The sugar market in Great Britain is shared between four firms : two producers, British Sugar and Tate&Lyle and two wholesalers, Napier Brown and James Budgett. The two producers work closely together and have more than 90 per cent of the market for retail consumers purchasing one kilogram bags. British Sugar has 60 per cent of the market share.
Napier Brown decided to package the sugar themselves and to sell it under its own brand. Then, it became British Sugar's competitor.
British Sugar decided to reduce its prices to force Napier Brown to withdraw from the market and, secondly, refused to
supply Napier Brown.
The four firms decided to meet... About twenty meetings were organized. British Sugar and Tate&Lyle agreed to sell at a higher price than previously asked for, but still more competitive than what the mainland competitors would ask for. Since Napier Brown can't be supplied with sugar outside Great-Britain, it followed British Sugar's policy of increasing the prices.
2/ Does the different firms' behaviour conform to European competition law ?
Book as support: Gareth Davies, EU Internal Market Law, 2nd edition, London:Cavendish
1/ Does British Sugar's behavior conform to European competition law ?
British Sugar's behavior does not conform to the European competition law. The action taken by British Sugar is that it has lowered its price to force Napier Brown to withdraw from the market and second it has refused to supply Napier Brown.
Article 82 of the Treaty of Amsterdam clearly says that a company in a dominant position cannot impose predatory low prices because they allow the company, in this case British Sugar to achieve benefits that it would not have been able to under normal circumstances.
The following is taken from the website: www.etsi.org/legal "The imposition of unfairly high prices or predatory low prices are generally considered to be abusive since they allow
The company to achieve benefits that would be possible to achieve in a more competitive environment." Article 82 Treaty of Amsterdam. www.etsi.org/legal
One escape that British Sugar can claim is that all the four companies are British and so no inter member trade is directly affected. However this is remedied by the Competition ...
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