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This article was originally published in TL4's ThoughtLeaders4Competition Magazine.
Introduction
The European Commission’s (EC’s) 2024 draft guidelines on exclusionary abuses of dominance1 were intended to “help increase legal certainty”2 regarding the EC’s approach to exclusionary abuses. However, these draft guidelines may have raised as many questions as they answer. Responses by competition practitioners to the consultation on the guidelines have raised a number of questions and concerns, including:
- an apparent reversion from an effects-focussed approach to what appears to be a more "form-based" approach;3
- a potential move away from the as-efficient competitor principle;4
- the emphasis on presumptions of harm and, in practice, their general applicability;5
- lack of clarity around what, precisely, competition on the merits is or is not;6
- a lack of safe harbours in the current draft guidelines.7
At one level, it should be noted that guidelines differ in their purpose from the EC’s previous prioritisation guidance,8 with the latter also encompassing the EC’s views as to case prioritisation and competition policy. Guidelines clearly need to focus on legal standards, and (ideally) the role of economic evidence in assessing whether these standards are met. Crucially, guidelines should set out clearly how consumer welfare9 should in practice be incorporated into investigations of exclusionary abuse.
What cases can be expected in the future?
The 2024 draft guidelines explicitly consider a wide range of potentially exclusionary conduct, and there is thus no explicit indication from the draft guidelines of what sectors may be the focus of future cases.
The EC has in recent years prioritised its investigation of exclusionary abuses on tech markets,10 focusing on conduct by the largest tech companies. Going forward, however, new ex-post abuse of dominance cases may be less likely to focus on these same companies, given the EC’s Digital Markets Act (DMA) powers, which give greater scope for and ease of intervention in digital markets specifically. The DMA was intentionally introduced to allow more timely – and in many cases ex-ante – regulation of conduct by "gatekeepers"11 in digital markets, in part as a response to the length of time and effort that ex-post enforcement under Article 102 required.12
As such, new abuse of dominance cases may indeed have a different focus or be in different industry sectors to recent cases. The EC may seek to prioritise cases investigating specific types of conduct, as well as cases that relate to innovation and economic growth. We consider how considerations of consumer welfare can and should in practice be tied into these considerations.
Types of conduct
The draft guidelines list a number of categories of conduct, specifying where a precedent-based legal test exists, and also where the EC would have a presumption of harm: this is summarised in Table 1 below.
Identifying legal tests that apply to specific types of conduct suggests that the evidence base and case that the EC may bring against these types of conduct may be more predictable, and therefore less risky in the EC’s view (providing that the requisite tests are satisfied). Given concerns around the length of time that abuse of dominance investigations have taken,13 and the fact that a number of EC decisions have been appealed, it could be argued that the EC may prioritise cases where a legal test is identified and there is a presumption of harm.
However, the EC has proven willing to expand its grounds for intervention, with Google Shopping being the first case where the EC found self-preferencing to be abusive. Indeed, given the stated focus of competition on the merits being "a competitive situation in which consumers benefit",14 it is important for the EC to focus on those cases where consumer welfare is likely to be most impacted. The EC should not shy away from cases with the most material impact on consumer welfare even if these may be cases which may require more in-depth, effects-focused analysis and economic evidence to determine an infringement. Of course, there may be a timing efficiency from investigating conduct with a clear legal test and presumption of harm, however, to the extent that there is a trade-off, this should not come at a loss of focus on consumer welfare.
Innovation and growth
The future application of Article 102 should also be viewed in the context of the EC’s recent emphasis on supporting growth and innovation. Competition policy and enforcement has been indicated as an area which can be deployed to support growth and innovation – for example, in the Draghi Report,15 or in the Mission Letter to Commissioner Ribera.16 While much of the emphasis in supporting growth and innovation regards merger control and state aid, there is clear recognition of the relevance of effective conduct enforcement, including ex-post enforcement.17
The EC may prioritise investigating conduct that is seen as a blocker to growth and innovation and, conversely, deprioritise investigating conduct where the investigation may be perceived as having a chilling effect on these objectives. Given the fast pace of change in innovative and dynamic markets that drive growth, establishing dominance in these markets may be more nuanced – as might be the identification of anti-competitive conduct and effects. However, having these markets function well is particularly important for innovation and growth. As such, again, a detailed consideration of the effects of putative conduct is important to, on the one hand, avoid undue intervention (i.e. Type I error) that may chill investment and slow innovation and, on the other, avoid a lack of intervention in abusive contexts (i.e. Type II error) where intervention would in fact be a catalyst for growth. Considering consumer welfare implications in innovation markets is far from straightforward, as there are welfare risks both from over- and from under- enforcement.18
Conclusion
The EC is currently considering consultation responses, and any final guidelines may well differ from the draft published in 2024. Hopefully, many of the issues raised will be adequately addressed, and further clarity and certainty will be provided in the final guidelines than in the draft. Nevertheless, there may be a temptation for the EC to focus on cases that have better defined legal tests or presumptions of harm, all else being equal. The EC may also prioritise investigations in areas key to growth and innovation, given the emphasis on these objectives since the publication of the Draghi Report. Yet the focus on consumer welfare is a critical aspect which should be considered in detail both in the Final Guidelines and when prioritising cases once the Final Guidelines are implemented.
References:
1 https://competition-policy.ec.europa.eu/public-consultations/2024-article-102-guidelines_en
2 https://ec.europa.eu/commission/presscorner/detail/en/ip_24_3623
3 RBB Economics (2024), “The EC’s Draft Guidelines on the application of Article 102 TFEU - Response by RBB Economics to the EC consultation”, 31 October, p.3
4 Berkeley Research Group (2024), “Response to the European Commission’s public consultation on the Draft Guidelines on the application of Article 102 TFEU to exclusionary conduct”, 14 November, pp. 5-6; and Freshfields (2024), "GUIDELINES ON THE APPLICATION OF ARTICLE 102 TFEU TO ABUSIVE EXCLUSIONARY CONDUCT - OBSERVATIONS IN THE CONTEXT OF THE COMMISSION’S PUBLIC CONSULTATION", 31 October, pp.17-20.
5 Berkeley Research Group (2024), "Response to the European Commission’s public consultation on the Draft Guidelines on the application of Article 102 TFEU to exclusionary conduct", 14 November, p.4; and A&O Shearman (2024), ‘PUBLIC CONSULTATION ON THE DRAFT GUIDELINES ON THE APPLICATION OF ARTICLE 102 TO ABUSIVE EXCLUSIONARY CONDUCT BY DOMINANT UNDERTAKINGS CONSULTATION RESPONSE’, 8 November, pp.4-5.
6 Oxera (2024), "European Commission Draft Guidelines on Exclusionary Abuse under Article 102 - Oxera Response to the Public Consultation", 31 October, pp.29-30; and A&O Shearman (2024), "PUBLIC CONSULTATION ON THE DRAFT GUIDELINES ON THE APPLICATION OF ARTICLE 102 TO ABUSIVE EXCLUSIONARY CONDUCT BY DOMINANT UNDERTAKINGS CONSULTATION RESPONSE", 8 November, pp. 3-4.
7 Oxera (2024), "European Commission Draft Guidelines on Exclusionary Abuse under Article 102 - Oxera Response to the Public Consultation", 31 October, pp. 21-22, 35; Draghi Report, Part B, p. 304
8 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52009XC0224(01)
9 Consumer welfare is a critical aspect of Article 102, as recognised by the 2024 Draft Guidelines, para. 5.
10 See for example: CASE AT.40099 Google Android (2018), CASE AT.39740 Google Search (Shopping), CASE AT.40462 - Amazon Marketplace, CASE AT.40703 – Amazon Buy Box, and CASE AT.40716 Apple – App Store Practices.
11 At the time of writing these are Alphabet, Amazon, Apple, Booking.com, ByteDance, Meta, and Microsoft.
12 See for example, the speech by EVP Margrethe Vestager at the Global Competition Law Centre, College of Europe - Article 102: The beating heart of antitrust in the EU. Vestager notes that "If ex-ante regulation and Article 102 had a child, it would be the Digital Markets Act. The DMA incorporates many of the lessons learned from Article 102 enforcement."
13 As referred to for example in the Draghi Report, p.304.
14 2024 Draft Guidelines, para. 51.
15 Draghi, M (2024) "The Future of European competitiveness", 9 September, available at: https://commission.europa.eu/topics/eu-competitiveness/draghi-report_en
16 Von der Leyen, U (2024), "Mission Letter to Teresa Ribera Rodríguez Executive Vice-President-designate for a Clean, Just and Competitive Transition"
17 September, available at: https://commission.europa.eu/document/download/5b1aaee5-681f-470b-9fd5-aee14e106196_en?filename=Mission%20letter%20-%20RIBERA.pdf 17 Draghi Report, Part B, pp. 303 – 304.
18 See for example OECD (2023), "Competition and Innovation - The Role of Innovation in Enforcement Cases", 23 October
