Am I a victim of an abuse of market power?

It is challenging to tell whether you are a victim of an abuse of substantial market power or not.

To check whether you are a victim or not, two questions need to be answered:

1. Does the company which you suspect has engaged in certain potential anti-competitive conduct against your business possess substantial degree of market power?
2. If your answer to the first question is a yes, has the company abused that market power in some way?

 

Do not worry if you are unsure about the answers to these questions before making a complaint. With necessary information, the Commission can help you with that. The following information only means to give you information at a high level to help you gauge your own risks of being a victim of abuse of market power.

 

Does the company have a substantial degree of market power?

 

A company with substantial degree of market power can insulate itself from competition. For example, it may increase prices or reduce quality without worrying about losing customers.

Whether a company possesses a substantial degree of market power depends on many factors, including:

• Market position of the company suspected of abusing that power as measured by its market share. Note that the term “market” used here may mean differently from your understanding of it as a business operator.
• Whether there are major barriers for new companies to enter the market and compete with the company suspected of abusing its market power. Such barriers to entry may include the availability of technology, or the need to obtain multiple licences before a company can open for business.
• Whether the company suspected of abusing market power can make pricing and other decisions without much need to care about other companies in the same market.
• Whether you, as a buyer, have negotiation leverage over the terms of the deal with the company suspected of abusing its market power.

 

Has the company abused that market power in some way?

 

Abuse of market power occurs when a company with substantial market power uses that power in ways that harm competition. There is no exhaustive list of what constitutes an abuse of market power. Given certain required conditions are met, some examples are listed below:

• Predatory pricing: Cutting prices is normally a sign of market competition. However, a company may price its products and/or services unaffordably low to drive out competitors or discipline them.
• Tying and bundling: “Tying” occurs when a company sells one product “A” (which could be a good or a service) on the condition that the buyer also purchases another product “B”. “Bundling” is when product A and B are sold together as a package at a discount. These practices can be abusive if the company uses its power in the market for A to drive out competitors in the market for B.
  For example, if there is only one supplier for a piece of machine your company is using, but many maintenance service operators are available for you to choose from. You may be a victim of an abuse of market power conduct if the machine supplier forces you to also buy maintenance services exclusively from its servicing arm.

• Refusal to deal: Companies are generally free to decide whom to do business with. If the company suspected of abusing its market power is a key supplier to your company and it decides to enter in the same line of business you are in, it may then refuse to supply to you. Unless there are alternative suppliers available, such conduct could be considered an abuse.
• Exclusive dealing: Exclusive dealing can give rise to competition concerns in certain circumstances. For example, a company with substantial market power may use exclusive arrangements to block your company from accessing customers or suppliers.

There may be other ways in which companies with a substantial degree of market power abuse that power in ways that harm competition.

If in doubt, you should approach the Commission.