Competition Law and Governance of Resilience-Driven Markets

Introduction

Resilience-driven markets are markets in which firms, regulators, and market institutions place substantial emphasis on the ability of supply chains, infrastructure, platforms, technologies, and essential services to withstand shocks, recover from disruption, and continue functioning under stress.

Examples include:

• semiconductor and critical-mineral supply chains;
• electricity and telecommunications networks;
• cloud-computing infrastructure;
• pharmaceutical and medical-supply markets;
• digital platforms and payment systems;
• logistics and transportation networks;
• food and agricultural supply chains;
• cybersecurity and data infrastructure.

Competition law traditionally seeks to preserve competitive market structures, consumer welfare, innovation, and freedom of commercial choice. Resilience introduces an additional dimension: a market may be efficient under normal conditions but highly vulnerable if it becomes dependent on one supplier, one platform, one technology, or one infrastructure operator.

Accordingly, competition governance increasingly confronts a central question:

How can markets remain competitive while also being sufficiently diversified and robust to withstand disruption?

Resilience, however, should not automatically become a justification for protecting inefficient incumbents, facilitating coordination among competitors, or approving otherwise harmful concentrations. Competition authorities must distinguish legitimate resilience-enhancing conduct from conduct that merely uses resilience as a justification for reducing competition.

I. Meaning of Resilience-Driven Markets

A resilience-driven market generally possesses one or more of the following characteristics:

1. Supplier diversification

Businesses maintain multiple suppliers so that failure of one supplier does not interrupt production.

2. Redundant infrastructure

Markets contain alternative infrastructure, networks, warehouses, data centres, payment rails, or transportation routes.

3. Interoperability

Customers can move between suppliers or technologies without excessive switching costs.

4. Strategic capacity

Firms maintain reserve production capacity even where that capacity is not fully utilised during normal market conditions.

5. Geographic diversification

Production and supply chains are distributed geographically to reduce vulnerability to regional disasters, geopolitical events, or infrastructure failures.

6. Technological redundancy

Businesses avoid dependence upon a single software, cloud, communications, or technological infrastructure provider.

7. Institutional resilience

Regulatory systems permit markets to continue functioning during emergencies without unnecessarily suspending competitive safeguards.

II. Competition-Law Relevance

Resilience affects virtually every major branch of competition law.

III. Resilience and Market Concentration

One of the most important relationships is between market concentration and systemic vulnerability.

A highly concentrated market may generate economies of scale and lower costs. At the same time, concentration can create a single point of failure.

For example, if 90% of an essential component comes from one producer, that producer's:

• factory closure;
• cyberattack;
• strike;
• natural disaster;
• export restriction; or
• technological failure

may have effects throughout downstream markets.

Competition law therefore increasingly considers not only whether a transaction creates market power but also whether it creates structural dependency.

However, concentration is not inherently incompatible with resilience. A large firm may possess greater financial resources, inventories, technological capabilities and geographical diversification than smaller competitors.

The relevant question is therefore not simply:

"Is the market concentrated?"

but:

"Does the particular concentration create or remove meaningful alternatives and increase vulnerability to disruption?"

IV. Resilience as a Merger-Control Consideration

Mergers may affect resilience in two opposite ways.

A. Resilience-enhancing merger

A merger may:

• combine complementary production facilities;
• diversify geographic supply;
• increase reserve capacity;
• integrate logistics;
• improve cybersecurity;
• create alternative distribution channels.

B. Resilience-reducing merger

A merger may eliminate:

• the only competing supplier;
• redundant manufacturing capacity;
• alternative logistics infrastructure;
• independent technology;
• competing data centres;
• alternative distribution networks.

Competition authorities must therefore examine whether efficiencies arising from a merger are sufficiently substantiated and whether they outweigh potential reductions in competitive alternatives.

V. Resilience and Abuse of Dominance

A dominant undertaking may have special importance in a resilience-driven market.

Potential abusive conduct includes:

1. Supply refusal

A dominant supplier refuses access to an essential product or infrastructure.

2. Discriminatory allocation

During shortages, the dominant undertaking allocates scarce capacity selectively to disadvantage competitors.

3. Loyalty arrangements

Customers are required to obtain supplies exclusively from the dominant firm.

4. Predatory conduct

The dominant firm uses temporary disruption to eliminate competitors.

5. Excessive pricing

A dominant undertaking exploits extreme scarcity to impose potentially abusive prices.

6. Interoperability restrictions

A dominant technology provider prevents competing systems from interoperating with its infrastructure.

VI. Essential-Facility Dimension

Resilience is particularly important in essential-facility cases.

Examples include:

• electricity grids;
• ports;
• railway infrastructure;
• telecommunications networks;
• payment infrastructure;
• cloud infrastructure;
• data exchanges;
• pipelines;
• critical logistics facilities.

If access to an infrastructure facility is indispensable and duplication is economically or technically impracticable, exclusion from that facility may substantially reduce downstream competition.

A resilience-oriented competition regime may therefore require:

• non-discriminatory access;
• interoperability;
• capacity allocation rules;
• transparent access conditions;
• emergency access mechanisms.

VII. Resilience and Vertical Agreements

Vertical agreements can either strengthen or weaken resilience.

Potentially beneficial

Long-term contracts can provide:

• supply certainty;
• investment incentives;
• guaranteed production capacity;
• inventory planning;
• quality assurance.

Potentially harmful

Exclusive dealing may:

• eliminate alternative suppliers;
• foreclose rivals;
• prevent customers from multi-sourcing;
• create dependence upon one network.

Thus, competition authorities should distinguish contractual stability from exclusionary dependency.

VIII. Competitor Cooperation During Crises

Resilience sometimes requires competitors to cooperate.

Examples include:

• sharing transportation capacity;
• coordinating emergency production;
• pooling logistics infrastructure;
• sharing technical standards;
• exchanging limited information necessary for continuity.

But competitor cooperation can create cartel risks.

The crucial distinction is between:

necessary, proportionate cooperation
and
coordination that suppresses competition beyond what the crisis requires.

Authorities may therefore examine:

1. necessity;
2. proportionality;
3. duration;
4. scope;
5. information exchanged;
6. whether cooperation remains after the emergency;
7. whether less restrictive alternatives exist.

IX. Six Important Case Laws

1. United Brands Co. v Commission

Case 27/76, United Brands v Commission (1978)

The European Court of Justice considered the conduct of a dominant undertaking in the banana market.

Competition-law principle

The case established important principles concerning:

• dominance;
• relevant-market definition;
• abusive conduct;
• discriminatory treatment;
• commercial dependence.

Resilience relevance

A resilience-driven market may contain businesses that depend heavily on a dominant supplier. The United Brands principles illustrate why dominance cannot be assessed merely through market share; the authority must examine the undertaking's ability to behave independently of competitors, customers and consumers.

2. Commercial Solvents Corp. v Commission

Joined Cases 6/73 and 7/73, Commercial Solvents v Commission (1974)

Commercial Solvents concerned a dominant supplier's conduct toward downstream competitors.

Principle

A dominant undertaking controlling an upstream input cannot improperly use its position to eliminate competition in a downstream market.

Resilience relevance

The principle is particularly significant where an upstream input is strategically important.

If a dominant producer controls a critical component and restricts supplies to downstream rivals, the result can be both:

• exclusionary; and
• structurally damaging to resilience.

The case therefore provides an important foundation for analysing supply dependence and vertical foreclosure.

3. Bronner v Mediaprint

Case C-7/97, Oscar Bronner GmbH & Co. KG v Mediaprint (1998)

The case concerned access to a newspaper-delivery system.

Principle

The Court established stringent conditions for imposing a duty on a dominant undertaking to provide access to infrastructure.

The facility must, in substance, be indispensable and duplication must not be reasonably possible under the relevant circumstances.

Resilience relevance

Bronner is highly relevant to resilience governance.

Where infrastructure is genuinely indispensable, denial of access can undermine downstream competition. But competition law should not require access merely because access would be commercially convenient.

The case therefore helps distinguish:

true structural dependency
from
ordinary commercial dependence.

4. IMS Health GmbH & Co. KG v NDC Health

Case C-418/01, IMS Health v NDC Health (2004)

The dispute concerned access to an intellectual-property-protected structure used for pharmaceutical data.

Principle

The Court addressed the exceptional circumstances under which refusal to license intellectual property may constitute abuse of dominance.

Resilience relevance

Modern resilience increasingly depends upon:

• data;
• interoperability;
• technical standards;
• software architecture;
• digital infrastructure.

IMS Health demonstrates that competition law must balance proprietary incentives against the competitive importance of access.

A resilience argument cannot automatically eliminate intellectual-property rights, but genuine technological indispensability may become relevant.

5. Microsoft Corp. v Commission

Case T-201/04, Microsoft v Commission (2007)

The European Commission found Microsoft had abused its dominant position in relation to interoperability information and tying.

Principle

The case demonstrates the competition significance of:

• interoperability;
• technological dependency;
• tying;
• network effects;
• exclusionary conduct.

Resilience relevance

Interoperability is a fundamental component of resilient markets.

If customers cannot connect competing products to a dominant technological ecosystem, dependence on one provider increases.

Resilience governance can therefore reinforce competition through:

• interoperability requirements;
• access to interfaces;
• portability;
• technical standards;
• avoidance of technological lock-in.

6. Google Shopping

Case T-612/17, Google and Alphabet v Commission (2021)

The General Court examined Google's treatment of competing comparison-shopping services.

Principle

The case concerned the interaction between:

• dominance;
• search infrastructure;
• self-preferencing;
• exclusionary effects.

The General Court upheld the Commission's core finding that Google's conduct constituted an abuse of dominant position, while examining the specific competitive effects and legal reasoning.

Resilience relevance

Digital resilience depends heavily upon alternative channels.

If a dominant platform systematically disadvantages competing services, users and businesses may become increasingly dependent upon the dominant intermediary.

This demonstrates that resilience is not merely about physical infrastructure. Digital diversity itself can be a competitive asset.

X. Additional Important Authorities

7. Magill

Joined Cases C-241/91 P and C-242/91 P, RTE and ITP v Commission (1995)

Magill is important for the exceptional circumstances in which refusal to license intellectual property can constitute abuse.

Resilience significance: critical information resources may become important infrastructure for downstream competition.

8. Slovak Telekom

Case C-165/19 P, Slovak Telekom v Commission (2021)

The case concerned exclusionary conduct involving access to telecommunications infrastructure.

Resilience significance: telecommunications networks demonstrate how access conditions can affect downstream competition and infrastructure dependence.

9. Bronner-related essential infrastructure jurisprudence

The European competition-law approach reflected in Bronner has influenced subsequent assessment of access obligations.

Resilience significance: competition authorities must identify genuine indispensability rather than treating every commercially important input as an essential facility.

10. MCI Communications Corp. v AT&T

708 F.2d 1081 (7th Cir. 1983)

This U.S. case is a classic authority concerning the essential-facilities concept.

Resilience significance

Telecommunications infrastructure illustrates the relationship between:

• infrastructure control;
• access;
• downstream competition;
• network dependence.

It is particularly useful when analysing resilient communications networks.

XI. Resilience and Digital Markets

Digital markets create distinctive resilience issues.

1. Cloud concentration

Dependence on a small number of cloud providers can produce:

• switching costs;
• operational dependency;
• data portability problems;
• infrastructure concentration.

2. App ecosystems

Developers may depend upon one operating system or application marketplace.

3. Payment infrastructure

A dominant payment intermediary can become a critical point of failure.

4. Data portability

The inability to transfer data can increase customer lock-in.

5. API dependence

Restricting API access may prevent competing services from operating effectively.

6. Algorithmic systems

Market participants may depend upon common optimisation or pricing infrastructure, potentially creating both resilience benefits and coordination risks.

XII. Resilience and Artificial Intelligence

AI markets introduce a new form of infrastructural dependency.

A market may become dependent upon:

• a small number of foundation-model providers;
• specialised GPUs;
• cloud infrastructure;
• proprietary training data;
• AI APIs;
• model-serving infrastructure.

Competition concerns may arise where a dominant AI infrastructure provider:

• bundles computing with AI services;
• restricts interoperability;
• imposes exclusivity;
• discriminates against downstream rivals;
• acquires emerging competitors;
• limits access to essential technical resources.

At the same time, maintaining redundant AI infrastructure can require substantial investment.

Competition law must therefore balance innovation incentives, economies of scale, interoperability and competitive diversity.

XIII. Resilience and Supply-Chain Competition

A resilient supply chain generally benefits from:

• multiple suppliers;
• geographically diversified production;
• alternative transport routes;
• inventory buffers;
• substitute inputs;
• transparent procurement.

Competition authorities should examine whether commercial arrangements unnecessarily eliminate those alternatives.

For example:

Supplier A requires customers to purchase 100% of their requirements from it for ten years.

Such a contract may provide investment certainty. But if Supplier A controls a critical input and the agreement prevents rival suppliers from obtaining sufficient demand, the arrangement may increase systemic dependency.

XIV. Resilience and Merger Remedies

Merger remedies can be designed to preserve competitive resilience.

Possible remedies include:

Structural remedies

• divestiture of production facilities;
• divestiture of infrastructure;
• sale of customer contracts;
• transfer of intellectual property.

Behavioural remedies

• access obligations;
• interoperability;
• non-discrimination;
• data portability;
• licensing;
• capacity commitments.

Operational remedies

• maintaining multiple production facilities;
• preserving technical standards;
• continuing supply to downstream rivals;
• maintaining independent systems.

The objective is not to maximise the number of competitors mechanically but to preserve meaningful competitive alternatives.

XV. Resilience and State Aid

Governments may subsidise strategically important industries.

Examples include:

• semiconductor manufacturing;
• renewable energy;
• batteries;
• pharmaceuticals;
• telecommunications;
• critical minerals.

State support can enhance resilience, but it can also distort competition.

Competition governance therefore asks:

1. Is the subsidy genuinely necessary?
2. Is it proportionate?
3. Does it create excessive advantage?
4. Does it favour an incumbent unnecessarily?
5. Can support be provided through competitively neutral mechanisms?
6. Does the measure create long-term dependency?

A resilience objective should therefore be accompanied by appropriate safeguards against permanent market foreclosure.

XVI. Resilience as a Competition-Policy Objective

Traditional competition policy commonly focuses upon:

• price;
• output;
• quality;
• innovation;
• consumer choice.

Resilience adds:

• continuity;
• redundancy;
• adaptability;
• supply security;
• infrastructure diversity;
• recovery capability.

This does not mean that resilience replaces competition.

Rather, resilience can become an additional factor in understanding how competitive structures function under stressed conditions.

XVII. Governance Framework

A practical competition-law framework for resilience-driven markets can be structured as follows:

Step 1 — Identify the critical market

Determine whether the market provides an essential:

• product;
• service;
• infrastructure;
• technology;
• data resource.

Step 2 — Measure concentration

Analyse:

• market shares;
• HHI;
• supplier concentration;
• customer concentration;
• entry barriers.

Step 3 — Identify dependencies

Examine:

• single sourcing;
• exclusive contracts;
• interoperability;
• switching costs;
• infrastructure dependence.

Step 4 — Test substitutability

Ask whether alternative suppliers or technologies can realistically replace the incumbent.

Step 5 — Assess disruption scenarios

Consider:

• natural disasters;
• cyberattacks;
• geopolitical shocks;
• export restrictions;
• infrastructure failures;
• sudden demand increases.

Step 6 — Apply competition rules

Assess:

• dominance;
• exclusion;
• refusal to deal;
• tying;
• exclusive dealing;
• discriminatory access;
• cartelisation;
• merger effects.

Step 7 — Examine claimed efficiencies

A resilience defence should be tested for:

• verifiability;
• necessity;
• proportionality;
• consumer benefit;
• duration.

Step 8 — Design remedies

Where necessary, preserve:

• alternative suppliers;
• access;
• interoperability;
• portability;
• capacity;
• independent infrastructure.

XVIII. Central Legal Tensions

1. Efficiency vs redundancy

Redundancy can be costly because duplicate capacity may remain underutilised.

2. Scale vs diversity

Large firms may produce efficiently while smaller independent suppliers create alternative sources.

3. Cooperation vs cartelisation

Crisis cooperation may improve continuity but facilitate collusion.

4. Security vs openness

Restrictions intended to secure supply chains may also exclude foreign or domestic competitors.

5. Innovation vs interoperability

Interoperability can reduce technological lock-in but may affect incentives to invest in proprietary technology.

6. Public support vs competitive neutrality

Government subsidies can create resilience but potentially entrench incumbents.

XIX. Key Case-Law Principles at a Glance

XX. Conclusion

Competition law and resilience-driven markets are complementary but not identical concepts. Competition encourages firms to innovate, diversify and provide alternatives, while resilience focuses on the ability of markets to withstand disruption.

The principal competition-law challenge is therefore to prevent resilience from becoming a blanket justification for concentration, exclusivity or coordination, while recognising that certain forms of diversification, interoperability, redundancy and supply security may generate legitimate competitive benefits.

The most important legal principles emerging from the case law are:

1. Dominant firms cannot use control over critical inputs to exclude downstream rivals.
2. Essential-facility obligations require genuine indispensability rather than mere commercial usefulness.
3. Interoperability can be critical to preserving competitive alternatives.
4. Vertical integration can create resilience but can also create foreclosure.
5. Competitor cooperation during crises must remain necessary and proportionate.
6. Merger analysis should consider whether transactions eliminate meaningful alternative sources.
7. State-supported resilience measures should avoid unnecessary competitive distortions.
8. Digital resilience increasingly requires data portability, interoperability and multiple infrastructure options.