Chillin'Competition

As one would expect from a proper rentree, I have just uploaded on ssrn (see here) a new paper, entitled ‘Form and substance in EU competition law’.

The piece deals with the unlikely comeback of formalism in competition law discussions. Formalism may be back, but the tone and substance of the debates are different from those of yore. During the 1980s and 1990s, formalism was criticised by those that championed the ‘effects-based approach’ and favoured restraint in the enforcement of competition law provisions.

In the past couple of years, formalism has been questioned for the opposite reason. Some leading commentators and practitioners see formalism as an obstacle to effective policy-making. From this perspective, the use of structured legal tests (such as the three Magill conditions or the ‘five criteria’ introduced by the Court in Intel) would hinder authorities’ ability to deal with anticompetitive conduct.

Against this background, the paper seeks to clarify what we mean by formalism (or form-based approach). It seems to me that people refer to different realities when they use the term.

The term was originally used to refer to an approach whereby the (i) categorisation and (ii) lawfulness of practices depend on their form (and their form alone). The meaning changed over time. For some, the ‘by object’ treatment of conduct is synonymous with formalism. For others, the use of structured legal tests (as opposed to unstructured or ‘liquid’ approaches), is also a manifestation of the phenomenon.

One of the conclusions of the paper is that it would be incorrect to conflate ‘by object’ and formalism. The analysis of the restrictive nature of an agreement is not necessarily formalistic. It can also rely on a substance-based approach. In the same vein, the paper explains that the use of legal categories is not inherently (and not always) formalistic. As pointed out by Wouter Wils in his instant classic on Intel, categories are a necessity in any legal order.

Another conclusion is that the Court of Justice has consistently placed substance above form both when it comes to assessing the object of agreements and when defining legal categories. There are two salient (and relatively recent) examples in this regard.

Super Bock confirmed that the form of an agreement does not and cannot determine, alone, whether it is restrictive of competition by object. The so-called ‘object box’ is elegant, intuitively appealing and incredibly useful as a first approximation to the issue, but does not reflect how the Court really goes about it.

After Super Bock (which implicitly overrules Binon), the last remaining pocket of formalism has fallen: resale price maintenance can no longer be said to amount, in the abstract, to a ‘by object’ infringement. The need to consider the ‘economic and legal context’ knows no exceptions.

Slovak Telekom, in turn, illustrates the substance-based approach that the Court follows vis-a-vis the definition of legal categories. According to the judgment, the applicablity of the Bronner test does not depend on formal criteria, but on substantive factors, namely whether requiring a dominant firm to deal with third parties would interfere with its right to property and its freedom of contract.

It would be really wonderful to get your thoughts on the paper. Do not hesitate to contact me. And, as ever, I am delighted to clarify that I have nothing to disclose.