Abuse of dominance occurs when a dominant firm adopts predatory or exclusionary business practices with the aim of eliminating or substantially lessening competition and excluding competitors. Abuse of dominance may entail:
- Refusals to deal, for example a refusal to supply an essential facility to a competitor,
- Exclusive dealing arrangements, in which a seller prevents its distributors from selling competing products or services,
- Tying and bundling, where a firm sells makes the purchase of one product or service conditional on the purchase of a second product or service,
- Predatory pricing, where a firm sets prices below cost in order to force a competitor out of the market,
- Non-price predation, where a firm adjusts the quality of its product offering to customers with the aim of harming its competitor. For example, a incumbent might offer an improved level of service to just those customers served by a new entrant.
A firm does not need to be dominant (in the sense of possessing a high market share) in order to implement these strategies. However, the consequences for competition can be particularly severe when the firm concerned is dominant.
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Remedies for Abuse of Dominance