Page 70 - Azerbaijan State University of Economics

STUDYING OF SPECIAL PRACTICAL ISSUES OF ABUSE OF DOMINANCE

another product is purchased (whose price is not regulated) and then set the

price of the bundle to capture all monopoly profits in the regulated good.
Some tie-ins could be used in moderately competitive markets to

exploit consumers. In particular, consumers who have bought a relatively

expensive durable good may have no reasonable choice but to go to the
manufacturer when replacement parts or service is needed - the so-called

lock-in effect. Even when the primary product market is competitive, the
seller might be able to take advantage of consumers who have already

purchased the good and do not have many alternatives for replacement parts.
If future consumers of the good are informed of this practice, however, they

will consider parts prices when they make their original purchase. In this

situation, if the manufacturer also faces competition for the original product,
its ability to exploit locked-in consumers will be reduced if not eliminated.

The competition agency must determine whether the conditions

necessary for anticompetitive lock-in - imperfectly informed consumers,
weak efficiency explanations for the tie-in - exist in sufficient measure to

raise competitive concerns. If, for example, the cost of replacement parts is
substantial in relation to the price of the durable good, as, say, with a motor

car, the replacement parts market would not constitute a properly defined
relevant market. Consumers would switch to a different car should they be

charged monopoly prices in the replacement parts market. In other words, if

consumers were informed about all costs they would incur by purchasing a
given product, then the tie should not be worrisome for antitrust authorities

since competition in the primary market could provide enough discipline to
the firm.

Of course, consumers may be unable to anticipate all costs related to the
use of a product and might be subjected to abusive behavior by a dominant firm

trying to exploit a possible asymmetry of information. Such a situation may not

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