Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Archive for April 20th, 2018

Case C-525/16, Meo – Serviços de Comunicações e Multimédia: a major contribution to Article 102 TFEU case law

with 5 comments

Image result for MEO — Serviços de Comunicações e Multimédia

Love them or hate them, the EU competition law community should be grateful to collecting societies. Their activities have ensured a steady supply of preliminary references since the very early days. It looks like things are unlikely to change soon.

Yesterday’s judgment in Meo is the latest – but will certainly not be the last – of these preliminary rulings. The case concerned a relatively narrow issue: the interpretation of Article 102(c) TFEU in the context of exploitative discrimination.

You certainly remember that Article 102(c) TFEU concerns the application of ‘dissimilar conditions to equivalent transactions’ by dominant firms. According to the letter of the Treaty, the prohibition applies only insofar as it places some firms ‘at a competitive disadvantage’.

Reasonably – and as expected – the Court has held in Meo that the ‘competitive disadvantage’ cannot simply be assumed, or taken as a self-evident consequence of the behaviour of the dominant firm. Effects in this sense will have to be established on a case-by-case basis.

In any event, the contribution of Meo to the case law goes well beyond the legal status of exploitative discrimination. The Court has clarified some fundamental questions about which we lack meaningful guidance.

Not every disadvantage amounts to an anticompetitive effect: In para 26 of the judgment, the Court holds that ‘the mere presence of an immediate disadvantage affecting operators who were charged more, compared with the tariffs applied to their competitors for an equivalent service, does not, however, mean that competition is distorted or is capable of being distorted’.

Simply put: the Court clarifies that not every disadvantage resulting from the behaviour of a dominant firm amounts to an anticompetitive effect within the meaning of Article 102 TFEU. This clarification is no less than crucial, both in the context of exclusionary and exploitative practices.

The Court has put to rest, for good, the idea that practices (any practice) by a dominant firm cannot fail to have anticompetitive effects. According to this interpretation, anything that makes rivals’ or customers’ life more difficult would be abusive. Post Danmark I already dismissed this interpretation of Article 102 TFEU; Meo is the last nail in the coffin.

This is a point that Alfonso and I already emphasised in our piece on the notion of restriction of competition. A restrictive effect cannot be everything, it only exists when a practice harms firms’ ability and incentive to compete.

There is no de minimis threshold under Article 102 TFEU, true. However, not every practice has an effect: In Post Danmark II, the Court held that there is no such thing as a de minimis threshold below which anticompetitive effects can be excluded under Article 102 TFEU.

Some people interpreted this point as meaning that, since there is no de minimis in Article 102 TFEU, any practice has an anticompetitive effect. The Court dismisses this view. What Post Danmark II means, Meo explains, is that, because we are dealing with a dominant firm, exclusionary effects cannot be ruled out ex ante. However, these effects will still need to be established in concreto.

As the Court puts it in para 29 of the judgment: ‘[…] in order for it to be capable of creating a competitive disadvantage, the price discrimination referred to in subparagraph (c) of the second paragraph of Article 102 TFEU must affect the interests of the operator which was charged higher tariffs compared with its competitors’.

Final thoughts: The case law makes more sense after Meo. The analysis of effects is a meaningful one under Article 102 TFEU, as it is under Article 101 TFEU and merger control. Crucially, some of the issues it addresses will, before too long, be addressed by the EU courts.

Written by Pablo Ibanez Colomo

20 April 2018 at 1:28 pm

Posted in Uncategorized