LT Comparative Competitive Law Assignment

LT Comparative Competitive Law Assignment

LT Comparative Competitive Law Assignment

Question 1. Temporary oil surcharge

The Ukraine crisis escalated, relations between the United States and Europe on the one hand, and Russia on the other, are at their lowest. All exports between them stopped. This causes in particular a very significant increase in the price of oil, as Russia is one of the world's largest producers and exporters.
An extraordinary meeting is held on this subject within the International Airline  Association (IAA), which regroups 80% of the world’s airline companies. The meeting takes place in Mexico City and all members are present, including United Airlines, Qantas, Air France, British Airways Emirates, Lufthansa etc.
Participants in the meeting immediately start addressing the price of oil, its negative impact on commercial aviation industry, the fact that the market was already performing poorly because of the economic crisis, the fact that airline bankruptcies multiply etc. Quickly, the discussion turns toward practical solutions to address these problems.

The representative of United says his company will have no choice but to pass on this extra cost to customers, which will result in the introduction of a new additional price component called "Temporary oil surcharge" (or TOS) on flights from New York to London from the following month onwards. The TOS, the amount of which he does not reveal, constitutes a small proportion (less than 10%) of the total ticket price, which he also refrains from revealing.

Question 1. Temporary oil surcharge

The Ukraine crisis escalated, relations between the United States and Europe on the one hand, and Russia on the other, are at their lowest. All exports between them stopped. This causes in particular a very significant increase in the price of oil, as Russia is one of the world's largest producers and exporters.
An extraordinary meeting is held on this subject within the International Airline  Association (IAA), which regroups 80% of the world’s airline companies. The meeting takes place in Mexico City and all members are present, including United Airlines, Qantas, Air France, British Airways Emirates, Lufthansa etc.

Participants in the meeting immediately start addressing the price of oil, its negative impact on commercial finance industry, the fact that the market was already performing poorly because of the economic crisis, the fact that airline bankruptcies multiply etc. Quickly, the discussion turns toward practical solutions to address these problems.
The representative of United says his company will have no choice but to pass on this extra cost to customers, which will result in the introduction of a new additional price component called "Temporary oil surcharge" (or TOS) on flights from New York to London from the following month onwards. The TOS, the amount of which he does not reveal, constitutes a small proportion (less than 10%) of the total ticket price, which he also refrains from revealing.

Question 3. GB & GL

Gaz de Belgique (GB) and Gazolux (GL) both are incumbent players in the market for the distribution of natural gas, respectively in Belgium and Luxembourg. They sell gas to both industries and individuals, each on its respective territory, that is to say Belgium and Luxembourg respectively.
In Belgium, the gas market has recently been opened to competition: subject to obtaining prior approval from Belgian authorities, any private player, Belgian or foreigner (especially from neighboring countries) can enter the market and try to sell gas to Belgian customers. Accordingly, GB’s market share has eroded slightly in recent years and currently stands at around 75%. Note that GL is not active in Belgium, the main competitors of GB in Belgium being France Gas (FG) and Gas of UK (GUK).

In Luxembourg, the gas market is still subject to a statutory monopoly benefiting GL: there  is a legislative provision prohibiting any company other than GL from marketing gas in Luxembourg. GL therefore has a market share of 100%. Market opening (and thus the end  of the legal monopoly) will intervene in 2020 in accordance with an EU directive.
There is no natural gas field in Belgium or Luxembourg, so that both GB and GL must import the gas they sell. GB buys mainly Algerian gas whereas GL mainly buys Russian gas. To fill a small proportion of their needs (5% and 15% respectively), GL and GB both started negotiations with a Norwegian producer (Gas Norway or NG) and each have entered into a supply agreement with NG.
Routing gas from Norway down to Belgium or Luxembourg requires the construction of a huge gas pipeline, the cost of which is prohibitive. Taking advantage of the proximity of  their respective markets, GB and GL decide to build the pipeline together and share the costs. The pipeline will pass from Norway to Belgium, then cross Belgium to arrive in Luxembourg.

Question 4. AB&C

AB&C is the leading producer of landline phones in Europe; it’s market these days is essentially composed of office businesses which purchase those phones (along with other business communicationsdevices) for their employees. AB&C’s market share has eroded over time, from a virtual monopoly to about 40% now. Several operators have recently entered the market, attracted by the profits generated by AB&C. Although none of them managed to reach the size of AB&C, many have reached a critical size enabling them to remain  profitably in the market. Thus, the second operator on the market today has a market share of 25%, which is constantly growing.

AB&C diversified and also produces scanning and copying machines. Its customers are essentially the same as for telephones. In fact, customers often source both telephones and scanning and copying machines from AB&C through a single contract. Regarding scanning and copying machines, AB&C has a stable market share of approximately 50%. The rest of the market is relatively dispersed. The few recent entry attempts have failed largely  because AB&C has a strong reputation that can only be challenged through very costly advertising campaigns. Thus, the second player in the market has a stable market share of around 20%.