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Is the Guidance Paper on Article 102 binding on the European Commission?

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A few posts ago (here) Pablo challenged me to explain my view on the binding force of the Guidance paper on Art. 102. The answer is crystal clear in my mind (and Pablo already anticipated the answer years ago labelling it as a “pre-commitment device”), but I have never seen the debate spelt out in full, nor have I seen what I think is the killer argument.

This is actually an issue that I have discussed with many people over the past few years, but never on this blog as it was pretty much a moot question. Until now every Commission decision challenged before EU Courts had been adopted prior to the release of the Guidance Paper. But the debate will now get serious, as the issue may come up in the Qualcomm (AEC test or no AEC test?) and Google Shopping cases (the first 102 standard infringement decisions adopted after the Guidance paper that does not mention it at all). All others mention it on substantive points unrelated to prioritization. [For the meticulous, ARA was a “settlement” and Romanian Power Exchanges was about an exploitative, not exclusionary abuse].

For various reasons I won’t discuss anything specific about those cases but rather the general theoretical point. I of course only work for non-dominant companies 😉 but since that view may be disputed (on the basis of a flawed dominance assessment…), please consider what I am about to say on its merits and with a critical mind. I am confident you will agree.

First, we can all agree that the Guidance Paper is not the law and that it is not binding on EU Courts, national courts or NCAs in spite of its persuasive value as a “useful point of reference”. EU Courts are the sole and ultimate interpreters of the law. Recital 3 of the Guidance acknowledges this otherwise evident reality.

Second, we surely all agree that EU case law has consistently established the principle that “in adopting [soft law instruments] and announcing by publishing them that they will henceforth apply to the cases to which they relate, the institution in question imposes a limit on the exercise of its discretion and cannot depart from those rules under pain of being found, where appropriate, in breach of the general principles of law, such as equal treatment or the protection of legitimate expectations. It cannot therefore be precluded that, on certain conditions and depending on their content, such rules of conduct, which are of general application, may produce legal effects”. (See, among many others, paras. 209-211 here).

This means that even if the Guidance Paper is not the law and cannot bind courts, it certainly might bind the institution which adopted it and committed to apply it to future cases.

The Guidance Paper seems to meet all conditions. It was formally adopted, publicly announced and presented, published in the Official Journal of the European Union and it is currently listed in DG Comp’s website under “Legislation in force” (here). The Guidance itself stated (para. 2) that its purpose is to “provide greater clarity and predictability” and “to help undertakings better assess whether certain behavior is likely to result in intervention by the Commission”. The Commission also made sure to clarify that it would “fully apply the approach set out [in the Guidance Paper] to future cases”.

I actually had a hearing in Luxembourg some weeks ago where we discussed the legitimate expectations generated by a statement from a Commissioner in response to a parliamentary question. There is, in fact, an established line of case law making clear that legitimate expectations may arise not only from administrative or legislative acts, but also from settled practice and even from oral or written representations (State aid lawyers know this all too well). If a random oral representation can have such effects, does the same reasoning really not apply to a document like the Guidance Paper?

Third, we surely all agree that deviations are certainly possible provided a special statement of reasons is given. The EU Courts have recently clarified in ICAP that the duty to state reasons “must be complied with all the more rigorously” when the Commission departs from guidelines (para. 289).

The interesting debate comes now.

Fourth (the Commission’s counterargument)

Some of the Commission’s top legal minds (whom for understandable reasons wouldn’t have agreed with the Guidance Paper in the first place) argue that the Guidance Paper is in reality a different animal because it is a “Guidance paper” (as opposed to Guidelines)? that refers only to “enforcement priorities”. This was also the view eventually advocated by the Commission in the Intel hearing as transcribed here.

At the litigation workshop we held back in June, some of the Commission representatives added that the Guidance Paper is also different from other soft law in the competition field because it relates to an element (the notion of abuse) on which the Commission lacks any discretion. The idea is that the Commission cannot limit the discretion it does not have regarding the substantive assessment of cases.

[Note that these two views appear to contradict each other, because the Commission does have prioritization discretion and could therefore limit it and commit to pursue only some types of pre-defined cases. Let us in any event consider both lines of reasoning for the sake of argument]

Fifth (my rebuttal)

I have told my friends holding this view that:

  • The case law makes it clear that the title of the document is irrelevant. Under EU law the denomination of an act is not decisive as regards its legal effects. This also applies to soft law instruments (se e.g. C-322/88). Rules of conduct of general application adopted by the EC may produce legal effects “depending on their content”. The Guidance Paper is drafted as substantive guidelines and refers to elements of the assessment that are only undertaken at every step of the investigation of a given case, not just in deciding what to prioritize.
  • There is no reason to treat the Guidance Paper differently to all other EC Communications to which the EU Courts have applied the said reasoning. If anything, there are reasons to conclude that the protection of the principle of legitimate expectations is even of greater importance here. Indeed, the EU Courts have considered that a deviation from the fining guidelines will, absent a statement of reasons, be considered contrary to the principle of legal certainty even if fining policy is an area where predictability and foreseeability may not be desirable.
  • The killer argument: The argument that the Commission could not limit its discretion with regard to its substantive assessment of Art. 102 cases because the notion of abuse is an objective one (and therefore the Commission would lack any such discretion) has already been disproven by EU Courts. The CJEU ruled in Expedia(para. 28) that the Commission is bound by its De Minimis Notice in the sense that a failure to state reasons for a deviation would imply a breach of the principle of legitimate expectations. Very importantly, the De Minimis Notice, like the Guidance Paper, refers to an objective notion in relation to which the EC enjoys no discretion (as confirmed in Case T-7/93, Schöller,  para.75). And very importantly, all versions of De Minimis notice, like the Guidance Paper, have also been clearly drafted in terms of prioritization and in order for “undertakings to be able to judge for themselves whether their agreements do not fall within the prohibition” (pretty much what para. 2 of the Guidance Paper says). In my view, paragraph 28 of the Expedia Judgment pretty much closes any possible debate.    

 I rest my case. Look forward to reading your views!

Written by Alfonso Lamadrid

15 March 2018 at 7:05 pm

Posted in Uncategorized

Professor Ibañez Colomo

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Barriers to academic promotion are lower than we thought… The London School of Economics has now officially announced that Pablo will be a full Professor as of the 1st of August. 

This is big and excellent news and it could not be more deserved.  I have said before that he is the prime academic of his generation, but that is an understatement.

Since this may be my last chance to justify a eulogy (from today on I will keep running jokes on him), let me just underline how extremely unlikely it is for someone to combine that kind of brain power (and freak memory that I enjoy showcasing at dinners), curiosity, hard-working nature, passion for a discipline and bullet-proof ethics. On top of that he is one of the most genuinely good people I know.

It’s a luxury to have him here and to learn from him everyday. His co-blogger could not be more proud.


P.S. Forget about all the above. I’m just trying to sugar coat him to see if that way he can go back to writing more frequently…

Written by Alfonso Lamadrid

12 March 2018 at 6:08 pm

Posted in Uncategorized

Judicial Review in Competition Law (Madrid, 9 March 2018)

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9 march

The 21st edition of the Competition Law course that Luis Ortiz Blanco and myself co-direct in Madrid is coming to an end this week (and with it, my chances to go to Spain for at least a few hours…)

From today until Wednesday our very own Pablo will be coordinating a module on network industries featuring a stellar line up of experts who also happen to be good friends of this blog.

And on Friday 9 March, Judge Mercedes Pedraz (Audiencia Nacional/Spanish Court of Appeal) has put together a programme for the closing seminar. Take a look:

Friday, 9 March 2018- IEB (Madrid): Los Jueces Nacionales y el Derecho de la competencia

12:00 – 13.00: The application of Article 102 on abuses of dominant position in the case law of the Court of Justice of the European Union. 

José Luís Da Cruz Vilaça (President of Chamber, Court of Justice of the EU and rapporteur in the Intel Judgment)
13:00 – 14:00: El control judicial en materia de cárteles en la jurisprudencia del Tribunal Supremo

Eduardo Espin (Presidente de la Sección Tercera – Sala de lo contencioso administrativo,
Tribunal Supremo)
14:00 – 15:30: Lunch Break
15:30 – 16:30: La cuestión prejudicial con especial atención a las relativas a ayudas de Estado

David Ordoñez (Magistrado, Juzgado de lo Contencioso-administrativo nº 4 de Oviedo)

16:30 – 17:30: Judicial review in competition law cases

Peter Freeman CBE QC (Hon) (Chairman, UK Competition Appeal Tribunal)

For registration and more info, click here.

Written by Alfonso Lamadrid

5 March 2018 at 12:56 pm

Posted in Uncategorized

Ohio vs Amex before the SCOTUS- EU judges already got it

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It used to be commonplace for many to say that EU Law was lagging behind US antitrust law. Not sure that is still the case, assuming it ever was. But there is an important are where EU judges (even if perhaps not yet all EU competition authorities) are one step ahead:

The US Supreme Court heard yesterday oral arguments in the Ohio vs Amex case. Some say the case is fascinating. To me it is important, but it could not be more straightforward in the light of the current EU case law.

Indeed, the issues to be decided upon in that case are exactly the ones that EU Courts have perfectly understood and applied in cases like Cartes Bancaires, Mastercard, Streetmap, Bottin, etc. That is the view I tried to develop here:  Lessons from the Case Law for Competition Law Enforcement in Multi-Sided Markets (A Teaser)

The transcript of the hearing held yesterday is already available here  (that, on the other hand, shows that US Court litigation is more advanced logistically) [By the way, I can’t comment on the transcript yet because I am preparing for a hearing at the CJEU on Thursday (all those interested in tax-related State aid should attend, because there will be no transcript)]. I did however read many of the amicus curiae briefs a few weeks ago (all of which are also publicly available here) and they confirmed the point that this is all stuff we know too well and that judges in Europe have already understood all too well.

Written by Alfonso Lamadrid

27 February 2018 at 5:25 pm

Posted in Uncategorized

NEW PAPER: The future of Article 102 TFEU after Intel

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What lies ahead

My paper discussing the implications of the Court of Justice’s judgment in Intel is now available for download on ssrn (click here). As usual, I would very much welcome your thoughts on it.

Has something changed? Maybe nothing, but a lot needs to change

Has something changed with Intel? Strictly speaking, nothing has changed. It really is a clarification. The point of law introduced in Intel was there for all to see before the ruling. It was just waiting for the occasion to come out.

The above does not mean, however, that everything people were saying before Intel is correct, or that courts and authorities can carry on as usual as if the judgment had never been delivered. It may be true that nothing has changed in theory, but a lot needs to change in practice.

Exclusive dealing and loyalty rebates continue to be ‘by object’ infringements – in the sense that they are prima facie prohibited irrespective of their effects – after Intel. A practice is only prohibited by object if it is capable of having restrictive effects. However, capability in relation to these practices is presumed. In this sense, it is true that nothing has changed.

On the other hand, the Court made it explicit in Intel that dominant firms can challenge the presumption of capability. This is true of all ‘by object’ abusive practices, not just exclusive dealing and loyalty rebates. We knew it was possible to rebut the presumption of capability under Article 101 TFEU (Murphy). We now know for sure that the same can be done under Article 102 TFEU.

An arrêt-cadre, not an arrêt-loi

I explain in my article that Intel is an arrêt-cadre, not an arrêt-loi. I mean by this that Intel lays down a framework, but does not develop it. I have come to the conclusion that this is a positive aspect of the judgment: trying to craft a whole system from the top-down may be counterproductive. It is better to wait for concrete issues to arise – this is after all the whole philosophy behind the EU Treaties.

What are the main questions that need to be clarified? I identify a few of these in the article:

What does capability mean?

The first key question relates to the meaning of capability – that is, what we mean when we say that a practice is capable of restricting competition.

Is capability the same as likelihood? Where does the threshold of capability lie?

In this regard, I argue in the paper that the threshold of capability is a fairly low one. This low threshold makes sense in relation to abuses ‘by object’, which are (and/or should be) those that according to economics and experience are liable to result in harm to competition with no offsetting benefits.

What authorities need to prove is that anticompetitive effects are plausible – not even likely. I also explain why it is important to distinguish between capability and likelihood.

The plain meaning of these words (‘capability’, ‘likelihood’) is – as highlighted by several speakers during our Chillin’ conference – already suggestive of different thresholds. I explain in the paper that mixing up the two concepts would blur the line between ‘by object’ and ‘by effect’ infringements. And such an outcome would be undesirable.

If the line between object and effect became blurred, either all ‘by object’ conduct would become subject to a case-by-case effects analysis (which would make no sense) or all ‘by effect’ conduct would become, for all practical purposes, prohibited by its very nature – thereby rendering the case-by-case assessment meaningless in practice.

What level of evidence do firms need to satisfy?

We know after Intel that dominant firms can rebut the presumption of capability. The judgment is silent, however, about the level of evidence that dominant firms need to meet in this regard. Do they need to prove the absence of capability beyond reasonable doubt? Do they need to provide ‘convincing evidence’ within the meaning of Tetra Laval?

This question, I sense, is likely to be very relevant in practice. DG Laitenberger’s speech on how to apply Intel going forward certainly focused on evidence, as did Alfonso’s post commenting on that speech.  A competition authority, instead of assessing the capability of a practice to restrict competition, may attempt to argue that the evidence adduced by the dominant firm is insufficient to rebut the presumption.

The more I think about it, the more I am persuaded that it would be enough if the evidence brought forward by the dominant firm has an ‘air of reality’, which is a relatively low level. Why? Alfonso and my colleague Andriani Kalintiri argued – separately and persuasively – in my discussions with them that this level is consistent with the presumption of innocence.

Does Intel require the application of the ‘as efficient competitor’ test?

I do not think so. The ‘as efficient competitor’ test has always been a proxy, and the Court refers to it as a proxy.

This said, if a dominant firm shows, in light of the ‘as efficient competitor’ test, that anticompetitive effects are implausible – in the sense that rivals would not have to sell below cost – a competition authority cannot avoid engaging with the question. In such circumstances, the authority may show, for instance, that there are other factors suggesting that the practice is capable of driving an equally efficient rival out of the market.

But even if Intel does not require the use of the ‘as efficient competitor’ test, the Guidance Paper does.  But we can leave the role of the Guidance as a pre-commitment device for another day. In fact, Alfonso has an interesting view that I challenge him to write up here. While we wait for his post, you can take a look at the paper and send your comments my way!

Written by Pablo Ibanez Colomo

19 February 2018 at 8:06 pm

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Ithaka Competition Summit, 23-24 August: SAVE THE DATE

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Our friend Peter Alexiadis, Partner at Gibson Dunn and Visiting Professor at King’s College London has come up with a wonderful initiative that is perhaps only matched by our Annual Chillin’ Competition Conference – in which, by the way, he has taken part twice.

Peter has put together a top programme for a two-day competition summit in the – no less than epic – island of Ithaka, in western Greece. Make sure you save the date! The academic bit will take place on 23 and 24 August. And because it’s the summer, and because it’s Greece, it should be very easy for you and the organisers to plan some exciting extracurricular activities around the event.

Chillin’ Competition will be proud to share information via the blog about the programme and about how to register for the summit. And please note that there will be a special deal for students. Stay tuned!

For the time being, we can anticipate that there will be four panels discussing (i) enforcement issues, (ii) behavioural matters, (iii) merger policy as well as (iv) issues at the interface of competition law and regulation. Speakers will be submitting their papers in advance to allow for in-depth discussion. These papers will be published later, and JECLAP will be the partner journal (more on this point in due course).

I am humbled to have been invited to speak alongside the following experts, in (why not?) reverse alphabetical order:

Marc van der WoudeGeneral Court of the EU

Tommaso VallettiDG Competition, European Commission

Nikolaos PeristerakisLinklaters, Brussels

Jorge PadillaCompass Lexecon, Madrid

Renato NazziniKing’s College London

Katerina ManiadakiOFCOM, London

Karim Lesina AT&T, Brussels

William KovacicGeorge Washington University, DC and King’s College London

Assimakis KomninosWhite & Case, Brussels and University College London

Massimiliano KadarDG Competition, European Commission

Alison JonesKing’s College London

Gonenc GurkaynakELIG, Istanbul

Cani Fernández Cuatrecasas, Madrid

Spyros DroukopoulosOXERA, Brussels

Martin CaveLondon School of Economics

Peter AlexiadisGibson Dunn, Brussels and King’s College London

We will come back with more information (including information about other speakers) soon!

Written by Pablo Ibanez Colomo

14 February 2018 at 5:17 pm

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Forthcoming events in Madrid and Brussels

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We are delighted to advertise a couple of forthcoming events taking place next week before it’s too late.

Lunch talk with the Hon. Makam Delrahim in Brussels (21 February): Our friends from the GCLC have organised a lunch talk, to take place on Wednesday of next week. Makan Delrahim, the current US Assistant Attorney General for the Antitrust Division will be meeting the Brussels community. It certainly sounds like a unique chance! It will all happen at Residence Palace, starting at noon. Information on how to register can be found here.

By the way: I have checked the Eurostar timetable and, if you rush, you should be able to make it for the event organised by Ioannis Lianos on search and net neutrality in the EU and the US. I will be one of the speakers. Conveniently, the event will take place at UCL, which is quite close to St Pancras Station 🙂 . More info here.

Workshop on evidence and judicial review in Madrid (23 February): In the context of the competition law course organised in Madrid by Alfonso and Luis Ortiz Blanco, Fernando Castillo and Eric Gippini (two good friends of the blog) will coordinate an exciting workshop on Evidence and Judicial Review in EU Competition Law. The event will take place at IEB, right behind the gorgeous building you see on the picture above – the one with the blue skies, in case you are wondering which.

You can find all necessary information on how to register for this event in this document.

Eric and Fernando have managed to put together an exciting programme with top speakers, which I copy below (as a bonus, both Alfonso and myself will attending the seminar):

12:30 – 14:30: Evidence in Competition Law


Fernando Castillo de la Torre (Legal Service, European Commission)


Daniel Sarmiento (Uría Menéndez and Universidad Complutense)

Andriani Kalintiri (LSE)

Enrique Andreu (Compass Lexecon)

Eric Gippini Fournier (Legal Service, European Commission)

16:00 – 18:00: Judicial review of competition law decisions


Eric Gippini Fournier (Legal Service, European Commission)


Maria Eugénia Martins de Nazaré Ribeiro (former Judge at the General Court of the EU)

Santiago Soldevila (Audiencia Nacional, former Judge at the General Court of the EU)

Fernando Castillo de la Torre (Legal Service, European Commission)

Francisco Marcos (Instituto de Empresa)

Written by Pablo Ibanez Colomo

13 February 2018 at 2:52 pm

Posted in Uncategorized