Chillin'Competition

Alfonso and I have just completed a paper on the notion of restriction of competition, which is available for download here. I am quite happy that we finally got around writing something together after such a long time. And it has been fun. It has been one of these papers that does not take you exactly where you expected.

As we were diving into the case law we realised, once again, that the Court is not given the credit it deserves. The case law is remarkably rich and consistent. It provides precious guidance, which, unfortunately, is sometimes ignored. We have the impression that there is still considerable noise in the context of discussions around the notion of restriction of competition.

When we first drafted the introduction, we pointed out that it was hopeless to provide a definition of the notion of restriction of competition. When the first version was completed, we felt confident enough to revisit that claim. The Court has laid down all the necessary elements to identify what amounts to a restriction, whether by object or by effect. These elements are summarised in the flowcharts that you will find below, which can be downloaded here and here.

In essence, a practice that is deemed restrictive is one that is presumed to have a net negative impact on competition. In other words, it is a practice whose anticompetitive effects are presumed to weigh more that the pro-competitive gains that result from it.

As a rule, practices that restrict competition by object are those that are deemed to lack pro-competitive virtues. As a result, they can be safely presumed to have a net negative impact on competition. As shown in Chart 1, the Court typically starts the analysis by asking whether a given practice is plausibly pro-competitive (you will remember that this is the factor that made all the difference in Cartes Bancaires).

‘By effect’ practices, on the other hand, are those that are plausibly pro-competitive. As a result, their net impact on competition may be positive or negative depending on the economic and legal context. We summarise the steps of the effects analysis in Chart 2.

We are grateful to the people who took the time to send comments on the paper. Do not hesitate to send them our way.

Chart 1: Assessing the restrictive nature of a practice

Chart 2: Assessing the likely restrictive effects of a practice