Chillin'Competition

My writing in the blog is not the only side effect of Alfonso’s long working hours. We should have run the Brussels 20k together (I bet he even forgot about that). Maybe next year!

As I have devoted part of my Sunday to update an article, I thought It could be a good idea to ask your views about one of my forthcoming pieces. The view that there is something wrong with Article 102 TFEU is far from unanimous, but it is certainly widespread. There is not even a consensus as to what exactly is wrong with the said provision. In my view, the problem with existing case law is not in any way economic, as many authors believe, but legal. Cases addressing the same questions (say, price cuts) follow different rationales (just compare AKZO and Compagnie Maritime Belge). The substantive standards of intervention also vary across practices. Sometimes, the mere potential of foreclosure is sufficient to trigger the application of Article 102 TFEU (rebates and exclusive dealing are a classic example). Other practices require concrete evidence of foreclosure (just think of the case law on refusals to deal and that on margin squeezes).

My piece seeks to explain why Article 102 TFEU case law has evolved the way it has. What inspired the piece is Post Danmark. I did not anticipate that the ECJ would rely on AKZO. After all, the factual setting looked more similar to Compagnie Maritime Belge and Irish Sugar (it was an instance of selective price-cuts), where EU Courts considered that a different substantive standard was applicable.

What, I thought, if the answer to the behaviour of the ECJ is explained by the fact that it was a preliminary ruling? Maybe EU courts are less inclined to ensure consistency within and across practices when cases reach them in the context of an annulment action. When EU courts review the legality of a Commission decision, they typically rely on the analysis already performed by the latter and thus do not have to define a substantive standard. In contrast, the very point of a preliminary reference is to obtain guidance from the ECJ. If annulment actions dominate over preliminary rulings, there is every chance that the case law becomes less consistent over time. This is what I call, somewhat pretentiously, the ‘procedural-institutional hypothesis’ in the paper.

And this is precisely what a close analysis of Article 102 TFEU case law reveals. The tone and general approach to abuses of dominance was defined in a series of annulment proceedings during the 1970s and 1980s. Meaningful preliminary references came only later in time, and were not as frequent or qualitatively relevant as in the context of Article 101(1) TFEU (think of landmark cases like STM, Delimitis, Pronuptia and so on) and thus did not change the game.

The implications of this analysis are important. First, in a field where substantive provisions are vague and malleable, judicial review is of paramount importance, in line with what the ECtHR emphasised in Menarini. Secondly, it seems that EU courts are not inherently reluctant to engage in economic analysis or to apply mainstream economic concepts. They do so often in fact, and cases like Post Danmark, as well as some oldies like Nungesser or Coditel II show that they often have a great grasp of the logic behind business interactions. The problem is a different one, of a ‘procedural-institutional’ nature. In this sense, the analysis reminds us competition lawyers of the extent to which substance and procedure are intertwined.

I would be interested in what the readers have to say about these ideas, which will appear in the Yearbook of European Law in a few months (thanks a lot to Prof Takis Tridimas for accepting the paper!).

Pablo