that are different from issues raised when a company’s refusal aimed at eliminating a certain competitor (Botta and Wiedemann, 2018). Although companies have the right to make decisions
EU Competition Law 5 on whether to deal with counterparties, a refusal to supply their products can amount into an abuse in exceptional circumstances. Before imposing any restrictive conditions, Spielzug company must consider various principles because firms which hold dominant positions in the market are entitled not to hinder market entrance, an existing competition in the market or the development of that competition. However, if a dominant company hinders the ability of other firms to compete by imposing abusive practices such as different treatment of the customers, the firm must provide additional justification for its actions (Botta and Wiedemann, 2018). Legal Consequences of Pricing Conduct under the EU Competition La w The EU competition has enforced rules that control the market power and also protect the market dynamics and competitive structure and the rights of its member not to be excepted by firms’ strategies with market power that are grounded on competitive merit. Article 82 of the TFEU states that, undertakings can be prohibited from raising prices if the expansion is likely designed to harm a competitor (Geradin and Petit, 2005). The European Commission can only consider the price increase if the expansion in sufficiently profitable to the competitors, considers barriers to expansion and also considers the risks and costs of failure. However, the given scenario regarding the three manufacturers of electronic toy drones named W, X and Y involves price expansion after every six months with a similar amount. Also, the prices for solar drone components have been high for the last four years, thus making it difficult for the solar powered drones’ manufacturers to compete with the manufacturers of battery powered drones. Applying the EU rules in this case, firms have the market power to impose price expansion, but they cannot manage to charge customers above the competitive price. Dominance is not a significant issue for pricing to occur, but it is only in cases of firm dominance that pricing can be considered abusive by the EU competition law (Geradin and Petit, 2005).
EU Competition Law 6 The EU competitive law protects the consumers’ welfare by increasing total surplus in a given market. Accordingly, a free and open competition among undertakings benefits the consumers by ensuring better products and lower prices (Qaqaya, 2008). In the given scenario, the pricing behaviors among the three companies are unilateral behaviors that eliminate competition from other manufacturers by harming their consumers directly. Marginal pricing among the firms fails to remunerate organizations’ fixed price, which in future can fail to offer incentives for companies to make effective investments in future. It is evident that, these firms
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