Article by David J. Gerber
Most industrialized countries treat the possession of significant economic power by individual firms as a potential societal harm and, therefore, apply legal controls to the conduct of firms having such power. United States law utilizes the concept of monopolization to define the limits of permissible conduct for powerful enterprises, but virtually all other competition law systems, including all significant European legal systems, utilize the concept of abuse of power to fulfill this function.
These two approaches to the problem of single-firm economic power share a common objective: each attempts to protect society against harms which may result from the use of economic power without unduly restricting the conduct of powerful enterprises. The two legal mechanisms are, however, fundamentally different. They have evolved from different conceptual and theoretical starting points; they are embedded in different legal traditions, especially in relation to the role of government in economic activity; they are shaped by different social and political pressures; and their enforcement is based on different assumptions about law as well as about economics.
Because of these differences, the concept of abuse of economic power is alien to American lawyers. It has been little studied in English, and what little attention has been paid to it has focused on its use in the competition law of the European Economic Community. Consequently, American lawyers frequently misunderstand the concept, its legal context, and the factors influencing its use and interpretation.
This lack of understanding has several harmful effects. It impairs the ability of American lawyers to render advice relating to business operations in most of the industrialized countries of the world. An understanding of the legal regime relating to the conduct of economically powerful enterprises is critical not only to those enterprises themselves, but also to all who would either deal or compete with such enterprises. In addition, this lack of understanding of the abuse concept tends to prevent meaningful evaluation in the United States of the European experience in controlling economically powerful enterprises. This is particularly important in light of long-standing dissatisfaction in the United States with the treatment of single-firm economic power under United States antitrust law. Proper evaluation of the European experience can thus provide needed perspective on United States law.
The problems involved in understanding the abuse concept are exacerbated by the fact that in recent years the role and content of the concept of abuse have undergone significant and rapid change. In Germany, for example, the abuse concept primarily targets a substantially different type of conduct than was its principle aim only ten years ago. Moreover, the nature and extent of these changes in the role of the abuse concept have been seldom recognized and little understood.
This article, therefore, responds to this lack of understanding by analyzing the legal concept of abuse of a market-dominating position. Section I of the article presents some historical background for the development of the abuse concept. Section II describes the function of the abuse concept in competition law systems based on administrative control. Sections III and IV examine, respectively, the concept's role in the competition law systems of the Federal Republic of Germany and the European Economic Community, analyzing in detail the factors which affect its interpretation and application. Section V then compares and assesses the role and development of the abuse concept in German and European Community law. The focus of this article is on understanding how meaning is ascribed to the vague notion of abuse. In analyzing this process, however, the article also reveals characteristics of the general process of law creation in the legal systems involved.
About the Author
David J. Gerber. Professor of Law Emeritus, IIT/Chicago-Kent College of Law. B.A., 1967, Trinity College (Conn.); M.A., 1969, Yale University; J.D., 1972, University of Chicago Law School.
Citation
62 Tul. L. Rev. 57 (1987)