Dominant market position and ordoliberalism

Abstract

The ordoliberal distinction between performance competition and impediment competition may improve the understanding of the European distinction between a ''dominant position'' and an ''abuse'' of that position. Using a simple game-theory framework, I illustrate the dominant firm as a firm with, among other things, a dominant strategy in performance competition. If, due to the impediment condition, the dominant firm abandons its dominant strategy in the performance competition, then this firm is conducting abusively. In other words, the dominant firm should behave as-if it did not have economic power. It is the formulation of the ordoliberal as-if standard. As I show, such an ordoliberal standard leads to a wider concept of dominance that not only includes the economic domain but also considers the impact of private economic power on the political sphere.

‘Ordo’ versus ‘Ordnung’: Catholic or Lutheran roots of German ordoliberal economic theory?

“…The question, then, becomes whether the problem structure and the centrality of Ordnung, too, have changed or remained stable. Some indications may be quoted supporting the stability thesis, notably Hien's (2017) work, but also detailed conceptual analyses of the ordoliberal legal structures of the EU, such as Vatiero (2015). Moreover, the main policy goals of ordoliberalism have remained stable throughout the period: state-guaranteed competition order, hard-line anti-inflationist monetary policy, and uncompromising enforcement of debtor obligations.…”

“…As Massimiliano Vatiero has shown, rulings by the European Court of Justice has promoted dominant firms to act 'as if' they did not possess monopoly power (Vatiero 2015). In other words, the problem of market power in the EU does not seem to be conceived so much in terms of power as such, but rather of the intentional exercise of power in one's own interest.…”