Relaxing whilst doing Competition Law is not an Oxymoron

Archive for April 24th, 2012

Recent Article 102 TFEU Case-law

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Today, my ex-Howrey colleagues invited me to give a presentation on recent developments on EU competition law at Shearman & Sterling. I was very honoured.

It gave me the opportunity to read  the recent judgments in Telefónica v Commission, Post Danmark and Tomra v Commission.

On my own arbitrary scale, the ranking of those judgments is as follows:

  1. CJEU, Post Danmark, C-209/10
  2. CJEU, Tomra v Commission, C 549/10 P
  3. GC, Telefónica v Commission, T-336/07

A word of explanation is in order: amongst those three judgments, the Grand Chamber of the Court should  first be praised for its ruling in Post Danmark. The judgment dissipates the uncertainty generated by Compagnie Maritime Belge in clarifying that selective price cuts are presumably legal when prices > average incremental costs. But this is not all. The Court makes very explicit – and this is right in my opinion – that dominant firms can compete on the merits even if this forces rivals off the market (§22). In so doing, it recognises that not all foreclosure is unlawful, but only that “anticompetitive foreclosure” matters under Article 102 TFEU. Last, but not least, the judgment upholds the unnamed “Article 102(3) TFEU defense” that the Commission had plugged in §30 of its Guidance Paper (see §42).

The second judgment on my podium is Tomra. It comes second because the dicta that dominant firms should be able to compete on the merits for the entire market is wholly unfortunate (§42). It is first non-sensical from an economic standpoint. But as we wrote here, it is also inconsistent with the approach followed in other areas of competition law . A similar comment applies to the unconvincing assertion that a “suction effect” can be established without any need to run a price-cost analysis (§79). Not all in Tomra is bad though. In particular, the judgment encapsulates a subtle message of hope at §81 when it implies, a contrario, that the Guidance paper will have increased relevance in future Article 102 TFEU cases:

As the Advocate General observes in point 37 of his Opinion, the Guidance, published in 2009, has no relevance to the legal assessment of a decision, such as the contested decision, which was adopted in 2006

The worst of those three judgment is, by far and large, Telefónica v Commission. In this judgment, the General Court obediently implements the perplexing standards set by the Court in Konkurrensverket v TeliaSonera Sverige AB (C-52/09). To me, it is beyond common sense, conventional wisdom, reason, logic, honesty, intellectual sanity to consider that a dominant firm can abusively squeeze its rivals through high prices, meanwhile being under no duty to deal with them (see §180). In the language of driving metaphors (I love them), this is akin to forbidding someone from driving at 130 km/h, meanwhile explicitly entitling him to drive at 200 km/h.

I should, however, be very grateful to the Court. The release of those rulings comes at a perfect time, with our Brussels School of Competition conference on “Costs in EU competition law” scheduled on 9 May. The number of participants keeps increasing, and yesterday, the General Counsel of one of the 3 firms involved in those cases registered :).

Written by Nicolas Petit

24 April 2012 at 10:03 pm

Posted in Case-Law, Uncategorized