This presentation by Thomas GRAF, Partner at Cleary Gottlieb Belgium, was made during the discussion “Competition issues in aftermarkets” held at the 127th meeting of the OECD Competition Committee on 21 June 2017. More papers and presentations on the topic can be found out at oe.cd/1ZY.

1. clearygottlieb.com
Aftermarket Monopolization Under
Competition Law
Conduct Analysis
OECD Roundtable On Competition Issues In Aftermarkets, June 21, 2017
Thomas Graf
The speaker represents companies with interests in the covered matters. All views expressed here are personal and not attributable to
any clients

2. 2
Aftermarket Questions Have Great Practical Importance
 Many products can generate sales of complementary products and services
 This not only involves classic “aftermarket” products, like consumables or repair
services, but can apply to a broader range of products
 For example, digital online platforms can raise similar questions:
− Mobile app store + apps
− Merchant platform + merchant offers
 Market definition and dominance analysis provides insufficient predictability:
− Large margins of appreciation
− How to deal with differing business models and different levels of vertical
integration?
− Tendency for narrow analysis by competition authorities
 Rigorous conduct analysis with clear limiting principles is therefore especially
important

3. 3
A Key Distinction:
Restriction of Independent Competition vs. Duty to Supply
 Conduct hinders rivals from
accessing customers, either
directly or via third-party
channels
 Dominant firm exploits
dependency of customers
through coercion
Restriction of independent competition:
Example: Microsoft Media Player Case
Duty to supply scenario:
 Rival seeks access to asset of competitor
 The objection is not that dominant firm hinders competitors
 The objection is that the dominant firm fails to assist competitors

4. 4
Implications For The Legal Test
Duty to supply requires indispensability + threat of elimination of all competition
(Bronner):
 Duty to supply is an exceptional measure because it is inconsistent with the concept of
competition – competitors are not meant to cooperate or assist each other
 Interference with property rights and incentives
 In aftermarket scenarios, dominant firm creates the “market” in the first place
Is the threshold being diluted?
 If the aftermarket is defined on a brand-specific basis, market definition and conduct
analysis collapse (e.g., IBM Mainframe Maintenance)
 Implications of TeliaSonera?
− Was a margin squeeze case, which can be understood as a variant of predatory
pricing
− Dominant firm can remedy the abuse without changing supply behavior vis-à-vis
competitor

5. 5
Is Self-Preferencing Without More An Abuse?
 In the context of digital platforms there is discussion whether self-preferencing
qualifies as an abuse
 The same question could be raised for aftermarkets more broadly
 Qualifying self-preferencing without more as an abuse creates tensions with existing
case law:
− Case law treats special forms of self-preferencing as an abuse where “plus factors”
are present (e.g., refusal to supply indispensable input, tying, margin squeeze)
− If self-preferencing without plus factors could be an abuse, existing case law would
be undermined – everything could be reframed as “abusive self-preferencing”
− Concept is also inconsistent with single economic unit principle
 German BGH excludes self-preferencing as an abuse
BGH KZR 7/10 Grossistenkündigung, BGH KZR 65/10 Telefon- und
Branchenverzeichnisse

6. 6
Objective Justification
 Case law, in principle, recognizes objective justification for alleged abusive conduct,
but very little practical guidance
 Is need to preserve commercial viability of system and integrity of business model a
justification?
− Haladjian judgment: General Court recognized the supplier’s legitimate interest to
protect authorized dealers from non-authorized spare parts sellers to maintain a
“good distribution network”
 Quality issues and technical difficulties
− Streetmap vs. Google: High Court recognized quality concerns in giving third-
party maps providers access to Google search results as an objective justification
− Vertical Restraints Guidelines: Recognize quality considerations as possible
justification for vertical restrictions (see also Pronuptia, Metro, Lancôme, Leclerc)

7. © 2017 Cleary Gottlieb Steen & Hamilton LLP. All rights reserved.
Throughout this presentation, “Cleary Gottlieb” and the “firm” refer to Cleary Gottlieb Steen & Hamilton LLP
and its affiliated entities in certain jurisdictions, and the term “offices” includes offices of those affiliated entities.