Law Assignment

Law Assignment

ESSAY 1

INTRODUCTION

Almost three years after the Article 82 Discussion Paper, the Commission has published a guidance document setting out its enforcement priorities in relation to exclusionary abuses of a dominant position. The document outlines the analytical framework which the Commission intends to rely on in this controversial area of competition law in order to determine which types of conduct by a dominant company merit intervention by the Commission to protect the interests of consumers.

The clear message in the Guidance Paper is that the EU Commission will prioritize cases where exclusionary conduct is liable to have a harmful effect on consumers. To the EU Commission, this means bringing cases with the objective of protecting "an effective competitive process and not simply protecting competitors." In this respect, the Guidance Paper should be viewed as crystallizing an existing trend whereby the EU Commission has gradually, since the late 1990's, endorsed a more "economic" and "effects-based" approach in its competition policy enforcement. The Guidance Paper aims to articulate how this effects-based approach will be applied, specifically in the context of Article 82. The EU Commission's Guidance Paper should serve as a confirmation that the Commission plans to abandon its historical, more formalistic application of Article 82. This should lead, in practice, to a marked shift from a traditional "per se" approach towards a more balanced analysis of each case on its economic merits, but with the corresponding loss in legal certainty. Perhaps the most striking example of the EU Commission's departure from its per se approach will be seen in the area of conditional rebates, where the Commission has traditionally adopted a very strict "straightjacket-type" enforcement attitude. The Guidance Paper provides a more careful analysis of the eventual loyalty-enhancing effects of such rebates instead of de facto presuming such effects.

ANALYSIS

It is also recognised that conduct may be justified because it creates efficiencies. However, as with the Discussion Paper, the guidance paper imports the methodology employed in Article 81(3) (relating to anti-competitive agreements) into Article 82. Thus, a dominant company intending to justify its behaviour will have to show that (i) efficiencies have been or are likely to be realised as a result of its conduct; (ii) its conduct is necessary to achieve these efficiencies; (iii) the likely efficiencies will outweigh any likely negative effects on competition and consumer welfare; and (iv) its conduct does not eliminate effective competition.

Considering that competition "on the merits" should not, under the proper definition, be regarded as unlawful under Article 82, and that the Commission itself states that "healthy competition, including by dominant undertakings, should be encouraged", this overly restrictive test is regrettable. Arguably, the defence of "objective justification" would be significantly narrowed by the Commission's interpretation. Moreover, the possibility for "superdominant" companies (i.e. those with a monopoly or near-monopoly position) to justify exclusionary conduct which maintains or strengthens their market positions by reference to efficiencies seems to be ruled out to a large extent. Having set out these general principles, the paper then goes ...