Competition on the Merits

Competition on the merits is a popular but vague term. There is substantial agreement on the broad goals and methods of enforcing competition laws against abuse of dominance, particularly with respect to studying harm to competition, not competitors, through the use of economics. There is some disagreement, however, over what variables to consider and whether to use a form-based approach or an effects-based approach. Dissatisfaction with both the ambiguity of some jurisdictions’ competition statutes and the lack of clear definitions for terms like competition on the merits has prompted a number of specific tests that aim to detect abusive conduct. The profit sacrifice test states that conduct should be considered unlawful when it involves a profit sacrifice that would be irrational if the conduct did not have a tendency to eliminate or reduce competition. The no economic sense test states that conduct should be unlawful if it would make no economic sense without a tendency to eliminate or lessen competition. The equally efficient firm test states that conduct should be unlawful if it would be likely to exclude a rival that is at least as efficient as the dominant firm is. Consumer welfare balancing tests determine whether conduct should be unlawful by requiring decision-makers to weigh the positive and negative effects that the conduct has on consumer welfare. his document comprises proceedings in the original languages of a Roundtable on Competition on the Merits which was held by the Competition Committee in June 2005.