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Indispensability in Google Shopping: what the Court did, and did not, address in Slovak Telekom

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Google Announces Free Google Shopping Listings | Onefeed

Slovak Telekom was eagerly awaited, to a significant extent, because of its impact on Google Shopping, currently pending before the General Court. The question of whether the legality of the behaviour in the latter should be assessed in light of the Bronner conditions is arguably the most important aspect of the case.

Last month’s judgment provides some valuable clarifications concerning the conditions under which the Bronner conditions apply. A careful and dispassionate assessement of Slovak Telekom reveals, however, that some issues remain open.

It does not seem possible to claim, categorically, that the judgment unequivocally supports one conclusion or the other. Depending on how some open questions are interpreted, both outcomes (i.e. that indispensability is required and that it is not) seem in principle defensible.

What the Court held in Slovak Telekom

Dominant firms are in principle able to engage in self-preferencing: In paras 45-46, the Court holds that, at least in principle, there is nothing inherently abusive in the fact for a dominant firm to develop an infrastructure for its own needs. In particular, it is not unlawful for a dominant firm to favour itself by refusing to conclude an agreement with a rival.

The indispensability and elimination of all competition conditions are required where intervention would force a firm to conclude a contract: In line with the relevant case law since Commercial Solvents (see here) the Court confirms that the Bronner conditions are relevant where intervention would require a firm to conclude a contract (paras 46-47). The applicability of the indispensability and elimination of all competition conditions depends, in other words, on the nature of the remedy required to bring the infringement to an end. If intervention demands a duty to deal with third parties with which the dominant firm had chosen not to deal, the lawfulness of the behaviour would be assessed in light of Bronner.

Freedom of contract and long-term incentives to invest and innovate explain the ruling: The Court is explicit about the reasons why the Bronner conditions are sometimes required. Forcing a firm to conclude a contract interferes with firms’ freedom of contract and their right to property, and should therefore be confined to exceptional circumstances.

Open questions in Google Shopping

Is it for an authority to decide when the Bronner conditions are applicable?

Interestingly, the Google Shopping decision shared the point of principle summarised above: the Bronner conditions are applicable where intervention would require a firm to ‘transfer an asset or enter into agreements with persons with whom it has not chosen to contract‘ (para 651 of the decision, which refers to Van den Bergh Foods).

More controversially, the Commission argued that the above question hinges on what the decision formally requires. The first open question is therefore whether this is an appropriate interpretation of Van den Bergh Foods and Slovak Telekom.

I have explained elsewhere why the Commission’s interpretation of the case law is not wholly uncontroversial. If it were followed, it would give a competition authority the discretion to decide when the Bronner conditions are applicable and when they are not. Insofar as it turns an issue of law into one of discretion, it does not find easy accommodation in the EU legal order.

Similarly, if one were to follow the Commission’s approach, a competition authority would be able to circumvent the Bronner conditions simply by avoiding the specification of the remedy.

As I have already argued, a more satisfactory understanding of Van den Bergh Foods and Slovak Telekom is to focus on what a decision requires in effect (as opposed to what it formally demands). This interpretation would be consistent with the role of the Court of Justice in the EU legal order and would place substance above form (a key leitmotif of EU competition law since its inception).

Do organic search results count as ‘access’ within the meaning of Slovak Telekom?

There is an important, and potentially decisive, difference between Google Shopping and Slovak Telekom. The technology behind Google’s search engine does not require the firm to deal with rivals. Accordingly, the display of Google’s generic search results involves strictly unilateral conduct (the underlying technology is explained, by the way, in paras 15-17 of the Commission decision).

In this sense, Google Shopping is different from the practices at stake in Slovak Telekom. In the latter, the provision of services by downstream rivals necessitated an access agreement between new entrants and the incumbent. In Google Shopping, on the other hand, the concerns related to the fact that comparison shopping sites only aspired to feature as ‘generic search results’ (para 344 of the decision).

Against this background, the question is whether featuring in Google’s generic search results counts as ‘access’ within the meaning of Slovak Telekom. In one sense, one could argue (as I presume the Commission and the complainants will) that it does. There are, on the other hand, reasons to take the opposite view, and claim that ‘access’ within the meaning of Slovak Telekom presupposes an agreement between the dominant firm and its rivals. These reasons are sufficiently compelling to make the issue interesting from a legal standpoint.

As explained by the Court in para 51 of Slovak Telekom, the question is whether intervention would interfere with the firm’s freedom of contract. Action under Article 102 TFEU would not interfere with such freedom where there is an ongoing contractual relationship with third parties (whether this is the result of voluntary dealing or of a regulatory obligation).

No such ongoing contractual relationship would exist, on the other hand, where the dominant firm unilaterally operates a service such as a search engine. In fact, only following intervention by the Commission in Google Shopping did the firm conclude an agreement with third parties. Which takes me to the last open question.

What about remedies that are effective alternatives to a duty to conclude an agreement?

In Google Shopping, the Commission did not specify a remedy. One may thus be tempted to argue that, even though intervention led to Google concluding agreements with third parties and granting them access to a feature it had reserved for its own use, such an outcome was not mandated by the decision. According to this view, Bronner would not be relevant. Shared access to a feature was the choice of the firm, not a requirement.

One may reach a different conclusion, however, if one considers that there is a gap in the case law, which Google Shopping exposed. Cases like Bronner and Slovak Telekom focused on one possible way in which refusal to deal cases can be remedied: by requiring the firm to provide access.

However, such cases can be remedied in two other ways, which are equally effective. First, by mandating the structural separation of the two activities (separating, for instance, the infrastructure and the services running on the infrastructure). Second, by asking the dominant firm to close a division (for instance, by no longer providing the services and merely operating the infrastructure).

Since all three remedies (mandating access, structural separation, closing down of a division) are functionally equivalent, and since they all intrude with firms’ freedom of contract and their right to property, I struggle to think of a reason why they should be treated differently from a legal standpoint.

In the same vein, one could define the scope of Bronner as follows: the indispensability and elimination of all competition conditions are part of the legal test where intervention would amount, in effect, to any of the three remedies above. Whether the remedies are spelled out in the decision would be immaterial. The relevant question would be whether bringing the infringement to an end would require, in effect, either a duty to conclude an agreement, the structural separation of two adjacent activities or the closing down of one of the activities.

I very much look forward to your thoughts on how best to make sense of Slovak Telekom, in particular if you see things differently. As you know, I have nothing to disclose.

Written by Pablo Ibanez Colomo

2 April 2021 at 6:06 pm

Posted in Uncategorized

GC Judgment in Case T‑814/17, Lithuanian Railways – Part I: object and indispensability

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Lietuva bendrai „Rail Baltica“ valdymo įmonei skyrė 2,1 mln. eurų - LRT

On 18 November, the General Court delivered the long-awaited ruling in Lithuanian Railways. The interest of the case did not lie in the outcome, which was widely anticipated. As I explained here, it is perhaps the most blatant abuse that the European Commission has ever considered.

Lithuanian Railways is valuable in that it engages with some of the key aspects underpinning Article 102 TFEU analysis. First (and most unusually), the case concerns a practice that could well be (and arguably should be) abusive by object. Second, it defines the conditions in which indispensability is an element of the legal test. Third, it engages with the analysis of effects.

In this first part I will address the first two points (abuse by object and indispensability). While the outcome is uncontroversial (and the thorough analysis of effects particularly valuable), the reasoning seems to deviate in some respects from the Court’s case law (and, indeed, from AG Saugmandsgaard Øe’s Opinion in Slovak Telekom).

As explained below, the GC suggests that, if there is regulation imposing an access obligation on a firm, indispensability would not be required under Article 102 TFEU. This position, which amounts to importing the standards and objectives of another regime, is not obvious to reconcile with TeliaSonera.

An abuse by object: why were effects considered?

Lithuanian Railways is a rare example in competition law. As the facts presented by the GC show, the removal of the track, in the economic and legal context of the case, had no plausible purpose other than the restriction of competition.

In other words: dismantling 19 kilometres of railway had, as its object, the restriction of competition. None of the reasons alleged by the applicant before the Commission and the GC change this conclusion. In this regard, the behaviour was similar to pricing below average variable costs, which is prima facie abusive irrespective of its effects (AKZO).

Against this background, the first question raised by the case relates to the legal test. Arguably, the fact that the removal of the track had no purpose other than the restriction of competition should have been enough to declare that it amounts to a breach of Article 102 TFEU.

Since the practice is inherently anticompetitive, it should be deemed prima facie abusive without it being necessary to carry out an analysis of effects (just like cartels and predatory pricing within the meaning of AKZO).

This approach is in line with the case law, which recognises a category of abuses ‘by object’ (most recently in Generics; see also here). It is also the most sensible way forward. Since Articles 101 and 102 TFEU can sometimes apply to the very same practice, it would be difficult to justify why effects would be evaluated under one provision but not the other.

The GC does not consider, as a matter of law, whether the practice should have been deemed prima facie unlawful irrespective of its effects. It simply notes that the authority had concluded that the behaviour was capable of having such an impact (paras 219 and 220; see also paras 82-85).

The review of the analysis of effects by the GC made the judgment ‘Intel-proof’ (remember that a firm can provide evidence showing that a practice is incapable of having anticompetitive effects even when it is prima facie abusive). I will address this review in Part II of this series.

On indispensability

The legal test issue was not addressed in relation to the abusive object of the practice. However, it was thoroughly considered when evaluating whether indispensability should have been assessed by the Commission.

I understand why the applicant might want to raise the issue of indispensability, even though the removal of a track has little to do with the issues at stake in Bronner (that is, whether a refusal to grant access to an infrastructure amounts to an abuse). It is therefore unsurprising that the argument was rejected.

Much more interesting is the question of why it was rejected. The GC advances two reasons, each of which sufficient to conclude that indispensability is not an element of the legal test (para 91).

One of the reasons is that, in the context of the case, there was a regulatory obligation to give access to third parties. Another reason relates to the fact that the infrastructure had been developed with public funds and/or under a statutory monopoly.

Regulatory obligations in light of TeliaSonera and Slovak Telekom

The GC holds, in para 92, that ‘[w]here there is a legal duty to supply, the necessary balancing of the economic incentives, the protection of which justifies the application of the exceptional circumstances developed in the judgment of 26 November 1998, Bronner (C‑7/97, EU:C:1998:569), has already been carried out by the legislature at the point when such a duty was imposed‘.

The GC does not provide any judgment in support of this position (other than its own in Slovak Telekom, under appeal). One should note, in this regard, that the Court has never given any weight to the legal obligations in place when considering whether indispensability should be an element of the legal test.

There was no such regulatory obligation in TeliaSonera. This factor, however, did not have any impact on the outcome of the case. Similarly, AG Saugmandsgaard Øe did not give any weight to the obligations imposed under sector-specific regulation in Slovak Telekom.

It is not wholly uncontroversial to state that legal obligations imposed under another piece of legislation should determine the relevance of indispensability under Article 102 TFEU.

Regulation imposing access obligations does not necessarily share the objectives of Article 102 TFEU. For instance, access obligations under the EU telecoms regime can be imposed under conditions that are considerably less stringent. Why? Because the objective of that regime is to eliminate dominant positions (unlike Article 102 TFEU, the objective of which is to prevent the abuse of such positions).

Thus, if we accept that the EU telecoms regime can or should determine whether indispensability is required under Article 102 TFEU, we would be accepting that EU competition law can be used as a vehicle to attain the objectives of sector-specific regulation (eliminate dominance), not its own (prevent abuses). We would also be accepting that the objectives of competition law may change whenever it overlaps with a sector-specific regime.

The consequences of Article 102 TFEU embracing the objectives of other regulatory regimes can hardly be overstated. Almost inevitably, this interpretation of the provision would lead to inconsistent enforcement and the fragmentation of the EU competition law system.

Such outcomes would be all the more controversial if one considers that Article 102 TFEU is primary EU law and sector-specific regulation is either secondary EU law or national law.

Fortunately, it will not take long before the Court addresses this point in Slovak Telekom.

I very much look forward to your comments. I will address effects next week.

Written by Pablo Ibanez Colomo

1 December 2020 at 12:34 pm

Posted in Uncategorized

Indispensability and Article 102 TFEU: it is not about Bronner (and refusals), but about Van den Bergh Foods (and remedies)

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Image result for van den bergh foods

As you know, the hearing in the Google Shopping case took place last month – speaking of which: huge thanks to Lewis Crofts for his quasi-live tweeting of what was going on (all that follows is what I gathered from his reporting).

The question of the applicable legal test was always going to be central in Google Shopping. Lewis’s tweets confirm this view. A lot of time was spent, it seems, on whether the Commission should have established that non-discriminatory display on the Google platform was indispensable within the meaning of Bronner (and, I would presume, IMS Health, which provides the most precise definition of the concept in the case law).

When I read about these matters, I am always surprised about two aspects of the discussions. One is that they are dominated by Bronner. A second one is the fixation with categorising conduct as a ‘refusal’ (as if it were the relevant factor to determine whether indispensability is an element of the legal test). I explored some of the themes in a recent paper, and tell myself it could be useful to revisit them in a post.

Bronner is just one of many cases on indispensability: it is not even the most important or relevant

Let me start with the first point. Bronner is just one of many cases addressing the indispensability condition: it was not the first and it will not be the last. It is not the most important either.

In the context of Google Shopping, it is not even the most relevant precedent: I have repeated many times (on the blog, at conferences and elsewhere) that the case is pretty much a re-run of Commercial Solvents and CBEM-Telemarketing.

As much as Commercial Solvents and CBEM-Telemarketing, the case is about a company changing its commercial practices to favour an affiliate at the expense of rivals. Indispensability was an element of the legal test in the two precedents (the latter judgment made an explicit reference to an ‘indispensable’ service).

Against this background, the fundamental question one should be asking, in my view, is why indispensability would not be an element of the legal test in Google Shopping, given that the self-preferencing has the same object and effect as the conduct considered in Commercial Solvents and CBEM-Telemarketing.

In other words: is there a good reason to depart from the legal test set out in the two closest precedents? Intriguingly, Lewis’s tweets suggest that this is not how the discussion took place.

It does not matter whether there is a refusal: what matters is the nature of the remedy

I have been able to gather from reporting-via-Twitter that a great deal of the discussion revolved around whether there had been a refusal to deal. I get the impression that this was perceived to be a crucial matter. As far as I can tell, the underlying idea is that, absent a refusal of some kind, indispensability is not an element of the legal test.

There is nothing in the case law that suggests this conclusion.

This is so, first and foremost, because there are cases where indispensability was required (including the two mentioned above) and which did not concern a Bronner-style refusal. Second, the question of whether there is a refusal can easily turn into a semantic discussion. Was the behaviour in CBEM-Telemarketing a refusal to deal? Maybe, or maybe not, depending on what one calls a refusal. How about Slovak Telekom? Is that a refusal or a strategy aimed at degrading the conditions of access? Finally, there are cases that involve a refusal and where indispensability is not required (including Slovak Telekom itself).

The criterion to determine whether indispensability is an element of the legal test was defined in Van den Bergh Foods. This criterion distils the essence of previous cases. According to this ruling, indispensability is required when intervention would require a firm to transfer an asset or enter into agreements with persons with whom it has not chosen to contract.

It is easy to illustrate this criterion by reference to Bronner. In that case, the defendant could have brought the infringement to an end in two main ways: (i) by giving access to its delivery network (that is, enter into an agreement with a firm with which it has not chosen to contract) or (ii) by transferring its assets to a third party (that is, a structural divestiture). To be sure, it could also have (iii) closed down its delivery division.

Accordingly, indispensability was found to be an element of the legal test (and the condition was found not to be fulfilled).

Apply the Van den Bergh Foods criterion to any vertical leveraging case and you will realise that, when intervention in a case necessitates one the three options mentioned above (enter into agreements with third parties, sell the firm’s upstream or downstream assets or close down its upstream or downstream activities), indispensability is a condition to establish an abuse.

This criterion helps one understand why indispensability is an element of the legal test in Commercial Solvents (the firm was asked to enter into an agreement with a third party on terms and conditions determined by the authority), Magill and IMS Health (in the last two, intervention forced the firms to change their business model and start licensing their intellectual property to third parties).

Conversely, the criterion is helpful to understand why indispensability is not required in ‘margin squeeze’ cases or in other constructive refusal scenarios. A mere cease-and-desist order was enough to bring the infringement to an end in cases like TeliaSonera and Slovak Telekom.

Whether or not there is a ‘refusal’ (however this tenuous concept is defined) does not come across as a relevant or decisive factor.

How Van den Bergh Foods is interpreted in Google Shopping, and why it is controversial

Interestingly (and reasonably), the Commission concludes in Google Shopping that the question of indispensability should be considered in light of the Van den Bergh Foods criterion.

The application of the criterion is even more interesting (and also controversial). Since the decision merely requires the firm to bring the infringement to an end (without specifying how), the Commission claimed, indispensability is not an element of the legal test.

As explained in my paper, I am not sure this comes across as the most reasonable interpretation of the Van den Bergh Foods criterion. It makes sense I go briefly over the reasons why.

In essence, this interpretation would give the Commission the discretion to decide when indispensability is an element of the legal test. The authority would have the freedom to choose when it imposes this threshold upon itself.

To illustrate the Commission’s approach and its implications, just consider Bronner (where indispensability was both required and not met).

According to the interpretation of the Van den Bergh Foods criterion advanced in Google Shopping, the Commission would be able circumvent the indispensability condition merely by requiring the defendant to bring its infringement to an end.

In other words: if, in a case identical to Bronner (same facts, same economic and legal context) the Commission left it for the firm to figure out how to comply with the decision, indispensability would disappear as an element of the legal test.

Since competition policy is implemented through law, not discretion, I struggle with this interpretation of Van den Bergh Foods .

The relevant question, as I understand the underlying principles, is not so much what the decision formally requires but what it entails in substance. What options does the firm have to comply with the decision? Are these options the same as in Bronner? If so, the Van den Bergh Foods criterion means indispensability is an element of the legal test. If there are other options (namely a negative obligation administered on a one-off basis), it is not.

Those who have read my paper knew I have nothing to disclose. Those who have not (no hard feelings) now do. I look forward to your comments!

_______________________________________________________________________

UPDATE: A few among you have reached out to explain that, in the hearing, some importance was given to whether there had been a ‘request’ for access, as if this factor had an impact on the applicable legal test (and whether indispensability is part of it).

I fail to see how the existence of a ‘request’ is a relevant factor. Just take a look at the facts of CBEM-Telemarketing (para 5 of the judgment). As soon as CBEM learnt about a firm’s decision to cease dealing with third parties, it brought an action before a court (and note that, because there was no ‘request’, there was no ‘refusal’ either). Still, indispensability was deemed to be an element of the legal test (para 26).

Thanks again for all the comments!

Written by Pablo Ibanez Colomo

6 March 2020 at 10:29 am

Posted in Uncategorized

NEW PAPER | Indispensability and abuse of dominance: from Commercial Solvents to Slovak Telekom and Google Shopping

with 4 comments

law logo

Under certain circumstances, Article 102 TFEU can only be triggered if it can be shown that an input or platform is indispensable for competition on a neighbouring market. There is some controversy, however, about what these circumstances are. Sometimes (e.g. CBEM-Telemarketing, Bronner) indispensability is required; sometimes, it is not (e.g. Telefonica, TeliaSonera).

The question is so intriguing that I have written a paper on it (available on ssrn, see here). Many of you will be familiar with my take: the case law is clearer than most commentators tend to concede. As I have explained in past papers, it is all about the remedy.

Where intervention under Article 102 TFEU would demand the administration of a proactive remedy (either a structural remedy or a prescriptive obligation that necessitates monitoring), indispensability becomes an element of the legal test (and thus a precondition for intervention).

Why the remedy determines whether indispensability is an element of the legal test

Support for this position can be found in the case law. In fact, the EU courts were explicit about the point in Van den Bergh Foods. According to this ruling, indispensability would be an element of the legal test where intervention would require the firm to ‘transfer an asset or enter into agreements with persons with whom it has not chosen to contract’.

The case law makes a lot of sense. Proactive remedies are notoriously difficult to design, implement, and monitor – the experience with Microsoft I and Microsoft II is there for all to see. Therefore, it makes sense to limit to exceptional circumstances the instances in which competition law institutions (courts, authorities) are exposed to this particular stressor.

This is all the more sensible if one considers, in addition, that weighing the ex ante and ex post dimensions of competition is as difficult an exercise, if not more.

From an ex post perspective, any refusal to deal restricts competition. Why is a refusal to start dealing typically abusive only in exceptional circumstances, then? Because the ex ante dimension of competition – the counterfactual, again – also matters. In this regard, indispensability is a valuable proxy to avoid a difficult balancing exercise (even if one ignores the difficulties, mentioned above, around the design, implementation and monitoring of proactive remedies).

Implications for ‘grey area’ cases

Indispensability is a controversial issue in some pending ‘grey area’ cases. What is interesting about these is that they come across as being somewhere in between two lines of case law.

Slovak Telekom is one of these cases. Some of the practices at stake in the case were labelled as a refusal to supply. Does it follow that indispensability should be required? Not necessarily, the Commission argued. I concur with it (and the General Court, which has already examined the question).

Why? In the circumstances of Slovak Telekom, the infringement could be brought to an end without resorting to proactive remedies. The usual reactive intervention (a cease-and-desist order) was more than enough.

The issue arose again in Google Shopping. Unlike Slovak Telekom, the infringement could only be brought to an end by means of proactive remedies (in essence, a redesign of Google’s products). The difficulties that come with the design, implementation and monitoring of such measures have become apparent in the aftermath of Google Shopping (and as far as I can tell, these difficulties have not yet been solved; see here).

In Google Shopping, the Commission refers to the principle laid down in Van den Bergh Foods.

Why does it conclude that indispensability is not required? It is all about its interpretation of the principle.

Google Shopping suggests that, so long as the Commission does not formally mandate a proactive remedy, indispensability is not an element of the legal test. According to this view, if the Commission simply requires that the infringement be brought to an end, Van den Bergh Foods would not be relevant.

As I explain in the paper, I am not sure this is the most reasonable interpretation of Van den Bergh Foods, and this, for two main reasons.

First, the interpretation advanced in Google Shopping would give the Commission the discretion to decide when indispensability is an element of the legal test and when it is not.

In other words, this interpretation would turn an issue of law (the conditions to establish an infringement), subject to full judicial review, into one left to the discretion of the authority (and thus subject only to limited review).

Second, the EU courts have always placed substance above form. As a result, I fail to see how the relevance of indispensability can depend on what a decision formally requires – as opposed to what it entails in substance.

It remains to be seen whether the case law will prove resilient. The pressure to circumvent and/or abandon the consistent doctrine since Commercial Solvents is strong. I claim in the paper that, if the case law is to survive, the underlying principles would probably have to be spelled out more clearly.

Before I forget: I am delighted to clarify that, in accordance with the ASCOLA declaration of ethics, I have nothing to disclose.

I really look forward to your comments!

Written by Pablo Ibanez Colomo

16 December 2019 at 11:05 am

Posted in Uncategorized

AG Rantos’ Opinion in Case C‑42/21 P- Lithuanian Railways

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AG Rantos delivered today his Opinion in the Lithuanian Railways case (see here for Pablo’s comments on the General Court’s Judgment). While the case concerns what Pablo has described as perhaps “the most blatant abuse that the Commission has ever considered, AG Rantos has managed to use the opportunity to shed some welcome light on some contentious issues.

The Opinion is of particular interest in relation to the interpretation of the Bronner Judgment and the indispensability condition, which has been the subject of much debate, including on this blog. This issue is also relevant to cases where I am acting for clients, so I will stay away from discussing the relevance of this Opinion to those cases.

As you will see, the Opinion is firmly rooted in the established case law of the CJEU and sets out a clear and clean analytical framework:

First, the Opinion observes that it would appear that the Bronner case law applies to situations where there has been a “request” and a consequential “refusal”, either explicit or implicit. At paras. 74-75 the Opinion explains that conduct that “could be perceived as an implicit refusal of access (constructive refusal to supply) (…) ultimately having de facto the same result as an (explicit) refusal of access” must also be analysed under the Bronner framework where its constituent elements share the meaning intended by the judgment in Bronner.

Second, the Opinion (para. 76) confirms, in line with Slovak Telekom and Van der Bergh Foods, that where a case does not involve an obligation to provide access but rather “the provision of services or the sale of products subject to unfair conditions, the Bronner conditions do not apply“.

Third, and this is in my view the key, the Opinion identifies the legal (paras. 64, 81 and 85) and economic (paras. 65, 86) logic that have always justified the application of the Bronner conditions in certain cases:

-The Opinion explains that, from a legal standpoint, the Bronner conditions are necessary in cases where putting an end to the alleged abuse would have the “consequence” of interfering with the dominant undertaking’s freedom to contract and right to property by requiring firms to dispose of an aseet or conclude contracts with person with whom it had opted not do so (paras. 64 and 81, both citing Slovak Telekom).

-For this reason, the Opinion posits that “any intervention, for the purposes of Article 102 TFEU, which consists in imposing on a dominant undertaking a (complete or partial) duty to supply to its competitors may clearly affect that right and should be carefully considered and justified”. AG Rantos explains that “any approach that involves a strict interpretation and application of that judgment would, in [his] eyes, disregard that underlying purpose“. Accordingly, he argues that Bronner “should therefore be the leading judgment, and the rule rather than the exception” (fn. 19).

-At para. 85 the Opinion argues that the Bronner criteria should apply in relation to infrastructure “of which the dominant undertaking is the owner and which, in principle, result from its own investment”; the accompanying footnote (38) distinguishes these scenarios from others where facilities were developed with public funding.

-The Opinion also recalls that, from an economic standpoint, the Bronner conditions are justified by the desire “to promote competition in the long term, in the interests of consumers, by allowing a company to reserve for its own use the facilities that it has developed“, thereby preserving its incentives to innovate and invest (para. 64). At para. 86, the Opinion endorses the view that the pre-existence of a regulatory duty to supply is a relevant factor to consider in as much as it already affects and takes into consideration those incentives.

For these reasons (in my view, the right reasons) AG Rantos’ Opinion proposes to endorse the General Court’s Judgment which, in turn, validated the Commission’s decision.

To be continued…

Written by Alfonso Lamadrid

7 July 2022 at 7:22 pm

Posted in Uncategorized

On Case C-377/20, Servizio Elettrico Nazionale (II): does the replicability test really work?

with 6 comments

This post is the second instalment of the series dedicated to the Court of Justice’s ruling in Servizio Elettrico Nazionale (see here for the first instalment). This time, I turn to what is potentially the judgment’s main innovation: the replicability test.

The Court suggests in its ruling that a large fraction of the case law, from rebates to refusal to deal and margin squeeze, can be analysed under the umbrella of replicability. The idea of an all-encompassing framework to scrutinise potentially abusive conduct has always been attractive. This judgment’s is certainly not the first attempt and is unlikely to be the last.

Alas, creating an all-encompassing framework is as tempting as it is difficult. Servizio Elettrico Nazionale goes to show, in this vein, that capturing the essence of the case law under a single test will always be a major challenge. It seems to me, after a careful reading of the judgment, that the replicability test does not quite work (probably not even in its own terms).

I have the impression that replicability will be remembered alongside its illustrious predecessors such as the ‘no-economic sense’ and the ‘profit sacrifice’ tests (that is, as an approach that is sometimes useful and potentially illuminating but that might lead to enforcement errors if applied mechanically or across the board).

There are three main reasons why I have come to this conclusion:

  • The case law that the Court cites in support of the test (including TeliaSonera and Bronner) is not exactly about the replicability of the practice, but about something else.
  • The meaning and scope of the replicability test fluctuates: para 78 suggests that it is about the practice, but the analysis that follows suggests it is about something else (the assets, or the effects).
  • The reasoning applying to the specifics of the case does not seem to fit the replicability test as defined in para 78.

TeliaSonera and Bronner are not about the replicability of the practice (nor is the AEC test)

As mentioned in my previous post, para 78 sets out the replicability test: under this framework, behaviour that cannot be replicated by an equally efficient rival is not in keeping with competition on the merits, and this insofar as the said behaviour flows from the firm’s dominant position.

The ‘as efficient competitor’ test is not about replicability

The Court goes on to support its claim in light of a broad range of precedents, in particular TeliaSonera and Bronner. According to the judgment, the ‘as efficient competitor’ test is essentially about whether an equally efficient firm would be able replicate the conduct implemented by the dominant firm.

This interpretation of the test is not easy to reconcile with TeliaSonera (paras 41-43, cited in the judgment). That judgment shows that the ‘as efficient competitor’ test is not about the practice, but the effects of the practice: more precisely, it seeks to ascertain whether an equally efficient firm would be able to offer its products or services otherwise than at a loss.

Put differently: the point of the test is not to assess the replicability of the practice, but whether, given the practice, an as efficient competitor would have the ability to compete on the market where the effects are manifested (which, by the way, is not necessarily the market in which the practice is implemented, as one might infer from para 78).

The refusal to deal case law is not about replicability, but indispensability

The same is true as far as non-pricing practices are concerned. Para 83 of Servizio Elettrico Nazionale interprets Bronner as revolving around replicability, and more precisely around whether the dominant firm’s assets can be replicated by an equally efficient rival.

However, Bronner (and Magill and IMS Health) is not about replicability, but about indispensability. It may sound similar, but it is not quite the same thing. According to Bronner, the question is not whether an equally efficient rival can build a replica of the dominant firm’s infrastructure, but whether the infrastructure is indispensable to compete on the relevant adjacent market.

Accordingly, an infrastructure may well be impossible to replicate and still not be indispensable. As explained by the Court in Bronner and IMS Health, if it is possible to enter the adjacent market by other means, even if less advantageous, the indispensability condition would not be met. Whether or not the infrastructure could be replicated is not a relevant, let alone decisive, consideration in this regard.

This point is crucial, as there seems to be a growing tendency to equate indispensability and replicability, even though the latter does not necessarily imply the former.

What is the replicability test about? The practice or the assets?

If one reads para 78 of Servizio Elettrico Nazionale, there seems to be little ambiguity about the nature of the replicability test: it is about the practice, and about whether it can be implemented by an equally efficient competitor.

The issue becomes less clear, however, when one takes a look at para 83 (which refers to Bronner and the exceptional circumstances test). This paragraph suggests that the replicability test relates to the infrastructure (or assets), not the behaviour (that is, the refusal to give access to the infrastructure).

The question is further complicated if one considers margin squeeze conduct. In a margin squeeze setting, replicability cannot be about the practice (since the practice is implemented on a market other than the one where it displays its effects) or the assets (since the relevant question is not whether the infrastructure can be replicated, but whether the spread between wholesale and retail prices allows equally efficient rivals to compete on the adjacent market).

The fact that the meaning (even the relevance) of replicability seems to fluctuate from one paragraph to the next suggests that, as much as we would want it to, one size does not fit all. It also means, by the same token, that the replicability test most probably does not work as an overarching framework.

The case seems to be decided on grounds other than replicability

Arguably, the single most reliable indicator suggesting that the replicability test may not work as an overarching framework is that the dispute itself is ultimately decided on grounds other than those laid down in para 78.

As already mentioned, para 78 refers to a practice that flows from the dominant position (implying, as explained in the previous instalment, the need to show a link between the dominant position and the practice). Para 101, however, suggests that the crucial consideration is another one, namely the fact that the firm has a unique status and set of assets as a former legal monopoly.

In the following paragraph (102), the Court holds that the replicability of the assets by other means is not a relevant consideration. This point, wholly sensible in the context of the case, is not easy to reconcile with para 83 and the refusal to deal case law: under the Bronner doctrine, there would be no abuse if there are other means, even if less advantageous, to compete on the adjacent market where the refusal displays its effects.

As can be seen, the case is not decided on replicability grounds in the end, but based on the fact that the dominant firm’s unique assets had not been obtained on the merits (but rather as a by-product of the exclusive rights granted by the State) and that, as a former monopoly, the undertaking had a particularly stringent duty not to impair the competitive process.

On those (somewhat narrower) grounds, the judgment is as illuminating as it is uncontroversial. A most useful addition to the growing case law applying to incumbents in liberalised markets.

I very much look forward to your comments.

Written by Pablo Ibanez Colomo

18 May 2022 at 4:19 pm

Posted in Uncategorized

AG Rantos’s Opinion in Case C-377/20, Servizio Elettrico Nazionale: a clean framework capturing the essence of the case law (I)

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Framework Stock Illustrations – 118,335 Framework Stock Illustrations,  Vectors & Clipart - Dreamstime

Advocate General Rantos’s Opinion Case C-377/20, Servizio Elettrico Nazionale, was published yesterday (see here for the French version). It is notable for two reasons. First, it effectively captures the essence of the case law following the contributions made by the Court from Post Danmark I to Generics. Second, it creates a framework that brings together all the pieces in a way that completes the picture and addresses some misunderstandings.

The Opinion is also a reminder that the pace of the law is not the pace of policy. The law moves in an incremental way that has little to do with the swings (occasionally dramatic) in enforcement. As Advocate General Kokott once memorably put it, the law, as interpreted by the Court, is not driven by the zeitgeist, but by a more stable undercurrent.

The questions asked by the Consiglio di Stato provide the Court with a great opportunity to engage with some questions that had not been expressly addressed so far. The Opinion is incredibly rich and I do not feel I would do it justice in a single post.

Thus, I will start my discussion with the question of whether an abuse of a dominant position involves an element of ‘impropriety’ or ‘abnormality’. Are practices caught by Article 102 TFEU inherently against competition on the merits? Can ‘normal’, ‘widespread’ or ‘commonplace’ conduct be prohibited as abusive?

Advocate General Rantos suggests an elegant answer, and one that is consistent with the case law. Whether a practice departs from competition on the merits and is qualified as abusive depends on a number of considerations, which vary based on the circumstances of each case and its peculiarities. One size does not fit all.

At one end of the spectrum (see para 62), there are practices that are inherently against competition on the merits, in the sense that they can only be rationalised as a means to exclude rivals (pricing below average variable cost is the perfect example in this sense; Advocate General Rantos adds Lithuanian Railways, in which the anticompetitive object of the conduct is also apparent).

Most potentially abusive practices, in any event, can be rationalised on pro-competitive grounds (and thus can be explained for reasons other than exclusion). They are, in that sense, ‘normal’. In such circumstances, the analysis of the anticompetitive effects becomes the central consideration to determine the legality of the behaviour. By the same token, the question of whether the said behaviour departs from competition on the merits and that of whether it has anticompetitive effects collapse into one and the same issue.

Concerning the analysis of anticompetitive effects (which is understood to mean ‘foreclosure’, or éviction), the Opinion addresses a number of important points (some of which will be discussed in a second post).

First, Advocate General Rantos confirms the principle according to which Article 102 TFEU is about equally efficient rivals. In this sense, the Opinion explains that, absent other circumstances, a practice that can be replicated by an equally efficient competitor is not abusive (para 69). This principle applies irrespective of whether the practice is price-based (say, a set of standardised rebates) or not (say, a refusal to deal).

Thus, there is a difference between ‘foreclosure’ and ‘anticompetitive foreclosure’. This point reflects the idea, introduced in Post Danmark I, whereby ‘not every exclusionary effect is necessarily detrimental to competition‘.

In the same vein, the ‘as efficient competitor test’ is considered to be an expression of that principle (but different from it and thus not to be conflated with it). There are circumstances in which the ‘as efficient competitor test’ is wholly inappropriate (as is true of the specific circumstances of Servizio Elettrico Nazionale or of Post Danmark II).

Second, a finding of abuse presupposes that the practice is capable of having anticompetitive effects, which is a point made explicit in Generics. It has long been clear that there is no such thing as a per se infringement in the EU legal order (para 55). We know from the case law, however, that effects need not be established by the authority or claimant in relation to all practices (AG Rantos mentions loyalty rebates in para 54; pricing below average variable costs is another example).

Third, substance trumps form (para 55). This is a theme that cuts across the case law in EU competition law (and, I would add, EU law at large). From the notions of undertaking and agreement to that of abuse, formal considerations are never decisive from a legal standpoint. The underlying substantive aspects are what truly matters.

Fourth, the evaluation of the anticompetitive effects of potentially abusive conduct is not carried out in the abstract and is not purely hypothetical. It must consider the relevant economic and legal context of which the practice is a part.

In fact, it is sufficient to read the application of the principles to the facts of the case (paras 75-81) to realise how far the analysis goes. The Court invites the Consiglio di Stato to consider, in particular, the following elements:

  • (i) the importance and extent of the competitive advantage afforded by the practice (the greater the competitive advantage, the more likely the anticompetitive effects).
  • (ii) whether the advantage can be replicated by rivals, in the sense that they can still compete effectively with the dominant firm.
  • (iii) the existence of a causal link between the practice and the anticompetitive effects: thus, if the competitive advantages can be effectively replicated, any actual or potential effects would not be attributable to the practice).

The nature of the analysis is entirely consistent with that introduced in cases like Deutsche Telekom, TeliaSonera and Post Danmark I and II. It is also consistent with that conducted in the context of Article 101 TFEU (Delimitis springs to mind when reading the Opinion) and merger control.

The above said, the framework proposed by the Advocate General is invaluable, as there are still few examples in the case law in which the issue is presented in such a thorough manner.

Written by Pablo Ibanez Colomo

10 December 2021 at 2:39 pm

Posted in Uncategorized

The General Court in Case T‑612/17, Google Shopping: the rise of a doctrine of equal treatment in Article 102 TFEU

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equal treatment

The General Court’s judgment in Google Shopping (available here) is finally out. There is much to unpack, and much that will be debated in the coming days and weeks. In this regard: the Journal of European Competition Law & Practice is planning a Special Issue devoted to the judgment. More details will follow in due course, but we will be open to proposed submissions, as we want to make sure that the issue is as balanced and diverse as possible.

The above said, it is immediately possible to get a clear idea of the logic underpinning the judgment. It is remarkable in a number of ways, which, if appealed and confirmed by the Court of Justice, may lead to a substantial expansion of the scope of Article 102 TFEU.

The rationale behind the judgment can be summarised as follows:

  • The General Court’s develops a principle of equal treatment, which is inferred from the case law applicable to public undertakings (and public bodies) and is now expanded to other dominant firms (para 155).
  • There is an element of ‘abnormality’ in the differential treatment of a search engine’s affiliated services, on the one hand, and third party ones, on the other (paras 176, 179 and 616).
  • Google’s search engine is a ‘quasi-essential facility’; in any event, it is not necessary to establish that the platform is indispensable within the meaning of the Bronner case law.

Equal treatment, abnormality and competition on the merits

When reading the judgment, one cannot avoid the impression that the General Court viewed the practice at stake in the case as inherently suspicious, that is, as a departure, by its very nature, from competition on the merits. To quote the judgment itself: ‘the promotion on Google’s general results pages of one type of specialised result – its own – over the specialised results of competitors involves a certain form of abnormality‘ (para 176).

The judgment concludes that the behaviour at stake is ‘abnormal’ for two separate reasons.

First, the General Court infers, from the case law, a general principle of ‘equal treatment’, which would demand, also in the context of Article 102 TFEU, that like situations be treated alike unless objectively justified (para 155). This paragraph is remarkable. The Court judgments cited relate to the behaviour of public authorities. The General Court appears to imply that dominant firms are also subject to the same principle (in Deutsche Telekom, the Court of Justice did not go this far, and confined the obligation of equal treatment to instances where the input is indispensable).

It is interesting (in particular for those who study telecommunications regulation) that the General Court refers, in support of its position, to Regulation 2015/2120, which enshrined the principle of network neutrality in the EU legal order. While net neutrality applies to Internet Service Providers, the General Court is of the view that the Regulation ‘cannot be disregarded when analysing the practices of an operator like Google on the downstream market‘ (para 180). Once the principle of neutrality introduced at one level of the value chain, it was bound to be expanded elsewhere (firms that lobbied for net neutrality rules have been reminded in this judgment that we should all be careful what we wish for).

Second, the judgment explains that the conduct is inconsistent with the ‘role and value‘ of a search engine, which, in the words of the General Court ‘lie in its capacity to be open to results from external (third-party) sources and to display these multiple and diverse sources on its general results pages, sources which enrich and enhance the credibility of the search engine as far as the general public is concerned, and enable it to benefit from the network effects and economies of scale that are essential for its development and its subsistence‘ (para 178). In this sense, it is argued, a search engine differs from the infrastructures or input at stake in precedents like Bronner or IMS Health.

Paragraph 178 of the judgment will be discussed at length by commentators. The General Court goes as far as to suggest that favouring the firm’s own services is ‘not necessarily rational‘ for a search engine (or rather, that it is only rational for a dominant firm protected by barriers to entry). Alas, it is sufficient to take a look at the wider world to realise that the conduct at stake in the case is pervasive, even in industries where dominance is rare (such as supermarkets, which, one would assume, are also interested in offering the most attractive products to end-users but have long engaged in similar self-preferencing).

More generally, digital platforms (and search engines are not an exception) are partially open and partially closed. In this sense, the fact that some features in a platform are not open to third parties does not necessarily go against its interests (or is not necessarily irrational). In the same vein, business models evolve, and may become relatively more open (or relatively more closed) over time (think of Apple, which has followed the opposite path).

Indispensability and the Bronner conditions

The General Court also advances two arguments in support of its conclusion that the Bronner conditions (in particular, indispensability) are not applicable in the case.

First, the judgment introduces a doctrine of ‘quasi-essential facilities’. More precisely, the General Court notes that ‘Google’s general results page has characteristics akin to those of an essential facility‘. Even though several judgments are cited (para 224), there are no precedents supporting this position. It is, therefore, an innovation that would need to be confirmed by the Court if the judgment is appealed. It would seem that a facility is ‘quasi-essential’ where it cannot be duplicated (even if not objectively necessary to compete for firms on an adjacent market, which is the crucial consideration).

Second, the General Court engages with the Slovak Telekom judgment, which clarified that indispensability is an element of the legal test where an authority or court would have to ‘force’ a dominant undertaking to deal with third parties with which it has chosen not to deal.

In this regard, the judgment tries to distinguish between a refusal in the traditional sense and the behaviour at stake in the case. However, the General Court seems to concede that formal differences between the two are not decisive. The arguments against requiring indispensability in the case are ultimately drawn from the opinions of the Advocates General in TeliaSonera and Bronner. These opinions are cited (at para 239) in support of the proposition that exclusionary discrimination is a separate form of abuse.

A close look at these opinions shows that only Advocate General Mazak’s analysis in TeliaSonera is capable of substantiating the conclusion drawn from it in the judgment. Advocate General Jacobs’ in Bronner indeed mentions discrimination, but is clearly referring to exploitative conduct and therefore does not answer the question (the same is true, by the way, of the reference to discrimination in Irish Sugar).

In any event, Advocate General Mazak’s Opinion would still fail to address the criterion introduced by the Court in Slovak Telekom: would the key question not be whether intervention forces a firm to deal with rivals? If so, does it matter whether we call it discrimination or otherwise? One should not forget, in this sense, that Slovak Telekom came after the Opinion and that the latter was not followed by the Court in TeliaSonera, which struck a different balance.

The General Court dismisses the idea that a remedy forcing a firm to deal with rivals means that indispensability should be an element of the legal test. It does so in the following terms:

244. However, the obligation for an undertaking which is abusively exploiting a dominant position to transfer assets, enter into agreements or give access to its service under non-discriminatory conditions does not necessarily involve the application of the criteria laid down in the judgment of 26 November 1998, Bronner (C‑7/97, EU:C:1998:569). There can be no automatic link between the criteria for the legal classification of the abuse and the corrective measures enabling it to be remedied. Thus, if, in a situation such as that at issue in the case giving rise to the judgment of 26 November 1998, Bronner (C‑7/97, EU:C:1998:569), the undertaking that owned the newspaper home-delivery scheme had not only refused to allow access to its infrastructure, but had also implemented active exclusionary practices that hindered the development of a competing home-delivery scheme or prevented the use of alternative methods of distribution, the criteria for identifying the abuse would have been different. In that situation, it would potentially have been possible for the undertaking penalised to end the abuse by allowing access to its own home-delivery scheme on reasonable and non-discriminatory terms. That would not, however, have meant that the abuse identified would have been only a refusal of access to its home-delivery scheme‘.

Your thoughts on the above would be very much welcome. My impression is that the paragraph fails to engage with the question, which remains unanswered. The General Court explains, in essence, that, in a case like Bronner, the dominant firm may have breached Article 102 TFEU in a different way, and that remedying the additional abuse may or may not have required the firm to deal with third parties (think of an exclusivity obligation). That seems correct and unquestionable.

However, the fact remains that indispensability would have been an element of the legal test in relation to the refusal. Whether or not there might have been an additional abuse does not alter this conclusion. And, as the Court explains in Slovak Telekom, the reason why indispensability would have been an element of the legal test in relation to the refusal is because intervention would interfere with the firm’s freedom of contract and would amount to forcing it to deal with rivals.

The General Court’s interpretation of Slovak Telekom will give rise to some controversy and will be widely discussed. This is only normal, as there is much uncertainty around the meaning of the case law. Paragraph 246 shows the extent to which the relationship between remedy and legal test needs to be clarified. As cases like Bronner show, they are two sides of the same coin: it is artificial to distinguish between both. When pondering whether a refusal to deal should be abusive, we are acutely aware that intervention would involve mandating a firm to deal with rivals (and we are cautious about such a remedy). It is difficult to pretend otherwise.

Since this post is already too long, I will be addressing other questions (in particular in relation to effects) in other entries. If there was any doubt: still nothing to disclose.

Written by Pablo Ibanez Colomo

10 November 2021 at 6:44 pm

Posted in Uncategorized

NEW PAPER | Product design and business models in EU antitrust law

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I have uploaded on ssrn (see here) a new paper on product design and business models in EU antistrust law (that is, Articles 101 and 102 TFEU). I will have to review the piece when the first instance ruling in Google Shopping comes out later this year, but I would very much welcome, in the meantime, your comments on it (if there was any doubt: nothing to disclose).

I have been thinking about these topics for a long time (as I suspect regular readers, and certainly my students, know). The key point I make in the paper is that there are fundamental differences between product design and business model cases, on the one hand, and more traditional competition law ones, on the other. It is difficult to argue that forcing a firm to redesign its product and/or to develop an alternative monetisation strategy is just enforcement as usual and that is has no implications from a legal standpoint.

Why product design and business model cases are different

The paper addresses the various ways in which product design and business model cases are different, including the following factors:

  • Intervention is more intrusive and far-reaching, as already pointed out above (banning a contractual tie-in is not the same as asking the firm to redesign its products; it seems difficult to pretend otherwise). For the same reasons, the conception, implementation and monitoring of remedies is also far more complex (the experience of the past few years is there for all to see).
  • The design of a product or a monetisation strategy can give rise to pro-competitive gains that are not manifested in more traditional cases: the integration of a camera in a smartphone allows it to interact at a deeper level with the rest of the phone’s functionalities, and this in ways that contractual tie-ins cannot (and never will).
  • The assessment of the counterfactual is more complex: because the pro- and anticompetitive aspects of a product design or a business model are so closely intertwined (the very restraints that appear to restrict competition also create it), the evaluation of the effects is also more complex (as I explained here by reference to the Apple App Store case).

How the case law accounts for the specificities of product design and business model cases

The case law does not ignore the specificities of product design and business model cases. These are and/or can be taken into account in a number of ways, in particular the following:

  • Where intervention amounts to forcing a firm to deal with third parties with which it has chosen not to deal, a finding of infringement demands evidence of indispensability and elimination of all competition: Slovak Telekom (in line with the relevant precedents) clarified this fundamental point.
  • A practice that is objectively necessary and/or a clause that is ancillary to a pro-competitive transaction is not restrictive of competition. This principle, which flows from the need to establish a restriction against the relevant counterfactual, is manifested, inter alia, in two ways:
    • Sometimes, it is embedded in the legal test: Metro I and Pronuptia are the go-to examples in this regard.
    • Sometimes, objective necessity/ancillarity is evaluated on a case-by-case basis. The lesson to draw from Intel and similar cases is that any arguments in this sense are to be carefully pondered by an authority when invoked by a firm.

The tension between the case law and common carrier antitrust

It seems difficult to dispute that there is, in some respects, tension between the case law and the most recent administrative practice (some examples of which I review in the paper). The Commission’s practice is an expression of what I have called ‘common carrier antitrust’, which is characterised by the following features:

  • The tendency to equate anticompetitive effects with a competitive disadvantage: I have discussed this point extensively on the blog (see for instance, here and here) as well as on a paper published earlier this year (see here). The Commission, in its most recent practice, seems to be embracing a very low threshold of anticompetitive effects, which would not be immediately obvious to reconcile with the case law (or indeed with the analytical framework laid down in the Guidance Paper).
  • The blurring of lines between exploitation and exclusion: are the Apple App Store and Amazon cases about exclusion? Are they about exploitation? Both? These cases may be marking a comeback to the days of Michelin I and British Airways, where exploitation and exclusion were conflated in individual decisions.
  • The formalistic approach to the ‘exceptional circumstances’ test: as explained elsewhere on the blog (see here), the Commission has advanced the view that the applicability of the indispensability and elimination of all competition conditions depends on what the decision formally demands (as opposed to what it involves in effect). A practical consequence of this interpretation of the case law is that any agency would be able to circumvent the ‘exceptional circumstances’ test by avoiding the specification of the remedy.

It remains to be seen how the tension between the case law and common carrier antitrust will be resolved and, by extension, what the relationship between competition law and sector-specific regimes (in particular the Digital Markets Act) will be. I very much look forward to hearing from you. Bon week-end a tous!

Written by Pablo Ibanez Colomo

17 September 2021 at 11:37 am

Posted in Uncategorized

NEW PAPER | What is an Abuse of a Dominant Position? Deconstructing the Prohibition and Categorizing Practices

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I have uploaded on SSRN a new paper on the notion of abuse from a comparative perspective (see here). It will be published in the Research Handbook on Abuse of Dominance and Monopolization, jointly edited by Pinar Akman, Or Brook and Konstantinos Stylianou (all based at the University of Leeds) and forthcoming with Elgar next year. I am really grateful to them for the invitation to take part in the project.

The paper seeks to provide an overview of the notion of abuse (broadly conceived) from a comparative perspective. It focuses, in particular, on the EU and US case law and administrative practice.

The first point I make is that the notion of ‘competition on the merits’ is not particularly helpful. Not all potentially abusive strategies are inherently anticompetitive or inherently pro-competitive; most conduct may or may not be caught by the prohibition depending on the specific circumstances of each case. It is not a surprise, against this background, that the evaluation of the economic and legal context has acquired an increasingly relevant role in the case law.

Second, the paper seeks to tease out, systematically, the constituent elements of the notion of abuse. The paper differentiates between practices based, inter alia, on whether they are price-based or not; whether they involve the leveraging or the strengthening of a dominant position; and, as far as leveraging strategies are concerned, whether the relevant markets are horizontally or vertically related.

On the basis of this exercise it is possible to understand the controversies and frictions that have become so frequent in this field. Like practices are not always treated alike by courts and/or authorities. There are also ‘grey areas’ in between the most common categories, as Slovak Telekom has recently shown.

Finally, the piece touches upon potentially abusive practices in digital markets. Intervention against online platforms is remarkable (and more intrusive and far-reaching that traditional competition law enforcement) in that it gets into the design of products and business models. Traditionally, authorities were reluctant to venture into such territory. Not anymore. Just compare and contrast the EU Microsoft saga, which left the firm’s business model untouched and Android, which challenged the core of Google’s monetisation strategy.

Given the paucity of precedents, it is not surprising that questions about the applicable legal test in relation to these practices have proved contentious. Slovak Telekom already suggested an approach to navigate the issue (as explained here, the applicable legal test would hinge on whether, in effect, intervention would force the dominant firm to conclude a contract with third parties with which it has chosen not to deal).

I look forward to your comments (as usual, nothing to disclose).

Written by Pablo Ibanez Colomo

30 July 2021 at 4:10 pm

Posted in Uncategorized