The European Commission’s draft guidelines on exclusionary abuses: a law and economics critique and recommendations

Abstract

We welcome the prospect of Guidelines on Article 102 TFEU and endorse the stated aims of the Draft Guidelines (ie enhancing legal certainty, helping undertakings to self-assess, and guiding the National Courts and National Competition Authorities). From an economics perspective, we also welcome the possible use of rebuttable presumptions for certain practices, but not for others (eg tying). Further, the approach of the Draft Guidelines to presumptions seems to imply a reversal of the burden of proof, which the EU Courts might arguably not accept. The Draft Guidelines move away from an economic, effects-based approach and do not fully acknowledge or embrace the modern legal approach of the EU Courts to Article 102 TFEU and lack clarity in many respects. Consequently, the Draft Guidelines offer limited guidance. The Draft Guidelines can be improved by: connecting the concept of ‘competition on the merits’ to harm to consumers; incorporating central concepts such as ‘theory of harm’; paying more than mere lip service to the ‘as efficient competitor’ principle; introducing safe harbours; and offering clarifications on the scope of certain presumptions and their rebuttal. The prohibition of an abuse of a dominant position found in Article 102 TFEU is a central tenet of EU competition law. In contrast to all other major aspects of EU competition law, such as Article 101 TFEU on anticompetitive multilateral conduct and merger control, Article 102 TFEU has so far operated with no Guidelines from the European Commission (EC). In 2009, the EC adopted a ‘Guidance Paper’ setting out the EC’s enforcement priorities in relation to exclusionary abuses, to provide ‘greater clarity and predictability’ regarding the ‘general framework of analysis’ employed by the EC in determining whether it should pursue a given case and to help undertakings to better assess whether their conduct may result in an intervention by the EC.1 The Guidance Paper was the culmination of a ‘reform’ of the EC’s approach to Article 102 TFEU and followed a period of extensive debate on, in particular, whether that approach should entail an economic, effects-based approach, in contrast to the EC’s and the European Courts’ historically formalistic approach.2 The Guidance Paper was received with different degrees of welcome in the competition community and in any case, its application in the EC’s decisional practice has not followed the enthusiasm with which the ‘reform’ was pursued.3 Against the background of the limited use of the Guidance Paper and its economic principles in the decisional practice by the EC, the Court of Justice of the European Union (CJEU) instilled an economic, effects-based approach to the application of Article 102 TFEU by its case law over the last decade. Thus, the ‘reform’ of the approach to Article 102 TFEU ultimately came not from the EC but from the CJEU, through seminal rulings such as Intel I, Unilever, SEN, and others, which arguably demonstrate a more economically informed, effects-based approach, moving away from the traditional, formalistic approach.4 This modern case law of the CJEU, often resulting in cases lost by the EC, clearly has implications for the development of the law on abuse of a dominant position. It is, thus, welcome that the EC has decided to adopt ‘Guidelines’ on exclusionary abuses given those significant judicial developments. The Draft Guidelines (DGs) published by the EC in August 2024 aim to enhance legal certainty, help firms to self-assess, and guide National Competition Authorities (NCAs) and National Courts.5 In contrast to the Guidance Paper, which was ‘not intended to constitute a statement of the law’,6 the Guidelines have the ambition to ‘codify the case law’7 and are not occupied with the setting of enforcement priorities. In addition to this ambition, importantly, the Guidelines arise out of a perception that the move towards an effects-based approach involves a ‘heightened substantive legal standard’ accorded to Article 102 TFEU, which ‘may inadvertently lead to undesirable outcomes’ such as false negatives by setting the bar for intervention too high.8 Thus, the EC declares its intention to adopt a ‘workable and effects-based approach’ to Article 102 TFEU, which has already been reflected in changes made to the Guidance Paper at the time of announcing the Guidelines and which will arguably be reflected in the forthcoming Guidelines.9 In this contribution, we examine, from a law and economics perspective, whether the Guidelines are likely to achieve their aims as currently drafted. We discuss the conformity of the DGs with the case law that the Guidelines purport to codify as well as with an economic, effects-based approach to Article 102 TFEU. This article contains two sections. In Section 2, after a brief summary of the DGs, we offer a critique of the DGs, focusing on the points where our views differ from the EC’s document, and identify areas for improvement. In Section 3, we offer some recommendations that the EC might want to the Section an the and of the DGs, the DGs provide principles and for and offer principles to conduct by a dominant is a of certain of conduct and to the DGs, a conduct by a dominant in an exclusionary abuse it a it from competition on the and it is of exclusionary The DGs identify different of The of for which the Courts have not a legal This others, and other than The is not may on which the Courts or the EC have not The to conduct which is as a to exclusionary This on the or all of its from the dominant in case of and of The of the as of conduct by a dominant that have no economic for that other than that of This paying for not on by a with the dominant or by We that it may also of The DGs on the that and to the which the of a legal the has an framework for the from competition on the the of the abuse as In relation to conduct which not competition on the in the the EC will such as whether the dominant or to other than competition law, of the of the service for the in of its over to a a conduct which an as efficient not such as the dominant position in The of the of abuse of whether the conduct at is of exclusionary the DGs which are likely to the legal burden of and the as and which different degrees of and on the of the the of the burden of the EC, which to that the practice is of exclusionary The which may be to the of a to exclusionary the position of the dominant the on the (eg of and the position of the of the the position of or of an exclusionary and to are for the of practices, exclusionary are to by the dominant of the of the in the at by their of such practices, a will be the EC that the practice from competition on the and has the to exclusionary be it through presumptions or an the dominant can its practice by an (ie an or that or the anticompetitive of the This as the of the of but with the burden of on the dominant be an not the of the but as a of the are through the of presumptions which not or an and of competition the and to exclusionary by the We the stated of the DGs and welcome the that by Guidelines the EC may be to enforcement of Article 102 TFEU cases through clarity of the as currently the DGs a of to the of this of the EC the to as dominant also firms with and the of safe for dominant firms which in Further, is on the EC to that for which is is that the of the abuse by the from competition on the on a concept which is to different and contains or no as as it is the framework is for that are to a legal This is that are to a legal are to of the abuse in the which the of the of abuse regarding are on in a different in the DGs The lack of clarity is by the that the of to exclusionary to all to a legal but This lack of clarity regarding the relation presumptions and the application of legal to certain of conduct the of the it is also the presumptions in the DGs can be in the of the case law of the as by the DGs regarding aspects of the of that the Guidelines may not enhance legal or help undertakings to the of their It is to that the Guidelines to the case law. the of on Article 102 TFEU is of the of the EC, that by the this legal as well as the that the case law on Article 102 TFEU is to the any legal the of Guidelines by the EC is their of to the of the law, than their of the law. The Guidelines provide by the EC may the law in certain aspects (eg for in its practice and the of the law (eg by the EC the law to by the as currently the DGs offer limited and do not legal In Section 3, we some that might help The of abuse is with some case law of the EU we the the concept of ‘competition on the merits’ is and to different by the Courts The DGs do not any to the concept a of that might be to that conduct from competition on the The DGs do provide an of ‘competition on the which it with The concept of competition on the conduct the scope of competition on the of the of economic and in to a in which from better and a of or improved and the DGs that a dominant can as an that conduct to competition on the in the case, the or exclusionary by the conduct are or by in of that the DGs do not to a to assess whether a conduct from competition on the in the We that the DGs and this of ‘competition on the merits’ by it that conduct from the is that has anticompetitive that is it or the for conduct be and the of the be given and to the that from competition on the to anticompetitive that or harm be in with the case law. a of the Courts it that Article 102 TFEU is with conduct to the of and that exclusionary should be as those ultimately or on or the case law the concept of ‘competition on the merits’ as a of the of the of exclusionary of Thus, the of ‘competition on the merits’ as a for which of exclusionary are anticompetitive has from the case law. The case law has to the as of the for abuse of by an practice as practice that a it is as not a dominant position on the in to that practice on the use of or to the of such a We that the is with the economic which that an the and the is for a conduct to lead to anticompetitive may in an in a or in the of an or It is to to the can be and the on the of conduct at The economic that for some of practices, such as and (ie those that do not by of the the dominant can a but such a can be by the by the dominant In such we that a is the of an abuse and can be to the The not to the of a but in the and and the of the dominant with practices, we that the Commission should as a safe the and legal to dominant a of we that might be anticompetitive also from efficient dominant firms which a of competition and of (ie of a false a which that is legal to a dominant a which or which be by the EC, we with the statement in the DGs that might be other of practices, it is to the In the case of for the of its the dominant to in the of any in the case of the the dominant and the is not In such we that the is not abuse and be to the The to other practices, such as or to where we are not of any on that the of the of the DGs is that presumptions for certain and by of the presumptions are to regarding their to exclusionary are to the the EC and the dominant The regarding the of to exclusionary is that the EC has to on the of points of and that such conduct is of exclusionary the the DGs a of to exclusionary for conduct that the DGs as to exclusionary and The a of the that have been found to constitute abuse in the decisional practice and some not of the for which the has legal two of the burden is on the dominant to the of the that the practice the to exclusionary of the The DGs also a regarding from competition on the merits’ the for which legal and are to from ‘competition on the merits’ and be of exclusionary We are to the of rebuttable In particular, this might help to and abuse of which are and provide for dominant which the to the and to assess the the by the competition in relation to the presumptions in the DGs, we presumptions are not in In particular, is a practice through which and might offer on by their of to exclusionary are not by the case law for on our of the case It is, on legal some have been as a to exclusionary as and others This also a the of the of the of abuse in the DGs and the of to legal the scope of two of the DGs not the use of the the to a legal legal and economic to whether a practice is and the to use a the as a to identify abuse legal and economic (ie a that conduct is practice it is the relation is the presumptions Section of the DGs for and the application of the legal for the Section of the it is the and of the presumptions legal are are already legal for the and two of the DGs are to the use of presumptions to demonstrate to exclusionary is likely with the of the case law that the of the or of competition be in all in the of all the It is that the presumptions by the EC are rebuttable The of for the of to exclusionary is not found in the the of is so that in practice it can be the presumptions in be the DGs to the to the or or to for the be of to a of for the can be the DGs that will be to a of the EC’s to the of a the that the conduct at has a to exclusionary The of presumptions a reversal of the burden of anticompetitive and we whether the Courts will the of this We that the to which certain presumptions are on economic might help the The DGs a that conduct which is to a legal the scope of competition on the but not provide the to this The for the Guidance was by economic not its was to adopt an effects-based approach to the enforcement of Article the DGs a more This the ambition of the Commission to adopt Guidelines that ‘codify the case We that aspects of the DGs use of the case law in a This is in relation to the case law from Intel In its modern case law, the has an effects-based approach to Article The that the case law has adopted an effects-based approach was in the announcing the In the DGs do not embrace aspects of the case law that are and the of certain concepts (eg ‘competition on the from the formalistic of the case law or from the case law that an effects-based We provide some of the a of the DGs do not to ‘as in their to to exclusionary This in contrast to the position in the case law, which has on in the last that Article 102 TFEU that have exclusionary on as efficient as the dominant we that the of efficient can certain also constitute anticompetitive the Court of Justice has on the position that on the by lead to the from the or the of that are efficient and so to from the of other or Thus, the the that not of is has been in the case of an effects-based In the DGs, the has been many that can demonstrate that a practice or ‘competition on the merits’ the of the to as efficient the DGs adopt a that to to the approach to an as by the CJEU, in to adopt a more the Guidelines from the case their of by the will be adopt a different approach to abuse the approach with a more and approach (eg of harm on This the DGs and the case law also the of the Guidelines to provide legal to In in relation to the which has been given a central in the DGs by of the Court of Justice has the of as efficient in where a competition that an has Article 102 TFEU and where that the the of those to efficient from the with that at the of the that those in the of the case, of as efficient as that from the The DGs any to as efficient in the of the of abuse that to be an of this of the Court of This that the DGs do not the case law, which to and this the that the of in the not the position of the Court that ‘competition on the merits’ by lead to the of efficient the Guidelines do not provide clarity on the of the the approach of the Guidelines can lead to a that of is It is that after the of the DGs, the has which or some of the by the EC in the that the the conduct at and its of the of an of competition law which it is for the Commission to and in that the is that is which the approach of the DGs to the Further, Intel that the that a conduct has or on competition be in all in the of all the on the of points of and some on the of the approach adopted in of the of abuse in the DGs, which on presumptions and a in the burden for exclusionary Intel also that the of to a as efficient as the dominant be as a the and that the of this whether the practice the scope of competition on the This not to be in with the position adopted by the DGs on the presumptions for but on this we with the position from an economics in the case of or the dominant can a not help to whether is an in the of legal certainty, it be for the Guidelines to this and clearly economic a different It should be that the case law of the is in a of and an effects-based approach with more formalistic fully the of to codify the case law at this in this should not an or of the case law in relation to the of in particular, of the as efficient a of the case law an framework which can lead to a in the of the case law provide legal or help undertakings to the of their in the enforcement of the such an approach can also the application of the law where National Courts and adopt the of the case law in the which can over time lead to of Article 102 TFEU (ie some the case law and some the EC an can legal and the of the law. 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We where the Guidelines that certain conduct is to be Commission at the of an a of harm and the for the conduct to be of anticompetitive in case of or the EC should not to that the dominant is, but also the and of the and whether the of The Guidelines should the the of the presumptions in Section regarding to exclusionary in the of conduct which is to a legal as on in Section this the framework for abuse in the Guidelines will the the DGs do not that all of the presumptions can be in The Guidelines should that all of the presumptions are rebuttable and the of is for the of the This is the is so that it can be in the presumptions will be presumptions which can lead to a of abuse can entail the burden of on the to the of which the EC presumptions can also by the EU and the of The Guidelines thus, from of the of which the dominant can in to the The DGs should that is for conduct which is to a legal or which not regarding the to exclusionary but also for the from competition on the merits’ The Guidelines should also more through on which of and the EC be to as a of conduct that of the of The EC’s use of its in the of such where the DGs that the of a will be should be certain rebuttable presumptions may be for with to and this is not the case for all of a dominant which are currently to a in the is likely to have significant in many we that of the and not to the of conduct which to be to be in with the case law the EC’s decisional an effects-based approach to as and of which adopted or a the EC to certain of in the of conduct which is to be the Guidelines should clearly through and which in the of conduct to be and that which we it to might in different on whether the is or but to In the is by the dominant and it should be in the We the is in case of other than the conduct is to be to be It be to the of the should be The DGs as as for a safe for and at do so We that the case in of this position not such a safe We that the DGs a safe for in with It is to an of a which might be found to be dominant in a with such a are by which might have some to more than such a of and it might be more to that this is the EC has in of possible with than the approach is to be with the Guidance Paper where the EC that are to We also that or should be a safe This the of competition and provide legal to a dominant which can the of its conduct a which is on or which the by the EC In the that its intention to on exclusionary abuses, the EC that it was to an effects-based enforcement of Article We that not the not in the DGs, but and more importantly, that the DGs to a case in is the of which might of different which might have to of or and other are all that a might use to or fully a in different in the In particular, to the DGs, for some of and for with of the are other of and with and for to the from competition on the is but the EC is to demonstrate exclusionary and the is to be and the EC is to assess whether to competition on the and are of exclusionary a different for which might be a or is and with an effects-based We that the Guidelines adopt an effects-based approach with are in the in their as This article has a critique of the DGs on exclusionary abuse with a to which can the Guidelines from a law and economics The article has where the DGs do not embrace an effects-based approach, their to that as well as aspects of the DGs, which from the case law. The case law on the prohibition of an abuse of a dominant position can in the the the the of the case law as it in the Guidelines and the of the case law, the likely that the will adopt any approach by the will also the of the Guidelines to provide legal to undertakings and to National Courts and and can the application of EU law in the of Against that this article has made which can the Guidelines conformity with the case law and with the article that the Guidelines adopt an of ‘competition on the which that concept with in to adopt the concept of It also the of a of harm in economics in case and an effects-based approach with are in a of their the Guidelines to provide any and to dominant of safe and clarifications as to the and of presumptions are also aspects of the DGs, which can be the EC to adopt a different approach to that of the case law, the EC should it to do so and approach it to in we the ambition of the EC to adopt Guidelines on the prohibition of exclusionary we that is for in the DGs for to be to achieve their