Chillin'Competition

The Court of Justice delivered yesterday its much awaited judgment in Android Auto, which I followed from the early stages (see here for a comment of the AGCM’s decision from four years ago). It exemplifies, better than any other, the uncertain future of the Magill/IMS Health and Bronner doctrines in the current economic and technological landscape.

Android Auto could have a very substantial impact on the relevance and scope of these two doctrines (far more substantial than Google Shopping, for instance). I write ‘could’ for the simple reason that the meaning of the judgment is only likely to be fully teased out following subsequent references to the Court.

Before addressing substantive matters strictly speaking, it makes sense to start by focusing on an issue that is potentially of interest to EU lawyers at large (and arguably the most intriguing in this particular case).

Yesterday’s judgment deals extensively with the conditions under which the Bronner doctrine is applicable. However, Bronner is not even cited in the original AGCM decision. The authority’s analysis was based on Magill and IMS Health instead (which is a similar, but not identical, doctrine).

More importantly (and unlike Google Shopping), the dispute at the national level was never about whether the Magill/IMS Health (or indeed Bronner) conditions were applicable in the circumstances of the case.

It revolved, instead, around the interpretation, by the AGCM, of the Magill/IMS Health doctrine, which was deemed to provide the appropriate analytical framework to evaluate the abusive nature of the practice. The AGCM’s choice of legal test was unsurprising. It was, after all, an outright, plain-vanilla refusal to deal.

One could argue, on the other hand, that the AGCM’s interpretation of Magill/IMS Health was somewhat unorthodox. It was therefore reasonable (and to be expected) for the Consiglio di Stato to refer a number of questions to the Court of Justice.

To begin with, it was unclear, in light of the available facts, whether access to Android Auto was indispensable within the meaning of IMS Health (this ruling provides, in paragraph 28, the canonical definition of the condition). Enel’s app had in fact been launched and was offered to end consumers even though it did not have access to the said platform (see paras 8 and 9 of the Court’s judgment in Android Auto).

The first and the second questions referred by the Consiglio di Stato addressed this issue. One of the questions related to the very meaning of the condition (does indispensability mean indispensability or does it mean convenience instead?). The other focused on the fact that Enel’s app and, indeed, rival apps had been offered to end users even though they were not accessible via Android Auto, thereby suggesting that the demanding threshold set in Magill and IMS Health had not been met.

The judgment in Android Auto does not interpret the indispensability condition. The Court, instead, reformulated the questions asked by the Consiglio di Stato (see para 33) and examined, following this exercise, whether the Bronner doctrine was applicable in the context of the case.

The reformulated question (para 36) was whether Article 102 TFEU can apply to a refusal to deal in the circumstances of the case (that is, one involving access to a digital platform) and this even though the platform in question is not indispensable but can make a product more attractive to consumers.

It is on the basis of this new question that the Court provided its interpretation of Article 102 TFEU. I will discuss the substantive aspects of the ruling (and how it potentially entails a shift in some points of law that had remained unaltered since Magill) in the next instalments.

For the time being, the fact that the dispute in Android Auto was transformed (from a case about the interpretation of Magill/IMS Health to one about the applicability of Bronner) raises a number of issues that are worth discussing.

Android Auto shows, first, the extent to which the substantive and institutional aspects of a legal discipline are intertwined. This is one of the overarching themes of my research. I have come to realise, over and over, that institutions often influence (if not shape) substance. This judgment is one on which I will rely in the future to illustrate this interaction.

A second point relates to EU law: it is fascinating that disputes coexist at various levels and that the EU incarnation of a case sometimes acquires a life of its own. As soon as new actors become involved in the dispute and provide their perspective, the discussion before the Court can drift apart from the national one and end up in a different place.

As a result, third, the judgment may be more consequential for disputes other than the one at stake in Android Auto. By focusing on the applicability of Bronner instead of the interpretation of Magill/IMS Health, the judgment may not necessarily shed much light on the specifics of the case. On the other hand, it is very likely to pave the way for intervention in other disputes relating to digital platforms.

The first instalment of this series (see here) – and the paper on which it is based (see here) – identify a mismatch between the reality of contemporary enforcement – where the adequate design and implementation of remedies is crucial to its success – and the ‘law in the books’, which assume a world in which the difficulty lies with detecting and establishing an infringement.

The obvious follow-up question is how the ‘law in the books’ (which is another way of saying Regulation 1/2003) can be changed to ensure that remedial intervention is effective.

The first step towards effectiveness is to acknowledge that ‘principles-based remedies’ hinder, rather than facilitate, enforcement. This point was already discussed at some length last time. The new iteration of Regulation 1/2003 should require the European Commission to provide the details of how the infringement is to be brought to an end.

The above point could draw inspiration from the framework that is already followed in relation to commitment decisions. The context is obviously different, but the fact that the obligations are specified in detail under Article 9 provide a clear template on what remedies should look like, in particular in cases that demand regulatory-like action. A quick look at recent decisions (such as this one) shows how granular the specification of commitments can get (as they should, given the concerns they address).

A second step towards effective enforcement would be to introduce a specific framework for the design of the remedies. This aspect is so central to the meaningful application of Articles 101 and 102 TFEU that is cannot be an afterthought in a procedure primarily conceived to establishing an infringement.

Again, this dedicated framework could draw inspiration from the one already applying when a firm proposes commitments to the European Commission.

Another source of inspiration is the Digital Markets Act, if only because this instruments acknowledges that a regulatory obligation is not always the end of the road, and that effective enforcement occasionally requires specification (as well as a formal apparatus allowing for it, such as the various avenues enshrined in Article 8 of the DMA).

The introduction of a formal framework for the specification of remedies would improve the current landscape in two ways (in addition to improving the effectiveness of remedies, that is). Third parties, who are not currently involved in the design of the remedy in any meaningful way, would be allowed to participate in the process.

The move would also provide greater clarity to firms subject to the remedies. By specifying, ex ante and in detail, how an undertaking is to meet its obligations, the state of perpetual uncertainty around compliance (which has become apparent in some recent cases) would be avoided.

The proposed framework is designed to balance these concerns with the requirements of the case law (pursuant to which the Commission cannot require the firm to bring the infringement to an end in a particular way if there are less intrusive means to achieve the same result)

The framework is summarised in the figure below.

The Commission would specify in detail the (structural or behavioural) obligations it plans to impose to bring the infringement effectively to an end, which would then be subject to a market test (along the lines of what is already done under Article 9 of Regulation 1/2003).

Following the market test, the Commission would give the chance to the undertaking subject to the proceedings to present a counterproposal to the (potentially revised) remedies. Only following this step (intended to bring the framework in line with the case law) would the Commission make the final version of the remedies binding upon the undertaking.