Chillin'Competition

Decades may have passed, but the FIDE Congress remains an (the) inescapable reference for those interested in EU law matters. This year’s gathering, in Sofia (Bulgaria), will be the 30th (!). The stellar programme of the event (to take place between 31st May and 3rd June) can be found here. And information on how to register, here.

This year’s edition has all the ingredients behind the success of past congresses: topics at the cutting edge of developments in EU law, stellar (general and institutional) rapporteurs and an unparalleled line-up of speakers (including the President of the Court of Justice and the General Court as well as the Presidents of the Constitutional Courts of several Member States and of Ukraine).

As per the tradition, one of the topics is devoted to competition-related matters. This year’s (The new geopolitical dimension of the EU competition and trade policies) focuses on the ongoing shift in competition law and trade policies. It is not a secret that changes underway at the global level (reshoring of manufacturing, decline of multilateralism and geopolitical tensions) invites us to rethink how competition and State aid provisions are interpreted are enforced in practice.

The topic is in the expert hands of Jean-François Bellis and Isabelle van Damme (Van Bael & Bellis, General Rapporteurs) and Ben Smulders (European Commission, Institutional Rapporteur). If you browse the programme, you will get an idea of the various angles they take (industrial policy, sustainability, foreign direct investment, supply chains) on the ongoing shifts. The publication that invariably follows each Congress will be one to keep an eye on.

Topics 1 (Mutual Trust, Mutual Recognition and the Rule of Law) and 2 (European Social Union), by the way. promise to be fascinating too (no less because discussions will be led by top academics and practitioners).

The event’s dedicated website is pretty detailed, but the organisers will be delighted to answer any questions you may have.

The European Commission is seeking feedback on the adoption of a set of Guidelines on exclusionary abuses (see here). At the same time, it has announced the amendment of the existing Guidance on its enforcement priorities and has published a most valuable Policy Brief outlining the novelties.

The significance of this moment is not to be underestimated. When the Commission issued its enforcement priorities, it made it very clear that they were not a statement of the law, and that the document was without prejudice to the interpretation of Article 102 TFEU by the Court of Justice. The point of the Guidance was simply to indicate how, as an administrative authority, the Commission intended to exercise its discretion.

By contrast, the ambition behind the new initiative is to codify the case law based on the Commission’s own understanding of Article 102 TFEU. What is more, the press release is explicit that the point of the exercise is to provide legal certainty to national courts and authorities, in addition to undertakings. It is intended, in other words, as a document that will assist the competition law community when navigating, and making sense of, the growing body of judgments.

This initiative is also highly symbolic. It marks the end (if not the end, at least the terminal decline) of the ‘more economics-based approach’ to competition law. The Policy Brief embraces objectives other than consumer welfare. While the new vocabulary will not have consequences as such (words are just words), it is a reliable indicator that times are changing. The new EU competition law is here to stay and will permeate every aspect of policy-making.

It is not easy to anticipate the scale and consequences of the initiative. This said, the Policy Brief is already informative and gives a sense of the direction of travel. There is much to unpack, but I can offer the thoughts that follow for the time being. I would very much welcome yours.

What is sensible in the Brief? A solid attempt to define the notion of anticompetitive foreclosure

As I have had the chance to mention in the past (see here), we are missing a definition of anticompetitive effects (or foreclosure) in the case law. The Policy Brief adds a great deal of common sense to the discussion. First, because it does not abandon foreclosure as the relevant benchmark of exclusionary effects. Second, because it explains at length that foreclosure within the meaning of the case law can exist even when rivals have not been fully excluded or marginalised.

The relevant question, under the case law, is not whether rivals are or may be driven out of the market, but whether rivals’ ability and incentive to compete are (or may be) affected to such an extent that the dominant firm’s competitive constraints are (or would be) reduced.

The definition proposed by the Commission captures effectively this idea and is very much in line with it. More precisely, anticompetitive foreclosure is defined, in the Brief and the amended Guidance, as a ‘a situation where the conduct of’the dominant undertaking adversely impacts an effective competitive structure, thus allowing the dominant undertaking to negatively influence, to its own advantage and to the detriment’of consumers, the various parameters of competition, such as price, production, innovation, variety or quality of goods or services‘.

What is confusing? The conflation of the threshold of effects (likelihood) and the temporal dimension (actual vs potential effects)

Another issue that needs to be further clarified in the case law pertains to the relevant threshold of effects (as a matter of substantive law, which is different from the standard of proof). This is not an academic or esoteric matter. It is crucial in practice and has major consequences for the scope of Article 102 TFEU.

It is one thing to require from an authority that effects be likely (probability of >50%) and a very different one that they be plausible (probability of >10%). In the latter scenario, it would be considerably easier to establish foreclosure (in fact, anticompetitive effects could be deemed established in pretty much every Article 102 TFEU case under a plausibility standard).

As the Commission rightly points out, the Court tends to use capable and likely indistinctly. The Guidance, in its original incarnation, referred to ‘likely’ effects. To the extent that this term was indicative of a >50% probability of harm, it is the right one as a matter of positive law. An attentive reading of the case law makes it clear that (irrespective of the terms used) the Court requires, in substance, more than mere plausibility of harm (this is a point made by AG Kokott in her Opinion in Post Danmark II).

The Brief, by contrast, relies on a different substantive threshold, that of ‘potential effects’. This reference is confusing and will give rise to debates (which is very much welcome, and the very point of the exercise). Contrary to what is suggested in the document, the divide between actual or potential effects does not refer to the probability of harm, but to the temporal dimension of the analysis (that is, whether we are looking at harm that has occurred or, instead, at harm that may occur further down the line).

When the Court (uncontroversially) holds that Article 102 TFEU comprises both actual and potential effects, it holds, in essence, that the provision encompasses not only past foreclosure but the prospect of exclusion. A cursory look at any dictionary confirms that the word ‘potential’ refers to something that may happen in the future given the appropriate conditions.

One needs to look no further than Servizio Elettrico Nazionale (paras 49-58) to realise that the actual vs potential divide in the case law is indeed about the temporal dimension of the analysis (as opposed to the substantive threshold of effects). In fact, this judgment is useful in a crucial sense that I presume the future Guidelines will incorporate: past evidence of actual effects (or their absence) is a relevant consideration when evaluating the potential of a practice to do harm.

What is missing? Causality and attributability of effects

Finally, there is an aspect that is not discussed at length in the Brief and that is equally crucial (and equally underdeveloped). Both EU courts have consistently referred, in the past few years, to the need to establish a causal link between the potentially abusive practice and any actual or potential effects (or, if one prefers, that foreclosure be attributable to the behaviour of the dominant undertaking).

If foreclosure would have happened anyway (that is, the anticompetitive effects are not attributable to the dominant firm), the practice cannot be said to be abusive. While this point is uncontroversial, it needs to be fleshed out. The Court has only sketched the principle, and it may take a while before some aspects are fully clarified. The discussion that the Brief has already triggered will hopefully shed light on this point.

A number of writing and teaching commitments have kept us busy in the past few months, and we look forward to exchanging views about them on the blog, as it slowly comes out of hibernation.

I will start with one of which I am particularly proud, and which is available here.

It is a piece, written jointly with Damien Neven (Graduate Institute and former Chief Competition Economist at DG Comp) and that is forthcoming in Vincent Verouden’s and Philipp Werner’s second edition of their monumental treatise on the Law and Economics of State Aid Control (I take this opportunity to thank both for the invitation!).

Philipp and Vincent assigned us a most exciting task: explain how the EU State aid control regime and its distinctive features have influenced other legal systems around the world.

Inevitably, our chapter covers a great deal of legal ground: the EU-UK Trade and Cooperation Agreement (in addition to the UK Subsidy Control Act), the EEA regime and, finally, the EU Foreign Subsidies Regulation.

We structure the discussion around the two mechanisms through which the EU regime influences other legal systems: convergence and unilateral action.

Convergence occurs through the trade agreements concluded by the EU (the UK Subsidy Control Act being a great example). This trend is complemented with unilateral action which complements and completes the effective enforcement of subsidy control the ‘EU way’.

It would be wonderful to get your thoughts on the piece: do not hesitate to get in touch via email.

On 1 April 2020 we lost Rubén Perea, a truly extraordinary young man who was about to start a career in competition law. We decided to set up an award to honour his memory, and to recognize the work of other promising competition lawyers/economists under 30. EVP Vestager kindly agreed to deliver this Award.

Today we are announcing the winner and runners-up of the Award’s 3rd edition. And…

the Rubén Perea Award goes to: JEREOME DE COOMAN, for his paper “Outsmarting Pac-Man with Artificial Intelligence, or Why AI-Driven Cartel Screening is not a Silver Bullet“. 

The jury also selected 4 finalists whose papers will be published in a special JECLAP issue. The finalists are:

• “Assessing the world’s largest gaming acquisition under EU competition law”, by Fabian Ziermann)
• “SEP licensing in the value chain: Does Art. 102 TFEU require license-to-all?”, by Lukas von Brasch)
• “The Liability of Corporate Groups for Violation of EU Competition Law” (by Marco Pasqua)

Congratulations to the recipients of the award!

Many thanks also to my fellow members of the jury (Gianni de Stefano, Lena Hornkohl, Michele Piergovanni, Damien Gerard and David Pérez de Lamo).