Chillin'Competition

I have just uploaded a new paper on ssrn (you can download it here). As you see from the title above, it is devoted to legal tests under Article 101 and 102 TFEU. The paper seeks to map these tests and explain how they operate in practice.

I thought it would be a good idea to provide a complete taxonomy, and to shed some light on where potentially anticompetitive conduct stands in the spectrum ranging from the prima facie unlawful (e.g. cartels) to the prima facie lawful (e.g. above-cost prices).

In addition, I felt a paper could shed further light on some questions that have been abundantly discussed in recent years and inter alia the following two:

How is the presumption of capability rebutted in practice?

We know that conduct that is deemed prima facie unlawful is presumed to be capable of having anticompetitive effects. 

We also know since Intel (and, in the context of Article 101 TFEU, since Murphy) that firms can rebut this presumption by showing why, in a specific legal and economic context, the practice in question is incapable of having such effects.

How does the rebuttal of the presumption work in practice? I explain in the paper that the presumption of capability can be rebutted in two ways:

• By showing that any actual or potential effects would not be attributable to the practice under consideration (remember Post Danmark II?); or
• By showing that the practice is objectively necessary to achieve a pro-competitive aim (remember Societe Technique Miniere?).

The first way of rebutting the presumption of capability is at the heart of Intel. The AEC test may tell us that an equally efficient rival would not be forced to sell at below cost, and thus provide a powerful indicator that the requisite causal link between the practice and any actual or potential effects is absent.

The second way or rebutting the presumption is at stake, for instance, in the Guidelines on vertical restraints. The Commission explains that, where necessary to enter a new market, an exclusive distribution agreement that insulates the reseller from active and passive selling may fall outside the scope of Article 101(1) TFEU (even though such an agreement is in principle a ‘by object’ infringement).

Why is indispensability required in some cases but not in others?

Another question that my paper addresses relates to an apparent puzzle in the case law. A refusal to deal and a ‘margin squeeze’ seem to be comparable in every way. Why is it, then, that, when it comes to establishing an abuse, indispensability is required in the case of the former but not the latter? Is the case law inconsistent, as some argue?

The paper identifies an aspect that is common to all cases in which indispensability was an element of the legal test (Commercial Solvents, CBEM-Telemarketing, Bronner, Magill and so on). In all of them, the remedy imposed was proactive in nature – a positive obligation to do something. In Commercial Solvents, for instance, the Commission prescribed the quantities and the price of the supplies.

Cases like Deutsche Telekom and Slovak Telekom are different. In these two cases, the remedy was the traditional reactive one – an obligation not to do something.

Proactive remedies are much more difficult to design, implement and monitor. Accordingly, it makes sense to introduce indispensability as a filter. In this regard, I submit (perhaps in contradiction with the prevailing view) that the case law is much more sensible than commonly conceded.