Predatory pricing is one of the forms of the abuse of a dominant position. Judicial institutions of the European Union and Commission during analysis of predatory pricing devote main attention to the relationship between costs and prices of the dominant undertaking. Moreover, attention is paid also to various cost benchmarks: average variable costs, average avoidable costs, average total costs and long run average incremental costs. European judicial institutions should pay less attention to the costs of a dominant undertaking than to (...) evaluation of the effect of the actions of a dominant undertaking to consumers and competition in the market. Moreover, proposition of the Commission to use average avoidable costs in predation cases does not correspond to the practice of the Court of Justice and the General Court. The Commission should stipulate more clearly how average avoidable costs and long-run average incremental costs should be calculated in order to increase legal certainty of the undertakings. Establishment of prices higher than average total costs by the dominant undertaking should not be recognized as predatory pricing. (shrink)

Abuse of a dominant position is one of the key aspects in EC competition law. The Court of Justice and General Court acknowledge that sometimes the actions of dominant undertaking that might be recognized as abusive should not be prohibited on the basis of Article 102 TFEU, if undertaking provides objective justification or proves that its actions generate positive effect which outweighs negative outcome on competition. Therefore, actions that usually are regarded as predatory pricing, which is one of the forms (...) of the abuse of a dominant position, in case of special circumstances might be recognized as legitimate. In the present case, attention should be devoted to objective justifications, since this provides the basis for evaluation of legitimate, pro-competitive reasons that explain why undertakings may establish prices lower than costs. This article is devoted to the analysis of objective justification, which might prove that allegedly abusive behaviour is actually legitimate. Plenty of factors might be recognized as objective justifications, therefore it is quite difficult to provide a finite list of justifications. (shrink)

One of the most important principles of the European Community law is the prohibition of the abuse of a dominant position based on Article 82 of the EC Treaty. Predatory pricing is one of the forms of the abuse of a dominant position. It is likely that the world financial and economic crisis will lead to an increase in competition among the undertakings. The fact that some dominant undertakings seeking to sustain or increase their market share might decide to engage (...) in predatory pricing and that no comprehensive research on predatory pricing has been carried out by legal scholars in Lithuania and the European Union up to date, underlines the relevance of this study. To decide whether dominant undertaking has become a “predator”, it is necessary to evaluate several issues, such as the ability of the dominant undertaking to recoup its losses incurred during the alleged application of predatory pricing strategy. The judicial institutions of the European Union pay little attention to this issue and might recognize that predatory pricing took place even without the evidence on the possibility for the undertaking to recoup its predatory losses. This study analyses the recovery of predatory losses by the dominant undertaking and the importance of such recovery in determining whether or not the dominant undertaking engaged in predatory pricing. (shrink)

The aim of this article is to analyse different goals of the competition law, which are established in European Union and Lithuania. EU Commission and the Court of Justice distinguish a number of goals of the competition law. Most commonly, mentioned goals of competition law are the following: the integration of the Internal Market, the protection of consumers, protection of the competitors, freedom of competition and economic efficiency. Different goals of competition law are analysed in this paper and relationship between (...) them is explained. Special attention is given to the analysis of protection of the consumers as one of the main objectives of competition law. While analysing protection of the consumers in competition law, a difference between the concept of consumer in competition law and consumer protection law is explained. The authors express a number of critical thoughts towards practice of the EU Commission and the Court of Justice so far, as there is a lack of consistency in evaluation of the protection of consumers’ rights in the context of the other objectives of competition law. Relevance of the present article is supported by the several facts such as revision of the competition law goals by the EU Commission and adoption of resolution “Concerning priority of the activities of the Lithuanian Competition Council” by the Lithuanian Competition Council that establishes main principles (priorities) applied while implementing competition policy in Lithuania. Setting out the main goals in Lithuanian competition law may have important practical consequences in the everyday activities of the Lithuanian national competition authority. (shrink)

One of the most important principles of EC law is the prohibition of the abuse of dominant positions as established in Article 102 TFEU. Predatory pricing is one of the forms of abuse of a dominant position. In order to decide whether the dominant undertaking has referred to predatory pricing it is necessary to evaluate several elements, one of which is analysis of the intent of the undertaking. European judicial institutions and Commission while assessing predatory pricing give too much importance (...) to the intent of the dominant undertaking. It should be recognized that intention to use predatory pricing is only additional evidence for the determination to undertake an abused dominant position. Intent to eliminate competitors and to take a big part in the market is the aim of all dominant undertakings, the driving force of competition. Competition law officers should inquire whether pricing will cause elimination of competitors and damage to consumers. If competition law officers will provide too much importance to consideration of intent in that case competition law rules will be applied to strict and dominant undertakings and will not charge low prices that are good for consumers. (shrink)

Imposition of sanctions for violations of competition law rules is an important instrument of the European Union (EU) and Lithuanian competition enforcement authorities and is an inevitable part of the EU and Lithuanian competition law policy. The fining policy of the Lithuanian Competition Council for breaches of the Lithuanian and EU competition rules has recently been changed by the new 2012 Government resolution and has been aligned with the 2006 Commission Guidelines on the method of setting fines. The new Lithuanian (...) fining rules set exactly the same basic principles for setting the amount of fines and are very similar to the Commission’s Guidelines, however some peculiarities may and shall be distinguished. The new Lithuanian fining rules in some aspects are even stricter than the EU fining rules established in the Commission’s Guidelines. The aim of the article is to analyse the main changes in the Competition Council’s fining policy and identify the discrepancies in national and EU fining rules, analyse advantages and disadvantages of the new fining policy. (shrink)