Page 87 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE

- The special case of government-origin dominance. When

dominance has been established by the state, or when the state owns the
company, other considerations may come into play. In many countries state

companies and state agencies do not enjoy immunity from remedies if they

are involved in economic activity. The question may arise, however, whether
the activity has taken place under state compulsion (result: no responsibility

of the company, but the state maybe liable) or not (result: full responsibility
of the company).

Conclusion

Investigating alleged abuses of a dominant position can be among the
most challenging and difficult tasks for a competition agency. This is

because practices that can qualify as abuses (predatory prices, tie-ins, vertical

restraints) can also promote efficiency. Consequently, investigating alleged
abuses of a dominant position will require a careful rule-of-reason analysis,

in which possible anticompetitive harm is weighed against possible

efficiency benefits.
In an investigation of an alleged abuse case the tasks are the same as in

other investigations: define the relevant market(s), explain how the alleged
abuse acts might harm competition, and explore possible efficiency benefits

from the practice. The second task is often called “laying out the theory of
the case.” Key questions include: How would the practice harm competition?

Will it deter or prevent entry? Will it reduce incentives of the firm and its

rivals to compete aggressively? Will it provide the dominant firm with an
additional capacity to raise price? Will the practice enable the dominant firm

to evade price regulation in one or more of its markets? If it is necessary to
evaluate possible efficiencies (that is, anticompetitive effects are likely), the

competition agency should expect the dominant firm to be able to explain

86