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NEW PAPER: Appreciability and de minimis in Article 102 TFEU

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de-minimis

I have just uploaded a new paper on appreciability and de minimis in Article 102 TFEU. See here for the pre-edited version, accessible via SSRN, and here for the edited version, which is coming out in the Journal of European Competition Law & Practice. As usual, I would very much welcome your comments: P.Ibanez-Colomo@lse.ac.uk.

A practice may violate Article 102 TFEU without it being necessary to show that it has a serious or appreciable impact on competition. I do not believe there is anything controversial in this position. It makes little sense to speak of de minimis abuses where a firm is dominant. After all, Völk made an explicit reference to the ‘weak position’ of the parties to the agreement. This fact alone rules out the relevance of the doctrine in instances where a firm’s share is at least above 40% and, typically, 50%.

However, the rejection of the de minimis doctrine in the context of Article 102 TFEU has given rise to controversy. I do not believe it is justified to criticise the Court’s position. More importantly, I do not believe that this line of criticism is about the de minimis doctrine at all.

I have come to realise that there is confusion about the meaning of de minimis in abuse of dominance cases. Some commentators appear to suggest that, because it is not necessary to establish the serious and appreciable nature of an exclusionary effect, every practice is abusive. For instance, a practice that covers just 1% of the market would be contrary to Article 102 TFEU.

In my view, this interpretation of the case law is inaccurate. As I explain in the paper, it is the consequence of the confusion around three separate but related notions, which should not be conflated: (i) appreciability; (ii) likelihood and (iii) effect.

The rejection of the de minimis doctrine does not say anything about what an anticompetitive effect is, and does not rule out the need to establish the likelihood of such an effect.

I explain these ideas by reference to Article 101 TFEU case law. In my view, it is reasonable to assume that the meaning of de minimis and appreciability is the same across provisions. What are the lessons to learn from Article 101 TFEU case law?

  • The fact that a firm has significant market power does not mean that its practices necessarily have anticompetitive effects. Take a simple example. Two parties to a distribution agreement may have a market share exceeding the 30% threshold set out in the Vertical Block Exemption Regulation. If it is not restrictive by object, this distribution agreement is not necessarily caught by Article 101(1) TFEU. The same is true in the context of Article 102 TFEU. If the practice is not abusive by its very nature, it is not always prohibited. A case-by-case assessment of its impact on competition would be required.
  • If a practice is unlikely to have restrictive effects on competition, it is not prohibited. ‘By effect’ conduct is only caught by Article 102 TFEU if it is likely to have an anticompetitive impact. In other words, and as explained by Advocate General Kokott, it is necessary to show that it is ‘more likely than not’ to have such an effect. As a result, a practice that only covers 1% of the market will typically fall outside the scope of Article 102 TFEU. The fact that it is not necessary to show the serious or appreciable nature of an effect is irrelevant in this regard.
  • Not every disadvantage to rivals is necessarily an anticompetitive effect. What amounts to an anticompetitive effect is independent from its serious or appreciable nature, and should not be conflated with it. A close reading of the case law suggests that not every disadvantage to rivals necessarily amounts to an exclusionary effect. For instance, the Court has already ruled that selective price cuts and ‘margin squeeze’ practices are not necessarily abusive. In Post Danmark I, it held that pricing below ATC but above AVC is unlikely to have exclusionary effects.

Written by Pablo Ibanez Colomo

26 September 2016 at 7:50 pm

Posted in Uncategorized

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