post-liberalisation competition problems. Relevant ministries and sector regulators should become more familiar with competition issues. Relevant ministries and sector regulators should become more familiar with competition issues. Useful tool in this respect: OECD toolkit for competition assessment. Useful tool in this respect: OECD toolkit for competition assessment.

8. 30 May 20078 Competition authorities’ role in liberalisation (II) DG COMP has successfully supported the liberalisation process in the EU in several industries. DG COMP has successfully supported the liberalisation process in the EU in several industries. Two important tools are applied to achieve this aim: Two important tools are applied to achieve this aim: Advocacy: take competition effects into account ex ante, when designing or reviewing EC legislation on liberalisation.Advocacy: take competition effects into account ex ante, when designing or reviewing EC legislation on liberalisation. Competition law enforcement (in particular in the area of abuse of dominance, but also state aid and merger rules).Competition law enforcement (in particular in the area of abuse of dominance, but also state aid and merger rules). Examples: i.e. telecom sector or air transport sector. New challenge: energy sector! Examples: i.e. telecom sector or air transport sector. New challenge: energy sector! Sometimes enforcement activities (even pending ones) may enhance market opening or accelerate the effect of the relevant legislation on liberalisation. Sometimes enforcement activities (even pending ones) may enhance market opening or accelerate the effect of the relevant legislation on liberalisation.