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Reversing the hold up vs hold out debate?

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Exactly 7 years ago, on 16 July 2015, the CJEU rendered its Judgment in Huawei v ZTE (here are the comments I published that day).

The Huawei v ZTE Judgment essentially sought to clarify the circumstances under which the seeking of injunctions by a SEP holder could constitute an abuse of dominance. The Judgment confirmed the view, initially advanced in academic circles, and endorsed by the European Commission in Samsung and Motorola, (and vehemently opposed by many) that in certain cases patent hold up was a competition law problem connected to the leveraging of market power obtained through standardization. The underlying idea was that hold up could materialize in refusals to licence, excessive royalties or injunctions. In that Judgment the Court set up a procedural framework balancing the different stakes and incentives at issue.

7 years later many of these debates remain (and remain equally bitter). Interestingly, though, there appears to have been an effort to shift attention away from hold up and focus, instead, on hold out  (i.e. the situation where implementers would allegedly refuse to negotiate in good faith). The argument is that innovation on the part of SEP holders would be discouraged should their royalties not be high enough as a result of hold out.

Paying attention to potential hold out on case-by-case assessments might be, to some extent, natural because  implementing the procedural framework set out in Huawei v ZTE necessarily requires assessing whether implementers have entered into bona fides negotiations.

At the same time, however, the recent trend is to present hold out (aka “reverse hold up”) as the other side of the same coin. This view has made it from economic articles, to national litigation, to the “new Madison” policy in the US under AAG Delrahim. More recently, and more surprisingly, the European Commission’s draft horizontal Guidelines (recital 470) would appear to support this view:

When the standard constitutes a barrier to entry, the undertaking could thereby control the product or service market to which the standard relates. This in turn could allow undertakings to behave in anti-competitive ways, for example by refusing to license the necessary IPR or by extracting excess rents by way of discriminatory or excessive royalty fees thereby preventing effective access to the standard (“hold-up”). The reverse situation may also arise if licensing negotiations are drawn out for reasons attributable solely to the user of the standard. This could include for example a refusal to pay a FRAND royalty fee or using dilatory strategies (“hold-out”)”.

Perhaps it is simply a drafting problem, but this paragraph appears to put hold up on the part of SEP holders and hold out on the part of individual users of the standard (and the concerns to which they both relate) at the same level, also from a legal standpoint. This is interesting for various reasons that we have often discussed on this blog. First, the shift in the focus of these debates is one more example of the pendulum oscillations that characterize competition law, but one where the swing would appear to be particularly wide. Second, this text would also appear to equate hold out practices with anticompetitive hold up practices on the grounds that both can affect the distribution of rents between the different parties, regardless of whether they involve the exercise of market power or not.

I would welcome your views on this point. Not having worked for clients on these issues, I have no view on the extent to which hold out may be a real-life concern. As a competition lawyer, however, I have trouble seeing how hold out practices could lead to genuine competition law concerns (i.e. how they could lead to foreclosure, anticompetitive leveraging, exploitation or otherwise restrict competition) absent dominance or a cartel/boycott-like arrangement at the level of would-be licensees. I see that others have expressed very similar thoughts (e.g. here or here).

Don’t get me wrong. As mentioned above, hold out considerations can be, and have been, relevant in case-by-case assessments under the Huawei v ZTE framework (under that framework injunctions remain legitimate in relation to implementers not acting in good faith). But to the extent that hold out concerns may be concerned with relative bargaining power (as opposed to market power) and with the distribution of rents between SEP holders and implementers (absent market power, exploitation or foreclosure), they would not appear to be a matter for competition law to address. In sum, while the narrative, the incentives, and perhaps even the economics, may be “the reverse” as those arising in hold up scenarios, this might not be accurate from a legal standpoint.

Written by Alfonso Lamadrid

19 July 2022 at 1:29 pm

Posted in Uncategorized

In the wake of the ISU and Super League hearings: why the focus on ‘conflicts of interest’ is potentially problematic (and unfair)

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Once again, thanks to Lewis Crofts and his reporting abilities via Twitter, I have been able to get a sense of what has been going before the Court this week. If you have not done so, go check his tweeting on ISU and Super League. These two cases will have a major impact on the relationship between competition law and sports governance.

I have been following this topic closely for a while (the updated version of my paper on sports governance can be found here; I am really grateful, by the way, to those who reached out with comments).

Lewis’s reporting gives me the impression that much has been discussed about sports associations’ alleged ‘conflicts of interests’. According to a particular school of thought, it is concerning that governing bodies enjoy the power to regulate the sport and, at the same time, to authorise rival competitions.

I have never really understood why this idea has managed to gain so much traction. It is definitely an astute spin on the issues. As an outside observer, however, I am not sure it makes sense to frame discussions in terms of conflicts of interest. It is, in fact, a problematic way of looking into the underlying substance.

It is problematic, first, because it suggests that the fact that a firm protects its own economic interests is somehow a concern under competition law (of all disciplines). Second, because it is based on the (now discredited) idea that one can meaningfully distinguish between, respectively, sports-related and economic considerations.

Third, and finally, because it would be unfair to sports associations, in the sense that it would demand more from them than from any other entity engaged in an economic activity.

‘Conflict of interest’ is just another way of saying ‘protecting one’s economic interest’ (which has never been presumptively anticompetitive)

Discussions around conflicts of interests in cases like ISU and Super League give the impression that the situation is specific or unique to sports governing bodies, in the sense that it does not arise elsewhere in the economy (or only rarely).

In reality, the only thing that is unique to sports is the vocabulary used to frame the underlying issues. When it comes to the substance of these issues, there is nothing special, let alone exceptional, about the situations described in the abovementioned cases.

In reality, ‘conflict of interest’ is another way of saying that governing bodies have put in place mechanisms aimed at defending their economic interests. And we know from the case law that doing so is not necessarily or presumptively anticompetitive (not even when the firm enjoys a dominant position).

Just to illustrate how pervasive (and, sometimes, even prima facie pro-competitive) so-called conflicts of interest are, consider the following examples.

A franchisor finds itself in a position that is not fundamentally different from that of a sports governing body. It dictates the rules of the system (brand image, quality of the products, look and feel of the stores) and also limits competition: franchisees will typically be subject to a non-compete obligation preventing them from concluding similar agreements with other suppliers, or setting up rival shops themselves.

In spite of the blatant conflict of interest, franchising agreements are prima facie lawful under Article 101(1) TFEU.

Consider also the proverbial refusal to deal scenario. A vertically-integrated firm that produces an input and also manufactures the finished product would also be in a ‘conflict of interest’: this firm would be able to control competition against itself on the downstream market.

It is clear from the case law, however, that the vertically-integrated firm cannot be compelled to deal with rivals absent exceptional circumstances. This is so in spite of the fact that its dual status as supplier and competitor to its own (would-be) customers necessarily creates a conflict.

The ‘conflict of interest’ test would apply a stricter standard to sports governing bodies for no valid reason

To the extent that ‘conflict of interest’ is just another way of saying ‘undertaking acting as expected in a system based on undistorted competition’, there is no reason to make it presumptively anticompetitive.

What is more, seeing with suspicion this alleged ‘conflict of interest’ would lead to governing bodies being treated more strictly than any other undertaking in competition law. There seems to be no valid reason justifying this differential treatment.

As the Court held in Meca Medina, there is nothing that immunises sports associations from the application of competition law. They may be scrutinised under Articles 101 and 102 TFEU, just like any other economic activity.

Conversely, it is not because a case is about football or skating (as opposed to the manufacturing of aminobutanol, or the delivery of newspapers) that so-called ‘conflicts of interests’ should become problematic ipso facto.

As explained in my paper, cases like ISU and Super League are best understood when examined through the lenses of other horizontal co-operation agreements raising similar issues.

Think of Gottrup-Klim. The cooperative in that case faced a ‘conflict of interest’ just as much as the UEFA or the ISU do. In fact, members of the cooperative were prohibited from taking part in competing ventures.

The association decided who was entitled to compete with itself, while regulating the joint purchasing activities. Alas, the Court held that these non-compete obligations were ancillary and did not restrict competition, whether by object or effect (just like franchising).

The divide between economic and non-economic interests is more of an illusion than a reality

I can think of a final reason why the idea of the ‘conflict of interests’ of sports associations is problematic. It seems to be grounded on the premise that one can establish a clean divide between economic and non-economic measures. According to this understanding, governing bodies would combine functions relating to sport and then economic functions.

The problem with this understanding is that it is, at best, an oversimplification of what goes on in the sector. Scratch beneath the surface and you will realise that this clean divide between the economic and non-economic does not reflect the reality.

Think of salary caps, thinks of rules limiting how much money can be spent on transfers, and on how the revenues generated by a competition are to be allocated. Are these measures economic? Certaintly. Do they serve non-economic aims as well? Without any doubt: they will are typically introduce to achieve competitive balance.

The bottomline is the same: to the extent that they relate to the exercise of an economic activity, the rules adopted by governing bodies are best scrutinised, in the usual way, under Articles 101 and 102 TFEU.

As ever: nothing to disclose in this and, indeed, any other case.

Written by Pablo Ibanez Colomo

13 July 2022 at 12:38 pm

Posted in Uncategorized

Case T-235/18, Qualcomm v European Commission (Part II: Substance)

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On 15 June the General Court (“GC”) annulled the Commission’s decision imposing a close-to-1-billion euro fine on Qualcomm in relation to alleged exclusivity payments made to Apple in breach of Article 102 TFEU. In a previous post I discussed the Judgment focusing on procedure; this second post deals with substance, and concludes my comments on what this means for future cases.

What the case was about. The case concerns rebates (in the form of direct payments from Qualcomm to Apple) in exchange for Apple exclusively incorporating Qualcomm LTE chipsets in certain devices. The Qualcomm decision was the first Commission decision concerning exclusivity rebates following the CJEUs’ Judgment in Intel.

The Commission’s approach. The Commission largely built its case on the wording of the agreements, the extent of Qualcomm’s alleged dominance, the importance of Apple as a key client and certain (see below) internal documents from Apple. For additional background on how the Commission saw the case, see this guest post from Max Kadar that we published in 2020.

What the Judgment does not address. Throughout the case there were relevant discussions about market definition and dominance (including on the question of whether conducting a SSNIP test was necessary or not) and on the binding nature of the Guidance Paper on Article 102 (see here for my take; the Guidance Paper will likely be withdrawn before the Courts address this), but the Judgment did not need touch on those points as it annulled the decision on other grounds.

The Judgment’s substantive review.

The principles. The Judgment starts off recalling the principles that competition law is not concerned with the exclusion of competitors due to their inferior efficiency because dominant companies cannot be prevented from competing on the merits (349-351). The Judgment also recalls the special responsibility of dominant firms (352), retains the formal “presumption” that exclusivity arrangements are abusive (353) subject, however, to the “further clarification” in Intel (354). It recalls that for conduct to be abusive, it must be capable of producing exclusionary effects, and that this assessment requires examining all the relevant circumstances (355). The Court also recalls the Galp case law indicating that post-decision elements may be relevant (357) Tetra Laval standard of review applicable to complex economic assessments (358), and the rules on the burden of proof/presumption of innocence (359).

The F word. In my mind, the principle in 354 (the one set out by the CJEU in Intel) makes clear that, under Art. 102, effects=capability to foreclosure (that is also view that the Commission advanced in its Guidance Paper). The Court is saying that, even for conduct presumed abusive, whenever the dominant company offers evidence challenging capability to restrict, then it is for the Commission to carry out a foreclosure analysis. This is not new, but it’s relevant here, because the Commission’s decision does not refer to foreclosure (just run a Ctrl+Find search here; 373 shows that Qualcomm made the same point). The Commission’s argument is that there was no need to show foreclosure, and that the restrictive effect consisted in the reduction of Apple’s incentives to switch to competitors (381, 384). This debate is also key several pending cases (including some in which I represent clients), but I will reserve my views on those for now. Its also worth noting that the GC’s review looks both at “real world” foreclosure effects and at “hypothetical AEC world” foreclosure effects.

The relevant circumstances. The Court observes that while the decision defines a worldwide relevant market for LTE chipsets, the alleged abuse concerns a single important customer (380). It also notes that the decision did not allege the existence of a strategy to foreclose (383). It then goes on to examine several circumstances.

  • Scope of the conduct. The Judgment observes a mismatch between, on the one hand, the Commission’s analysis and findings of abuse (which relate to LTE chipsets for iPhones and iPads) (389-391) and, on the other hand, the Apple documents and explanations invoked to support those findings, which only referred to certain iPad models which Apple planned to launch in 2014 and 2015 (395, see also 420 and 422).
  • The counterfactual. The Court notes that, according to the decision itself (322), between 2011 and 2015 “Apple had no alternative as regards its requirements of LTE chipsets for its iPhone devices” (400); this, the Court underlines, is common ground (403, 405). Since iPhones represented approximately 90% of Apple’s requirements of LTE chipsets (408), this means that for a very large part of Apple’s requirements covered by the decision Apple could not have switched to competing LTE suppliers (409-410). The Judgment observes that, while the decision acknowledged this fact, it failed to consider it when analyzing whether Qualcomm’s conduct was capable of restricting competition (412, 415). The Judgment does not use the term “counterfactual”, but evidently applies that logic: Qualcomm’s payments could not have reduced Apple’s incentives to switch to rivals because, even absent that conduct, Apple could not have switched to rivals. In other words, there was no competition that Qualcomm could have restricted. For this reason, the Court concludes that the decision failed to take into account all the relevant circumstances (417).
  • Conditions for granting the payment / exclusivity label. The Court does not dispute that the characterization of the payments as exclusivity payments, but explains that this is “not sufficient to conclude that those payments constituted an abuse” (424).
  • Other circumstances invoked by the Commission. At 425 the Court finds that while the circumstances invoked by the Commission (extent of the dominant position, conditions for granting the payments, their amount and duration or the importance of Apple as a customer) “should not be disregarded, the fact remains that those factors (…) do not in themselves demonstrate, in the present case, anticompetitive effect and, in particular, foreclosure” (425). What this means is that “all the relevant circumstances” includes “all the relevant circumstances”, not only those that may support the finding of abuse.

The Judgment also engages, for the sake of completeness (442-444), in an analysis of whether Qualcomm’s conduct could have influenced Apple’s sourcing decisions concerning 2014 and 2015 iPads. In a nutshell, the Court observes that this section of the decision is based on Apple’s internal documents and explanations regarding only to certain versions of certain iPad models which were to be launched in 2014-2015 (439, 450), which do not necessarily match  the Commission’s conclusions (455-456); the Court dismisses both the Commission’s argument that this was a clerical error (458). For this reason, the Court finds that the evidence on which the Commission relied is “inconsistent, both internally within such evidence, and in relation to the findings which it seeks to support” (462-463).

The Court goes on to address Qualcomm’s argument that the Commission failed to take into account evidence that demonstrated that Apple did not select Intel’s chipsets for reasons other than the payments concerned. [This is related to both the procedural points we discussed in the previous post and to the discussion on the counterfactual above]. This has to do with the question of whether Intel’s chipsets met Apple’s technical and schedule requirements. The Commission, based on certain Apple documents and explanations, concluded that it did. But, in the Court’s view, the evidence obtained by Qualcomm through the Section 1782 application (that the Commission opposed) “gives rise to doubts in that regard” (467, 476). Para. 475, for example, shows that the decision had relied on an internal Apple email, but that Qualcomm obtained other follow-up emails suggesting the opposite. For these reasons, the Judgment concludes that the decision failed to carry out a “true examination” of whether alternative chipsets could have met Apple’s requirements (480, also 477) and, therefore, failed to take into consideration all the relevant circumstances.

Finally, the Judgment concludes that the evidence in the decision was not only inconsistent and incomplete, but also that it was incapable of substantiating the conclusions drawn from it (483). In essence, the Court finds that the decision relied exclusively on Apple’s statements and documents which either did not refer to the models at issue (492, 496), were not conclusive (494), or had been internally challenged by other Apple’s employees according to evidence obtained by Qualcomm (498, 499). In a harsh concluding recital (505), the Judgment concludes that the Commission “in the context of a general analysis mixing models and years, relied on evidence which is not relevant, which is contradicted by other evidence or which is not capable of substantiating its conclusions (…) and which, therefore, does not make it possible to demonstrate that the payments concerned actually reduced Apple’s incentives to switch to the applicant’s competitors to obtain supplies of LTE chipsets”.


This is a thorough and (despite the confidentiality challenges) very clear Judgment articulating the principles set by the Court of Justice in its 2017 Intel Judgment. It is probably noting that the Commission’s case was initially conceived in one world (after the 2014 Intel Judment) but born in a very different (after the 2017 Intel Judgment).

From a legal standpoint, I do not see anything innovative other than the important message that enforcers must consider all, not only some, relevant circumstances. Perhaps ironically, the message from the Court in this case is, in my view, not very different from that of the Apple State aid Judgment (see my comments here). This is what I wrote exactly 2 years ago when that Judgment was delivered; everything applies equally, word by word, to this case:

“The Judgment will attract more attention than other annulments, but in reality, it is not in any way groundbreaking from a legal standpoint. The reasons, and the reasoning, leading to today’s annulment are exactly the same as the one that has led to the recent annulment of other decisions, including in Frucona KosiceFC BarcelonaReal MadridNaviera Armas, Valencia and Elche cases, among others. In recent years the Courts have consistently insisted on the Commission’s obligation to actively and impartially gather and assess all the relevant evidence in relation to issues where the burden of proof is incumbent upon it. It was all there.

You might think this is easy to say in retrospect, but we already anticipated all of this here and here. At the time, we said that “it won’t be difficult for the Commission to continue to win cases if it incorporates this logic into its day-to-day. If that does not happen, we are likely to witness a series of annulments based on this logic (…) My bet is that I will be making a few future cross references back to this prediction”. Here’s one more cross reference, probably not the last one”.


Written by Alfonso Lamadrid

11 July 2022 at 11:23 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

Case T-235/18, Qualcomm v European Commission (Part I: Procedure)

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On 15 June the General Court (“GC”) annulled the Commission’s decision imposing a close-to-1-billion euro fine on Qualcomm in relation to alleged exclusivity payments made to Apple in breach of Article 102 TFEU. [For some helpful background on the Commission’s decision see this guest post from Max Kadar that we published in 2020].

I have no involvement in the case (beyond good friends on both sides), but I followed it closely and attended the public part the oral hearing. As I told many colleagues then, I left with the impression that Qualcomm could win based on a mix of interrelated procedural and substantive arguments.

The case is unique for various reasons. First, it concerns a single agreement with a single customer, Apple, which happens to be the largest company in the world. Second, the case appears to have been very largely based on information and documents provided by Apple itself (see e.g. ¶222). Third, it is quite extraordinary to see a full annulment in an abuse of dominance case. Fourth, it is a rare case where the procedural errors identified by the Court take center stage and have a material impact on the outcome of the case.  

At the same time, however, my view is that this Judgment does not materially move the law in any way, certainly not in a way that may hinder the Commission’s ability to bring and win future cases. The Judgment simply requires the Commission to fulfill its (post-Intel) obligations regarding both procedure and substance. There is no attempt to create new law, no extravagance, no adjectives, no unnecessary obiter dicta; just a clear, logical and thorough application of the law to a unique set of facts. For those reasons, I very much doubt the Commission will contemplate an appeal.

This first post deals with procedure; I will discuss substance and other general comments in a second post.


The Judgment is a must-read for anyone interested in competition procedure. It contains interesting discussions on admissibility of evidence, the practical application of measures of organization of procedure, and the Commission’s procedural obligations; it also provides details on Qualcomm’s smart move of resorting to a Section 1782 discovery request to obtain the evidence that might have been decisive to win the case:

On Section 1782. This is a provision that authorizes U.S. Courts to order persons in the US to provide information or documents “for use in a proceeding in a foreign or international tribunal.” It has attracted EU competition attention before, mainly when AMD tried to use it to gather information to boost its complaint against Intel (see here). [Side note: only two days before the Qualcomm Judgment the US Supreme Court severely restricted the use of this provision in arbitration proceedings; the SCOTUS has done much worse lately, though)]. Qualcomm brought its Section 1782 application after the Decision was adopted, in anticipation of judicial proceedings (see ¶140).

Rights of defence: Minutes and meeting notes. The CJEU already clarified in Intel that the Commission is required to take minutes of all meetings with third parties, and that Article 19 of Reg. 1/2003 makes no distinction between formal and informal meetings. In the Qualcomm case, the Commission argued that it is only required to draft “succinct notes” of meetings where parties provide inculpatory or exculpatory evidence. The Commission also acknowledged that:

  • it had regrettably and inadvertently failed to provide any notes of one meeting and 3 conference calls (two competitors and two customers) prior to the adoption of the Decision (¶166; by the way, the last sentence in that paragraph may help you identify the most important of those third parties);
  • it had held another meeting and another conference call with a third party which were never disclosed to Qualcomm and for which, regrettably, no notes existed. It appears that the Commission acknowledged this meeting in the context of litigation before the GC after Qualcomm learnt about it via Section 1782 discovery proceedings (see ¶231 in combination with ¶¶121, and 241-243). The identity of that party is confidential, but para. 234 appears to give a hint and reduce options to essentially two.
  • before the opening of proceedings there had been a meeting with an anonymous third-party informant who provided inculpatory evidence; the Commission had taken no records of this meeting, which was only disclosed to Qualcomm during the litigation proceedings following a GC inquiry (¶¶269-273).

The Qualcomm Judgment clarifies that conference calls and meetings all fall within the scope of Art. 19 of Reg. 1/2003 (which is hardly controversial), and also that minutes must give meaningful “indications of the content of the discussion” (¶190), and “indicate the information gathered” (¶200). The Judgment acknowledges the recent case law indicating that Art. 19 does not apply to interview held before the formal opening of proceedings (¶276, citing the questionable judgment in Casino, currently under appeal). Regardless of that, the GC finds in this case that Commission’s obligations to ensure companies’ rights to access the file cannot be bypassed by resorting to the use of inculpatory information provided orally and require the Commission to draw notes and place them in the file (¶279).

Impact of procedural breaches on the outcome of the case. Pursuant to the case law cited at ¶160, procedural breaches may infringe rights of defence where a company shows that it would have been better able to defend itself absent the procedural error. [Longtime readers may remember that we had a panel debating these issues: “And so what? Procedural violations in EU competition law”: at our 2018 conference].

In Intel the Commission’s failure to take adequate minutes did not result in a violation of rights of defence. In Qualcomm the GC does consider that this error warrants the decision’s annulment. Why? First, because of the identity of the parties at issue (notably the one customer and the allegedly foreclosed rivals; ¶¶203-207). Second, because the sparse notes, or the absence of any notes, made it impossible to ascertain the possible relevance of the meetings (¶¶207-209, also 256-259 and 291-294). Third, because all these contacts related to the case and to Qualcomm’s business practices (¶¶210-211 and 239-245, 290).

Fourth, (and pay attention, because this is what ties procedure with substance and what may largely explain the outcome of the case), the Court repeatedly insists that the likely relevance of those meetings is also confirmed by “the content of the contested decision and the specific circumstances of the present case” (213; other references to the specific circumstances of the case can be found at ¶¶202, 221, 223, 224, 252, 266, 288, 291-292, 295-296). Despite redactions, ¶¶216-218, 223-224 and 263, 265 might help you understand what the Court has in mind; essentially: it cannot be ruled out that Apple the customer and competitors could have provided info as to whether competitors could truly have satisfied Apple’s requirements absent the exclusivity provisions. As discussed below, it turns out they could not have satisfied those requirements; it would appear that the Commission was somehow misled into believing otherwise, or in any event failed to verify it adequately. We will come back to this when we discuss substance.

Differences between the SO and the Decision. While the SO related to an alleged abuse on the markets for UMTS and LTE chipsets, the Decision’s scope was narrowed down to LTE chipsets alone. While this was to Qualcomm’s benefit, the narrower scope of the case meant that the evidence put forward by Qualcomm to deny that its practices were capable of foreclosing competitors (a critical margin analysis concerning both the UMTS and the LTE chipset markets) was no longer relevant (the GC notes that the decision itself also relied on a revised version that was no longer relevant; ¶328).

Following a summary of the case law on the relevance of SOs (¶¶307-310), the GC preliminarily notes that (i) abandoning objections does not imply a procedural error (¶¶313-314), and (ii) the Commission was not required to provide Qualcomm with the opportunity to comment on the reasons leading to that view (only on the matters of fact at law at the basis of that decision) (¶315). The GC, however, observes that “the possibility for an undertaking to submit that conduct is not capable of restricting competition, and in particular, of having foreclosure effects by relying on an economic analysis such as the critical margin analysis (…) is of no practical effect if the scope of the conduct concerned is modified by the Commission after the [SO] (…)” (¶352, developed in ¶¶333-337). The GC rules that the principle of observance of the rights of defence requires the Commission to bring to companies’ attention any modification of the scope of its objections that may be relevant for them to be able to make their views effectively and, where necessary, to adapt their analysis and evidence (¶¶338-340).


If you made it this far down the post, you will have realized that the case concerns a pretty unique set of facts. The Judgment shows, once again, that the GC takes rights of defence seriously. What is remarkable is that the GC goes beyond the usual slap on the wrist and finds that procedural irregularities suffice to annul the decision in its entirety. The GC does not attribute any relevance to the number of procedural errors nor to their seriousness; instead, it finds that the link between these procedural errors and the decision’s theory of harm makes the infringement of Qualcomm’s rights of defence particularly problematic.

Looking forward, it will not be difficult for the Commission to avoid repeating these errors. I see nothing in the Judgment that would place a heavy or disproportionate burden on the Commission’s case management; the Judgment is not too demanding, nor is it too harsh.

In my personal view, this Judgment should mainly be taken as a call for greater awareness. We come from a time when reliance on cooperation/negotiation proceedings (commitments, settlements, cooperation procedures, etc) may have relaxed attitudes vis-á-vis procedural matters, fundamental rights and rights of defence. That this relaxation may happen naturally (and not be matter of bad faith) is only one more reason to make an extra effort to prevent it. This Judgment reminds us, perhaps at the right time (I also have the DMA in mind now), that procedure and rights of defence should not be afterthoughts, for they are what make public enforcement sound, effective and legitimate.

Written by Alfonso Lamadrid

27 June 2022 at 6:59 pm

Posted in Uncategorized

3rd Edition of the Rubén Perea Award – How to Participate

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We are delighted to announce the Third Edition of the writing award in the memory of our friend and colleague, Rubén Perea Molleda. As in previous editions, the winning paper will be published in a special issue of the Journal of European Competition Law & Practice, together with a selection of the very best submissions received (have a look at the special Issues of March 2021 and April 2022).

The winners of the two previous editions received their awards from Executive Vice-President Vestager on 22 March 2022. EVP Vestager will also deliver the award to the winner of the upcoming 3rd edition.

Who can participate?

You may participate if you have not reached the age of 30 by the submission date (i.e., if you were born after 15 September 1992). Undergraduate and postgraduate students, as well as scholars and practitioners are all invited to participate. If you are too old reading this and do not fulfil the criteria, please feel free to promote this opportunity among your junior colleagues or students.

What papers can be submitted?

You may submit a single-author unpublished paper which is not under consideration elsewhere. The paper may be specifically prepared for the award or originally drafted as an undergraduate or postgraduate dissertation.

The paper must not exceed 15,000 words (footnotes included; no bibliography needed).

Prior to submission, please make sure your paper follows the JECLAP House Style rules, which can be found here.

How to submit?

Please submit the paper via this link:

IMPORTANT: As you go through the submission process, make sure that in Step 5, you answer YES to the question ‘Is this for a special issue’? and indicate that it is for the Rubén Perea Award.

What is the deadline?

Papers will have to be submitted by 23.59 (Brussels time) of 15 September 2022.

Written by Alfonso Lamadrid

13 June 2022 at 1:19 pm

Posted in Uncategorized

NEW PAPER | Competition law and sports governance: disentangling a complex relationship

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I have uploaded on ssrn (see here) a new paper, which deals with the application of Articles 101 and 102 TFEU to sporting activities. There is no need to point out how topical and important the issue has become, given that the Court hearings in International Skating Union and Super League are around the corner.

The paper builds on some posts shared on the blog (see here and here) and, in particular, a seminar delivered in the context of the mardis du droit de la concurrence at ULB.

It would be wonderful to hear your views on the piece, the main points of which can be summarised as follows:

First, it would be incorrect to see participants in a sports tournament (such as a football team) exclusively as competitors. The worth of participants depends on their ability to rival each other. In addition, cooperation between them allows them to offer something (a tournament, a championship) that is more than the sum of its parts (a collection of disparate games).

The consequence, for the purposes of competition law, is that organised sport is best understood as a joint venture in which participants both compete and cooperate (‘co-opete’) under the umbrella of a governing body. From this perspective, they are analogous to franchising and selective distribution systems.

Second, frictions of a horizontal and a vertical nature are bound to arise in organised sports. Frictions are said to be vertical when they involve governing bodies and individual participants. As recent cases show, opportunism is a potential source of vertical frictions.

Some participants may be tempted to undermine the joint venture (for instance, by setting up competing tournaments) while simultaneously trying to benefit from it. This behaviour is common, and a fact of business life. EU competition law has form dealing with opportunistic conduct (think of cases like Remia or Cartes Bancaires).

Third: what cases like Remia and Cartes Bancaires tell us is that measures aimed at tackling opportunistic behaviour (for instance, a seller setting up shop next door to the business it has just sold) are not restrictive of competition by object.

However, these measures may have anticompetitive effects. Ordem dos Técnicos Oficiais de Contas provides a comprehensive framework for the assessment of the restrictive impact of regulatory measures such as those laid down by sports governing bodies.

Fourth, controversies in the most recent cases can be primarily explained by a tendency to conflate (i) the question of whether an agreement is objectively necessary and (ii) that of whether it has a restrictive object.

Fifth, and in the same vein: some of the most recent developments appear to have introduced a fundamental transformation. What used to be a safe harbour (a set of conditions under which the agreement escapes the prohibition altogether) is now being transformed into strict requirements that sporting organisations need to satisfy to avoid a finding of infringement.

This transformation from safe harbour to minimum requirements seems to be the consequence, at least in part, of the influence of Article 106 TFEU case law. MOTOE has been cited as a precedent in support for this stricter stance vis-a-vis sports governing bodies.

However, these references to MOTOE miss a crucial aspect of this case: the preliminary reference from the Greek court concerned the lawfulness of national legislation under Article 106 TFEU. The case was not about the legality of regulations set by an autonomous body. Accordingly, MOTOE is only of limited relevance (if at all) in the latter scenario (at stake in the most recent developments).

The application of Article 106 TFEU standards into the case law would fundamentally change the approach of competition authorities to sports governance. Inevitably, competition authorities would be frequently asked to strike the right balance between cooperation and competition. Legal considerations aside, this shift would have major consequences from a policy-making standpoint.

Finally, I draw some lessons for some of the most interesting pending issues in sports regulation, including the following:

  • Salary caps, which limit how much teams can spend, do not seem to be restrictive by object; what is more (and as per Wouters and Meca Medina), they do not necessarily have anticompetitive effects. The object of salary caps is to enhance competitive balance betwen the joint venture (see, by analogy, Cartes Bancaires, where the contentious clauses were a response to a similar concern).
  • Transfer restrictions, which would limit whether, and how, often, some teams can hire players from other participants, would not be restrictive of competition by object either. Again, the object would be to preserve competitive balance and accurately reflect interdependence.
  • Finally, competition law is agnostic about open and closed championships. Nothing in the case law suggests that Articles 101 and 102 TFEU mandate a particular model. A system of promotion of relegation, which is a key feature of the European sports model, does not flow inevitably from EU competition law.

Please do not hesitate to reach out and share your thoughts with me (via the blog or email).

And: I have nothing to disclose.

Written by Pablo Ibanez Colomo

8 June 2022 at 9:38 am

Posted in Uncategorized

On Case C-377/20, Servizio Elettrico Nazionale (III): as efficient competitor principle and effects

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Following the first two instalments on the Court’s judgment in Servizio Elettrico Nazionale (see here and here), I turn to two questions that have given rise to much commentary in the past few years. The first relates to the meaning and scope of the ‘as efficient competitor’ principle. The second concerns the issue of anticompetitive effects, which can be broken down into two sub-questions: one of which is the relevance of actual effects and the second the threshold of effects.

The ‘as efficient competitor’ principle applies to pricing and non-pricing practices

The Court has consistently held, over the past 10 years, that Article 102 TFEU is (at least as a matter of principle) about equally efficient rivals (see here and here for a discussion of this aspect of the case law). This principle is to be distinguished from the narrow ‘as efficient competitor’ test, which may (or may not) be relevant in a narrow set of pricing cases.

The ‘as efficient competitor’ principle captures and crystallises several features of the case law, namely (i) the need to show a causal link between the alleged abuse and any actual or potential effects (attributability); (ii) the importance of legal certainty and predictability and (iii) the role of the competitive process as a means to preserve firms’ incentives to create, invest and innovate.

From this perspective, the exclusion of less efficient rivals is nothing but the natural and expected outcome of the competitive process, and not one that would justify intervention under Article 102 TFEU (if anything, the exclusion of inefficient competitors is to be encouraged under that provision, at least as a matter of principle).

Even though the above has been abundantly discussed for the past decade (Post Danmark I was delivered almost exactly 10 years ago), some commentators have continued to argue that the ‘as efficient competitor’ principle was only relevant in relation to pricing practices.

This argument never came across as particularly persuasive. Following Servizio Elettrico Nazionale, it can be put to rest. This case is ostensibly about non-pricing conduct, and the ‘as efficient competitor’ principle features prominently throughout the judgment.

The role of actual effects in the analysis

Servizio Elettrico Nazionale clarifies the role of actual effects in the analysis. Since Article 102 TFEU (and EU competition law at large) is concerned with both actual and potential effects on competition, this issue was far from settled.

Can actual, observable market developments invalidate the analysis of the potential impact of a practice on competition? Would accounting for actual effects not negate the idea that an infringement can be established on the basis of a prospective analysis alone?

The Court’s answer to this question is as clear as it is uncontroversial. First, it holds that, indeed, actual effects can be taken into consideration in the analysis (para 56). It is difficult to see how the judgment could have concluded otherwise (it would have amounted to saying that key evidence about the impact of a practice can be ignored).

Second, the Court notes that actual effects on competition are not sufficient, in and of themselves to conclude that the practice was incapable of having restrictive effects on competition in the relevant context (para 57).

Again, the latter conclusion seems inevitable. I do not believe I have read or heard claims that the absence of actual effects can, alone, rule out the application of Article 102 TFEU. Evidence in this sense would need to be completed by reference to, inter alia, the features of the relevant market, the coverage of the practice and the extent of the dominant position.

The fluctuating threshold of effects and the importance of context

A careful reading of the case law reveals that the threshold of effects varies from one practice to another. The threshold of effects is not the same when the dominant firm prices below average variable costs (there, plausibility is enough) and in cases like Intel and Post Danmark II (there, the analysis demands a more in-depth inquiry, to be conducted in light of the five factors identified by the Court).

The bar is even higher in refusal to deal cases a la Bronner or IMS Health (where elimination of all competition, and in some cases even direct evidence of consumer harm, is required to establish an infringement).

The nature of the practice seems to explain the fluctuating threshold of effects. It is low when the very object of the conduct is anticompetitive (or where it is inherently against competition on the merits) and it is higher when the practice is of an ambivalent (or presumptively lawful) nature.

This background is useful to make sense of the analysis in Servizio Elettrico Nazionale. When the Court engages with the facts of the case, it very strongly hints at a low threshold of effects, close to the plausibility threshold that would apply in the context of predatory pricing within the meaning of AKZO (see in particular para 99).

Is there a contradiction or a tension with some of the most recent rulings? I do not believe so. In Servizio Elettrico Nazionale, the Court simply adjusts its analysis to the nature of the behaviour (the use of information that had not been acquired on the merits) and the wider context (a recently liberalised market where competition is fragile). Just as it has done in the past and I believe should.

I very much look forward to your comments.

Written by Pablo Ibanez Colomo

26 May 2022 at 11:10 am

Posted in Uncategorized

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

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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

On Case C-377/20, Servizio Elettrico Nazionale (I): overarching framework or case-specific judgment?

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The Court of Justice delivered its judgment in Servizio Elettrico Nazionale last week (see here for the French version). Because the questions asked by the Italian Consiglio di Stato were so broad, some hoped that the ruling would provide an overarching framework applying to potentially abusive practices (what we might call an arrêt de principe).

Having read the judgment, it seems more likely that the analysis is tailored to the specifics of the case and will not apply to other cases (what we might call an arrêt d’espèce). Seen from this (more modest) perspective, both the analysis and the outcome at which the Court hints make perfect sense.

The case concerns a textbook example of abuse, if there is one. An incumbent that uses the assets it owes to its status as a former monopoly (as opposed to its investments or innovation) to favour its own activities is prima facie in breach of Article 102 TFEU. It is a quasi-Article 106 TFEU scenario. Thus, there would be every reason to be as strict as the Court has always been in cases involving exclusive or special rights.

The outcome suggested by the Court is supported by an analytical framework that works well in the specific context of the case. On the other hand, this framework does not appear to capture the case law in its full complexity. As a result, there is a chance that it will not be the reference that some hoped would become. I can think of two main reasons in this sense.

The first reason is that the scope of Article 102 TFEU is broader than one might infer from the judgment. The scenarios identified in it do not encompass all instances in which Article 102 TFEU can come into play. The Court is careful to use language that suggests that its framework is not exhaustive (see para 76, where the French version uses the word ‘notamment‘ and the Italian one ‘in particolare‘). These nuances, however, may be lost in future interpretations of the ruling.

If nuance is indeed lost, the framework applied in the judgment may lead to the underenforcement of Article 102 TFEU. Some behaviour that amounts (and has been found in the past to amount) to an abuse of a dominant position would escape the prohibition.

In Servizio Elettrico Nazionale, the Court of Justice identifies two instances in which conduct implemented by dominant firms departs from competition on the merits:

This is so, in the first place, where the practice has no plausible purpose other than the restriction of competition (para 77). As is well known, practices are deemed abusive where they have an anticompetitive object. The Court refers in this regard to pricing below average variable costs, which is the most eloquent example. The practice at stake in Lithuanian Railways (the destruction of the dominant firm’s own property with the sole aim of restricting competition) is another one.

According to the judgment, a practice also departs from competition on the merits where it cannot be replicated by an equally efficient competitor, and this insofar as it flows from the exploitation by the dominant firm of its position (para 78).[1]

These passages may be interpreted as suggesting that, in an Article 102 TFEU case, an authority or claimant would need to show that the practice at stake (i) departs from competition on the merits, either because (ii.a) it has an anticompetitive object or because (ii.b) it cannot be replicated by an equally efficient competitor.

As I understand the case law, it seems clear to me that an abuse can be established in circumstances other than those described in the preceding paragraph. Suffice it to mention the following three points in support of this idea.

There should be little doubt, to begin with, that there is no need for an authority or claimant to show that a practice is not in keeping with competition on the merits. That is, after all, the very point of the ‘special responsibility’: conduct that would otherwise be unproblematic can be prohibited precisely because it is implemented by a firm that enjoys a dominant position.

The very finding of dominance, in other words, dispenses from the need to establish that the behaviour is somehow improper or abnormal. For instance, the unconstrained exercise of a firm’s duly earned intellectual property rights is the purest expression of competition on the merits. As such, it is in principle unproblematic. However, there are (exceptional) circumstances in which Article 102 TFEU imposes a duty to license a firm’s intangible property.

In a different vein, paras 76-78 (in particular para 78) may be interpreted as suggesting that the abusive conduct somehow needs to flow from the dominant position. There is consistent case law, dating back to the very early days (Continental Can), which shows that, as the law stands, there is no need to establish a link between the dominant position and the practice.

Finally, it is clear from the case law that an abuse can be established even when the contentious practice can be replicated by an equally efficient firm. ‘Others also do it‘ has never worked as a defence in the context of Article 102 TFEU (and I do not believe it should). If this ‘replicability test’ had applied in the Microsoft I case, for instance, the firm would have escaped the prohibition (at least as far as the Media Player aspects of the decision are concerned).


Second, and somewhat paradoxically, the scope of Article 102 TFEU is also narrower than suggested by the Court. I would be most interested to hear your views on the scope of para 78. Having read it a few times in French and Italian, this key paragraph appears to suggest that behaviour that involves the use of assets or resources that cannot be replicated by an equally efficient rival is not in keeping with competition on the merits.

If this is indeed the correct reading of para 78, it seems difficult to reconcile with other aspects of the case law. The unique assets or resources enjoyed by a dominant firm may be the fruit of its inventive and creative efforts. If this is so, any advantages resulting from them would be the very manifestation of competition on the merits, rather than the opposite (just think of the exercise of duly earned intellectual property, which I mentioned above).

The implication of a literal reading of para 78 is that every time a dominant firm exploits a competitive advantage flowing from assets or resources that its rivals do not have, it would not be competing on the merits. It is not surprising that there is no basis for this position in the case law: it would paradoxically disincentivise the very behaviour that Article 102 TFEU seeks to promote and preserve.

One can also read para 78 as applying to the specific circumstances of the case. In Servizio Elettrico Nazionale, the dominant firm was exploiting assets that were unique, but not as a result of its efforts (that is, they had not been acquired on the merits). Rather, they were the product of the dominant firm’s status as a former monopoly.

If para 78 is confined to these circumstances (that is, if it is read as applying to the cas d’espèce), it makes perfect sense (and I tell myself that it is perhaps what the Court had in mind).

I will follow up with a few posts on other aspects of this fascinating ruling. The next one, on whether, and to what extent, the framework crafted by the Court captures the essence of the case law on which it is based. In the meantime, I very much look forward to your comments on this first entry.

[1] The French version of para 78 reads as follows: ‘Il en va de même, ainsi que l’a relevé M. l’avocat général aux points 69 à 71 de ses conclusions, d’une pratique insusceptible d’être adoptée par un hypothétique concurrent qui, bien qu’aussi efficace, n’occupe pas une position dominante sur le marché en cause, car cette pratique repose sur l’exploitation de ressources ou de moyens propres à la détention d’une telle position‘.

Written by Pablo Ibanez Colomo

16 May 2022 at 4:31 pm

Posted in Uncategorized