Theory of Dependence and the Relative Market Power

Abstract

One of the most basic rules in the competition law is that where there is an abuse of market power, there is a legal control. According with the spectrum of different forms of market power, there should be also a control system in the competition law which can provide different ways of legal treatments that can meet the needs of the regulations of various kinds of market powers. The article deals with the regulation of the so-called "relative market power" whose status in the Fair Trade Law to a great extent still remain unclear.

The "relative market power" can be described as the market power of an enterprise when his trading counterparts as suppliers or purchasers of certain kinds of goods or services "depend on" him to the extent that sufficient and reasonable possibilities to deal with other enterprises do not exist. The conduct of an enterprise with relative market power may be regards as an illegal discriminatory practice if he stop dealing with an old trading counterpart or refuse to establish business relation with a new one, unless the discrimination can be justified by facts. The existing possibilities of trading are to be considered as insufficient, if such alternatives are not interchangeable with the original one as far as what their reputation and popularity are concerned. A "sufficient" possibility to deal with another enterprise will only be deemed as "reasonable" for the discriminated enterprise to accept when the forced change of trading counterpart will not cause so high risks and so great disadvantages, that the abilities of the discriminated enterprise to compete will be heavily injured.

There are four different types of "dependence": 1.Dependence on product lines; 2.Dependence caused by the shortage of raw materials; 3.Dependence on specific enterprise; and 4.Dependence on purchasers.

The article comes to the conclusion that the theory of dependence can also find a place in the framework of the Fair Trade Law. This theory can be applied especially in the cases concerning discriminatory practices, exclusive dealing and the deceptive or obviously unfair acts regulated in article 24 of the Fair Trade Law.