COMPETITION • EUROPEAN LAW • ABUSE OF DOMINANT POSITION
The as efficient competitor test allows the Commission to measure the impact on competition of price-based exclusionary practices. When a dominant undertaking is suspected of engaging in such practices, the “as efficient competitor” test consists of examining the economic data relating to the dominant undertaking’s costs and sales prices to see whether it is charging below-cost prices. The European authorities focus on the prices and costs incurred by the dominant undertaking and not on the specific situation of its actual or potential competitors as “the use of such analytical criteria can establish whether that undertaking would have been sufficiently efficient to offer its retail services to end users otherwise than at a loss if it had first been obliged to pay its own wholesale prices for the intermediary services”.
If the average avoidable cost (fixed costs incurred during the period under review) is not covered, the dominant undertaking is likely to sacrifice profits in the short run and an as efficient competitor cannot satisfy the targeted consumers without incurring losses.
When the long-run average incremental cost (which includes the product-specific fixed costs incurred during the period of the alleged abuse) is not covered, it means that the dominant undertaking is not recovering all the (attributable) fixed costs of producing the good or service in question and that an equally efficient competitor could be foreclosed from the market.
