Monday, November 08, 2004

What is a fair access price to an essential facility?

O intrebare la care va invit sa reflectati, alaturi de colegii nostrii francezi..

In a decision of 22 December 2003, the Competition Council ordered interim measures against NMPP, the leading French press distribution group controlled by Lagardère/Hachette. NMPP was found, prima facie, to have abused its dominant position by preventing MLP, its sole competitor, direct access to the core functionalities of "Presse 2000", a software used by the members of the press distribution network in order to manage and monitor sales of newspapers and magazines, for the benefit of publishers. The Council found that Presse 2000 could be regarded, prima facie, as an essential facility and enjoined NMPP to allow MLP direct access to its core functionalities.

NMPP was also enjoined to inform the Council, within four months, of the measures taken to make such direct access effective. In a new decision dated 22 July 2004, the Competition Council examined whether the measures taken by NMPP were sufficient and adequate and, in particular, whether the access price proposed by NMPP met the "fair economic terms" condition.

NMPP argued among other things that the price of access to an essential facility does not automatically have to be cost oriented. According to NMPP, the access charge should take into account the loss that it will inevitably suffer due to the direct access to its software enjoyed by MLP (the opportunity cost). Accordingly, in order to set the price for direct access, NMPP estimated the value of the economic transfer in favour of its competitor that would result from the implementation of the interim measure.

The Competition Council rejected NMPP's arguments. It held that on an uncompetitive market such as the French press distribution market, which is dominated by NMPP, the owner of an essential facility cannot charge its competitors an access price equal to the loss suffered because of the access. Indeed, in such a market environment, the dominant undertaking cannot legitimately claim to recover the loss suffered as the ex-ante revenues which it is alleged will be lost are largely the result of monopoly profits. To validate such an approach would allow the dominant undertaking to maintain a high level of prices.



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