![]() ![]() Read More Defence and security procurement-France-Q&A guideĭefence and security procurement-France-Q&A guide This Practice Note contains a jurisdiction-specific Q&A guide to defence and security procurement in France published as part of the Lexology Getting the Deal Through series by Law Business Research (published: April 2022). Unless a company has been involved in previous competition law cases or findings of dominance in a merger context, it may be uncertain as to whether it is dominant as a matter of law.For an introduction into the concept of a ‘dominant’ position, see further, Dominant position under Article 102 TFEU-dominance.The legal testThe test for establishing dominance has been set out by the Court of Justice as:'a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers'.The concept of independence of action means that competitive constraints are insufficiently effective and that the dominant company enjoys substantial market power over a sustained period of time (see further 'Assessment of dominance' below).For practical purposes this Dominance does not necessarily entail having a majority share of the market but a company with a share of 50% will typically be presumed dominant. Natural monopolies are common in industries with high fixed costs and low marginal costs of operation such as providers of television, telephone, and internet services.View the related practice notes about Monopoly Dominant position under Article 102 TFEUĪrticle 102 TFEU prohibits undertakings which hold a dominant position within the EU or a substantial part of it from abusing that dominant position, in so far as it may affect trade between Member States.It is often unclear whether a company is 'dominant' for the purposes of EU competition law. Such firms become monopolies due to their position and size, which makes it impossible for new entrants in the market to compete price-wise. A company with virtually unlimited economies of scale is referred to as a natural monopoly. Natural Monopoly: A market may also become a monopoly simply because it may be more cost-effective for one company to serve the whole market than to have several smaller firms in competition with one another.This creates a temporary monopoly in the market with regards to new products and services. Patents and copyrights work in providing owners of intellectual property with the right to act as an exclusive provider of a new product for a specific length of time. When a government does this, it is in fact giving a single company an exclusive right to provide a particular product / service to the market. Intellectual Property Protection: Extending intellectual property protection to a company in the form of patents and copyrights is yet another way in which monopolies are created.As a result, other firms are only able to offer passenger train services with the cooperation and/or permission of the government-owned provider. For example, when a national railways transportation service is created by the government, in most cases they are granted a monopoly on the operation of passenger trains in the country. Government Franchise: In certain instances, a monopoly may be explicitly created by the government if it grants a single company, whether private or government-owned, the right to conduct business in a particular market. ![]() The company can, therefore, be said to have a monopoly over ingredient X that is needed to cure the disease because it is the only company that can produce a product deemed acceptable. For example, the only medication deemed acceptable to treat a disease comes from a particular ingredient X, and knowledge of this ingredient X is owned by a single family owned company. Ownership of a Key Resource: When one company exerts sole control over a resource that is necessary for the production of a specific product, the market may become a monopoly. ![]() Because such barriers occur in different forms, there are therefore varying reasons for the existence of monopolies. Monopolies typically originate due to barriers that prevent other companies from entering the market and giving the monopolist some competition. This works to the detriment of market competition – the foundation of any healthy economy, and is the main reason monopolies are discouraged. Technically, the term “monopoly” is used in reference to the market itself, although it is today commonly used to refer to the single seller in a market as well.īecause the single seller is the only source of the particular product or service, they have the ability to charge whatever price they want. A monopoly is a market with only one seller and no close substitutes for the product or service that the seller is providing. ![]()
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