Page 222 - ITU-T Focus Group Digital Financial Services – Technology, innovation and competition

ITU-T Focus Group Digital Financial Services
Technology, Innovation and Competition

and its competitors on the relevant market, but also other factors, such as (i) barriers to entry – legal barriers
(IP, regulatory monopoly, licensing), economic advantages (ex. economies of scale), cost and network effects
and (ii) countervailing buying power.
Ultimately, these include:

i) Constraints imposed by the existing supplies from, and the position on the market of, actual competitors;
ii) Constraints imposed by the credible threat of future expansion by actual competitors or entry by potential
competitors; and
iii) Constraints imposed by bargaining strength of company’s customers.

It should be noted that certain commercial behaviors - such as the bundling products, tying and predatory
pricing - may be consider acceptable competitive behavior for market participants who do not have SMP, but
may be considered as an abuse of a dominant position for SMP participants. These SMP participants have a
special responsibility vis à vis the market due to their market size and influence. Thus the determination of
SMP status by the regulator is key in determining if concretely there has been any anti-competitive conduct.

An in-depth market analysis should always be taken before any allegations of abuse of dominance are made.

Problematic behavior includes:
• Excessive purchase or selling prices
• Other unfair trading terms

• Margin squeeze 264
• Bundling of rebates

• Discriminatory pricing
• Refusal to deal
• Exclusive dealing agreements
265
• Predatory pricing
• Tying of products/services: contractual tying, refusal to supply, withdrawal of guarantee, & technical tying
• Vexatious litigation

• Refusal to supply
• Loyalty rebates 266

4 Market imbalances created by regulatory policy

These are actions undertake by the state/ a regulator that can make an effect on the dynamics of the market,
and can cause market imbalances similar to those created by anti-competitive actions taken by market
participants. From the market participant’s perspective, these include:

• Inconsistency in the application of related rules, leading to one market participant being advantaged
versus others without justification
• Inconsistency in the licensing of institutions

264 Here a dominant firm leaves insufficient margin between upstream and downstream products, squeezing competitors down-
stream.
265 Buying all from one supplier.
266 Volume rebates are allowed under EU law

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