Chillin'Competition

Earlier this year, a treatise on Regulation 1/2003 came out with Kluwer, with contributions from Alfonso (see here for his) and myself (mine on the enforcement aspects of the Digital Markets Act).

The volume is a genuine tour de force and it is only fitting to set up an event to celebrate the achievement and touch upon some of the key themes addressed in it (the timing, with the review of Regulation 1/2003 under way, could not be better).

We will be meeting on the afternoon of Thursday 29th June in Brussels, at the Fondation Universitaire (Rue d’Egmont, 11, next to Porte de Namur). You can register for the event here.

As you see in the programme below, we will be discussing the present and future of Regulation 1/2003 with several leading figures, followed by a drinks reception. We very much look forward to seeing many of you there!

16.30 | Welcome: Pablo Ibáñez Colomo (LSE and College of Europe)

16.45 | Introductory remarks: Johannes Laitenberger (General Court)

16.55 | Regulation 1/2003: looking back at its achievements

• Chair: Céline Gauer (European Commission)
• Lars Kjølbye (Lathan & Watkins)
• Margarida Matos Rosa (formerly Autoridade da Concorrência)
• Jacques Steenbergen (formerly Belgian Competition Authority)
• Wouter Wils (European Commission and King’s College London)

17.45 | Break

18.00 | Regulation 1/2003 and the future of enforcement

• Chair: Pablo Ibáñez Colomo (LSE and College of Europe)
• Pascal Berghe (European Commission)
• Or Brook (University of Leeds)
• Massimiliano Kadar (European Commission)

18.45 | Closing remarks: Nils Wahl (Court of Justice)

Eleanor Fox and Damien Gerard are two unique members of the competition law community. Eleanor is a force of nature, a brilliant scholar and probably the US academic who has paid more attention to convergence and divergence in US-EU antitrust enforcement. Damien is the total competition lawyer, with experience in private practice, top-universities, DG Comp and, currently, as Prosecutor General of the Belgian Competition Authority. Together, they have authored “EU Competition law: Cases, Texts and Context“.

To launch the second edition of this excellent book, Eleanor and Damien have organized a discussion about “Antitrust Divergences and Convergences in post-Modern Times” on 26 June in Brussels (Fondation Universitaire) featuring Inge Bernaerts (DG COMP), Nicholas Levy (Cleary Gottlieb) and myself (Garrigues).

If you want to join us for the discussion (and for the drinks…), just CLICK HERE. Look forward to seeing many of you there.

A year ago I participated at the Global Competition Law Centre’s Annual Conference, on a panel devoted to discussing the role of the EU Courts in competition cases together with General Court President Marc van der Woude and Judge Ingeborg Simonsson.

My more developed views on this topic have just been published as a chapter of Kluwer’s new book ‘The Transformation of EU Competition Law: Next Generation Issues’, edited by our friends Adina Claici, Assimakis Komninos and Denis Waelbroeck. More information about the book is available here.

Kluwer has authorized us to post here the full text (12 pages) of my contribution. To read it, click on the link below:

Now that the XXX FIDE Congress (Sofia, 31 May to 3 June 2023) is approaching, we are delighted to feature a guest contribution by the General Rapporteurs of the topic devoted to competition and trade-related matters.

Jean-François Bellis and Isabelle van Damme (Van Bael & Bellis), who need no introduction, will be coordinating rapporteurs’ efforts to understand how the shifting economic and geopolitical landscape is influencing the shaping and understanding of two policies that have been central to the project of European integration from the outset.

Enjoy the post (and if you are fortunate enough to attend it, the FIDE Congress)!

The looming threat of climate change has rekindled the debate on considering non-competition interests in legal instruments regulating the market. Competition law enforcers have also had to address the specific challenges raised by the development of the digital sector. Moreover, the subsidies granted to domestic production in the United States under the Inflation Reduction Act have exacerbated the concern that foreign investment would leave the European Union for more profitable locations abroad and might undermine the European Union’s Green Deal objectives. Those concerns have led the European Commission to develop the Green Deal Industrial Plan, which includes relaxing the State aid rules with a view to strengthening European industries. In fact, the concept of “industrial policy” which had largely disappeared from the vocabulary of EU policymakers in the last decades is making a comeback.

The discussions on Topic II “The new geopolitical dimensions of EU competition and trade policies” at the FIDE Sofia Conference, on 31 May 2023 – 3 June 2023, will explore how competition rules can be enforced—at both the national and the European levels—in this new geopolitical environment. As general rapporteurs for this topic, we look forward to debating this question with the institutional rapporteur, Mr Ben Smulders (DG Competition, European Commission), and the participants at the FIDE Sofia Conference.

Sustainability and competition

The question of whether non-competition interests, including sustainability, can be integrated in EU competition law enforcement has gained urgency. The FIDE Conference will review the practice of national competition authorities (NCAs) with respect to sustainability agreements and compare it with the approach outlined in the Commission’s Draft Horizontal Guidelines.

This question will be addressed in the context of both the assessment of sustainability agreements under Article 101 TFEU and merger control. More generally, there will also be a debate on how to balance the benefits of sustainability agreements against the harm that they might inflict on particular categories of consumers. There is already a significant body of experience with respect to this issue at the national level which will be discussed and compared with the Commission’s position as it can be distilled from, inter alia, the Draft Horizontal Guidelines.

Digital economy and competition

Making Europe fit for the digital age is the other objective pursued by the current Commission. In shaping Europe’s digital future, the European Commission has identified “a fair and competitive economy” as one of the key pillars of its strategy. The European Commission thus aims at ensuring competitive conditions and safeguarding the level-playing field in the digital Single Market while, at the same time, seeking to contribute to the global competitiveness of the European digital economy and to achieve “digital sovereignty”.

The FIDE Sofia Conference will discuss whether these two objectives are always aligned. “Digital competition enforcers” might take decisions that, at the surface, protect a European model of the digital market, while serving the European Union’s industrial policy objectives to become globally competitive.

To further the understanding of the interaction between “digital competition” and “digital sovereignty”, the following two specific issues will be discussed, namely (i) the cases against large digital US platforms, and (ii) the Digital Markets Act’s expected impact on national authorities’ competition enforcement.

Industrial policy and competition

Another element of the new geopolitical dimension of the policies which the current Commissionis promoting relates to what should be the role of industrial policy and its interplay with competition policy. Questions are being raised as to whether, in certain cases, industrial policy considerations should prevail over technical competition policy concerns in order to allow for the creation of “European champions”, able to compete with powerful non-European companies in international markets. This debate has intensified after the United States announced its new subsidies programme to promote green transport. In particular, it has caused the European Union and its Member States to intensely reflect on whether to enter a subsidies race, grant similar preferences and possibly loosen State aid control. At the centre of this discussion is the balance between responding to external threats to the competitiveness of the European Union and its green and digital agendas and preserving, at the internal level, the integrity of the internal market.

Two aspects of this sensitive interplay will be specifically discussed, namely (i) merger control and the thorny issues of “European champions” and “killer acquisitions” and (ii) State aid, including in the broader context of guaranteeing access to secure clean energy supply chains.

Impact of trade considerations on competition

Finally, the FIDE Sofia Conference will address the impact of trade considerations on competition policy.

In this respect, it is important to bear in mind that Topic II of this year’s FIDE Conference covers both competition and trade policies. Competition lawyers will benefit from a better understanding of the new trends in trade policy especially since, as illustrated by the recently adopted Foreign Subsidies Regulation, international trade law considerations will be injected in areas which were previously assessed solely on the basis of EU State aid and merger control rules.

Looking forward to seeing you in Sofia and benefiting from your contributions and insights in what promises to be a very topical debate.

The most recent Article 102 TFEU case law has emphasised the need to consider the coverage of a practice when ascertaining whether it has actual or potential anticompetitive effects. There should be little doubt that this criterion is, and has always been, central to the assessment of the restrictive impact of potentially abusive conduct.

Coverage: a key condition from the early days of competition law

Coverage as a requirement has a long and illustrious history in competition law, dating back to the very early days of the discipline. In Brasserie de Haecht, the Court held that the analys of the cumulative impact of similar exclusivity obligations on competition is a factor pertaining to the economic and legal context of an agreement and, as such, relevant when evaluating its restrictive effects under Article 101(1) TFEU.

Coverage also features prominently in the structured test laid down in Delimitis. Under the first prong of that test, it is necessary to consider the coverage of parallel networks of exclusivity agreements. Article 101(1) TFEU may come into play where the coverage of these parallel networks leads, or can lead, to market foreclosure.

It was only a matter of time before this criterion would feature in Article 102 TFEU cases. Van den Bergh Foods is one where coverage was central to the assessment. Unsurprisingly, the General Court concluded that a set of de facto exclusivity agreements implemented by a dominant firm and covering 40% of the market constitutes an abuse of a dominant position.

Tomra is another judgment where coverage was front and centre of the evaluation of the abusive nature of the practices. The Commission explained in the proceedings that there the dominant firm’s practices covered a substantial part of the internal market, amounting to 39%. Given that level of coverage, the Court held that it would not be warranted to consider whether or not rivals would still have the chance to compete on the merits (which, again, comes across as reasonable).

This brief overview of the case law suggests that there was nothing new or revolutionary in the Court judgment in Intel: coverage had always been there. It was bound to feature, sooner or later, in any case dealing with the lawfulness of loyalty rebates under Article 102 TFEU

Why coverage is indispensable when assessing anticompetitive effects under Article 102 TFEU

The prominene of coverage in the assessment of anticompetitive effects is unsurprising. It is simply not possible to evaluate the impact of a practice on competition without considering how much of the relevant market is covered by the practice. It is a necessary, but not sufficient, condition to establish its potential to cause harm.

Where the coverage is not of sufficient entity, the practice is incapable of displaying anticompetitive effects. Put differently, such effects are only plausible where the coverage is significant.

To explain why the evaluation of the coverage of a practice is so important, let me take a classic from the US, International Salt. This case involved a tying strategy implemented by a firm that had developed a technology for adding salt for food processing purposes. The company made the lease of its machines conditional upon the supply of salt (in other words, customers were required to buy both the machine and the salt from the company).

Did this tying strategy have the potential to restrict competition on the tied market? Emphatically not. The proportion of the tied market that the practice would encompass was always bound to be minuscule. No matter how successful the company and how much in demand the machines, the coverage of the practice would always be infinitesimal. Salt has so many uses and there are so many producers that exclusion would not be a plausible prospect under any realistic definition of the tied market.

I can think of another example drawn from the Commission’s recent practice. Earlier this year, the Commission sent a Statement of Objections to Apple in which it clarified its concerns. The key clarification comes from the fact that the authority would no longer be looking into the exclusionary aspects of the case.

I was not surprised by the Commission’s announcement. As I explained a while ago (see here), the exclusionary claims in the case were not obvious to reconcile with the case law. The modest coverage of the practice is one of the reasons why arguments pertaining to the restrictive potential of the in-app purchasing requirement were difficult to square with the principles laid down by the Court over the years.

These two examples are useful in another sense. The assessment of the coverage of a practice is relevant across the board. It is not confined to rebates or to practices aimed at strengthening a dominant position. The assessment of the coverage may come into play when leveraging conduct is at stake (such as a tying case a la International Salt) or in relation to non-price conduct (as in the abovementioned investigation into Apple’s requirements).

Following Servizio Elettrico Nazionale and Unilever, it seems clear that the Court regards Intel as an arrêt de principe. Therefore, the framework introduced in it (including the five criteria to assess anticompetitive effects, of which coverage is one) appear to apply in all Article 102 TFEU cases.

How about appreciability and de minimis? That is the second prong of Delimitis, not the first

I almost hear some readers reacting (entirely reasonably) to the above by asking: did the Court not hold in Post Danmark II that there is no such thing as a de minimis doctrine in Article 102 TFEU, and that there is no need to assess the appreciability of the effects under that provision?

The above is correct, but is not in any way at odds with the need to evaluate the significance of the coverage of a practice.

Coverage is, as mentioned above, part of the first prong of the Delimitis test, which seeks to ascertain the impact of parallel networks of exclusivity agreement on competition. The second prong of the test is about appreciability: do the agreements concluded by the supplier under consideration make an appreciable contribution to foreclosure?

What the Court held in Post Danmark II is that this second prong is not relevant in the context of Article 102 TFEU. Which, if you ask me, makes perfect sense and is difficult to dispute. If the effects of a practice implemented by a dominant firm have been established to the requisite legal standard, we can assume that such effects are appreciable. Appreciability would follow logically and inevitably from the fact that the firm enjoys substantial market power.

However, effects needs to be established in the first place. And, at that earlier stage, coverage is a key component of the assessment.

We had a great discussion on exclusionary abuses last Tuesday at LSE. We were delighted to see how many of you joined us online to what was (at long last) a Chillin’ event (rest assured there will be many more to come).

During the event, I shared a presentation outlining my main ideas, which you can find here. I would very much welcome your thoughts on the main points I made, which I can summarise as follows:

Enforcement under the Guidance is in a much better shape: the days of Michelin II and British Airways are long gone, which is why we tend to forget how much in need of reform Article 102 TFEU policy was at the time.

In the years that have followed the Guidance, enforcement has remained robust (both in qualitative and quantitative terms), and has become wiser (in the sense that the intellectual foundations are much more solid) and more predictable (again, we tend to forget how unpredictable enforcement was in the old days).

The analysis of effects is not a luxury or an indulgence from which we can dispense. It is the key tool to distinguish between conduct that is on the whole pro-competitive and behaviour that can be expected to harm the competitive process. One should not forget that the majority of practices potentially caught by Article 102 TFEU are, most of the time, normal expressions of competition on the merits.

The above said, it is worth reflecting on some of the criticisms that have been directed at enforcement under the Guidance. Is the analysis of effects overly cumbersome? Is intervention difficult to tell in advance?

Structured legal tests could be part of the answer to these concerns while preserving the essence of the Guidance. From this perspective, the forthcoming Gudelines provide a good opportunity.

Contrary to what is sometimes said, the evaluation of the actual or potential anticompetitive effects of a practice need not be open-ended or all-encompassing. It can be structured around a number of solid proxies and finite lists of criteria. This, in fact, is what the Court of Justice has been doing over the past decade (just think of Intel).

The case law could be codified in line with this principles. For instance, there is little doubt that the coverage of a practice is central to the assessment of the actual or potential impact of a potentially abusive practice. Why not rely on a bright line (say, 30% coverage) to define the instances in which effects are more likely?

If effects can be established always and everywhere, then the test of effects is a bad one. Any attempt to recalibrate policy should not come at the expense of predictability. If the test is reconfigured so that the analysis of effects becomes little more than a formality, it will not be possible to anticipate enforcement (the Commission would always find a way to show an impact on competition).

In the same vein, I explained that the hard questions cannot be avoided. These hard questions include:

• The meaning of effects.
• The threshold of effects. We all agree that Article 102 TFEU is concerned with actual or potential effects. But the notion of potential effects does not answer the question of what threshold applies. AG Kokott suggested that the case law demands a threshold of likelihood (probability of >50%) when looking at potential effects. I agree with her understanding of the relevant rulings.
• Causality: The difference between competition law (understood as a system aimed at protecting the competitive process) and economic regulation aimed at restructuring markets so that they conform to the particular vision of an agency is the issue of causality. As emphasised by the EU courts in recent years, Article 102 TFEU is only triggered when the actual or potential effects are attributable to the behaviour of the dominant undertaking.

I very much look forward to your comments. As you know, I have nothing to disclose.

We hope many of you will be able to join our LSE-Chillin’ Webinar next week (Tuesday 25th April; 4pm London time, 5pm Brussels time).

You can now register for the event here. The link provides all the necessary information to join us remotely on the day.

Alfonso and I will be discussing the future of Article 102 TFEU enforcement with my colleague Niamh Dunne, Mark English and Jorge Padilla.

Do not hesitate to get in touch with any questions. See you next week!

Alfonso and I have concluded that the Commission’s plans to issue Guidelines codifying the law of exclusionary abuses is important enough to set up, at long last, a new Chillin’ Competition event. So please save the date (Tuesday 25th April) and time (4pm London time; 5pm Brussels time), for a webinar on the subject.

My colleague Niamh Dunne and I will be welcoming at LSE Law School a true Article 102 TFEU dream team made up of Alfonso himself, Mark English and Jorge Padilla. We will be chatting with them about the future of the Commission’s policy on exclusionary abuses.

We hope to many of you will be able to join us via Zoom. We will be providing details on how to register early next week, so keep an eye on the blog! In the meantime, please get in touch in case you have any questions.

Many readers will remember the inaugural Ithaca Competition Conference, which took place in the Summer of 2018. It has long been known that returning to the island of Ithaca takes a while. This time has not been an exception. Now that the pandemic is firmly behind us, Peter Alexiadis has put together the (epic) programme for the second edition.

You can take a look at it here. As you will see, it is full of superstars (from civil service, practice and academia).

The event will take place over three days in August (3rd to 5th). The start is strong: a panel with no fewer four former Chief Competition Economists at DG Comp, (Kai-Uwe Kuhn, Damien Neven, Pierre Regibeau and Tommaso Valletti) who will be looking back and into the future in conversation with Jorge Padilla.

That would be enough to make the programme attractive, but there is even more: a panel on digital (with, just to mention a few, Filomena Chirico and Alex de Streel) and one on energy (with a dream team that includes Martin Cave, Leigh Hancher, Adrien de Hauteclocque and Carole Maczkovics, all chaired by the OECD’s Ruben Maximiano).

The conference will close with a discussion about the direction of travel in competition law and policy featuring, among others, such enforcement luminaries as Cani Fernandez, Ioannis Lianos and Henri Piffaut.

You can register for the event here. Please note, that, if you are a competition law student, you can register at a discount and the organisation will provide affordable aaccommodation.

The programme includes a very detailed Q&A, including on how to get there. If you have any questions, I am sure Peter will be delighted to answer them!

Decades may have passed, but the FIDE Congress remains an (the) inescapable reference for those interested in EU law matters. This year’s gathering, in Sofia (Bulgaria), will be the 30th (!). The stellar programme of the event (to take place between 31st May and 3rd June) can be found here. And information on how to register, here.

This year’s edition has all the ingredients behind the success of past congresses: topics at the cutting edge of developments in EU law, stellar (general and institutional) rapporteurs and an unparalleled line-up of speakers (including the President of the Court of Justice and the General Court as well as the Presidents of the Constitutional Courts of several Member States and of Ukraine).

As per the tradition, one of the topics is devoted to competition-related matters. This year’s (The new geopolitical dimension of the EU competition and trade policies) focuses on the ongoing shift in competition law and trade policies. It is not a secret that changes underway at the global level (reshoring of manufacturing, decline of multilateralism and geopolitical tensions) invites us to rethink how competition and State aid provisions are interpreted are enforced in practice.

The topic is in the expert hands of Jean-François Bellis and Isabelle van Damme (Van Bael & Bellis, General Rapporteurs) and Ben Smulders (European Commission, Institutional Rapporteur). If you browse the programme, you will get an idea of the various angles they take (industrial policy, sustainability, foreign direct investment, supply chains) on the ongoing shifts. The publication that invariably follows each Congress will be one to keep an eye on.

Topics 1 (Mutual Trust, Mutual Recognition and the Rule of Law) and 2 (European Social Union), by the way. promise to be fascinating too (no less because discussions will be led by top academics and practitioners).

The event’s dedicated website is pretty detailed, but the organisers will be delighted to answer any questions you may have.