Page 62 - Azerbaijan State University of Economics

STUDYING OF SPECIAL PRACTICAL ISSUES OF ABUSE OF DOMINANCE

cases. There are, however, two special considerations in abuse of dominance

cases. First, as in defining relevant markets, assessment of barriers to entry
should take into account the theory of the case. Barriers that would be

ineffective if prices were raised higher than prevailing levels may still be

relevant in assessing exclusionary practices that prevent prices from falling
below current levels.

Second, the conduct being investigated can in some cases be the most
significant barrier to entry. The ability of firms to deter entry through

behavioral as opposed to structural barriers is increasingly recognized
[Ordover and Saloner,1989]. Such entry-deterring conduct includes

predatory pricing, exclusionary contractual provisions, tying requirements,

and use of fighting brands. Thus valid cases of abuse may sometimes involve
markets in which there are few barriers in the more traditional, structural

sense of specialized physical assets. Of course, traditional structural barriers
in a market would reinforce concerns about the potential anticompetitive
effects of restrictive business practices.

Identifying and investigating abuses. Two broad types of business
conduct have traditionally been recognized as abusive by competition laws

and enforcement agencies:
- Exploitative abuses, in which a firm takes advantage of its market

power by charging excessively high prices to its customers, discriminating

among customers, paying low prices to suppliers, or through related
practices.

- Exclusionary abuses, in which a firm attempts to suppress
competition - for example, by refusing to deal with a competitor, raising

competitors’ costs of entering a market, or charging predatory prices.
These practices are abusive when put in place by a dominant firm

because the market does not offer alternatives for consumers. However, when

61