The European Commission’s draft guidelines on exclusionary abusive conduct by dominant firms under Article 102 TFEU (the “Draft Guidelines”) were published on 1 August 2024. They show a marked change from the 2009 Article 82 [now Article 102] Enforcement Priorities Guidance (the “Priorities Guidance”): economic concept has largely been replaced with the Commission’s interpretation of the European Courts’ caselaw.

The consultation on the Draft Guidelines is open until 31 October 2024. Practical suggestions rooted in and developing the caselaw appear more likely to influence the Commission’s final version of the Draft Guidelines than statements of economics.

Like the Priorities Guidance before it, the Draft Guidelines cover exclusionary conduct that the Commission views as concerning – conduct that benefits the dominant firm by excluding competitors from the market – and not exploitative conduct which benefits the dominant firm by exploiting its market power such as excessive pricing or the use of unfair trading conditions. Though in a departure from the Priorities Guidance, the Draft Guidelines do note overlaps between exclusionary and exploitative analysis: “the principles relevant to the assessment of dominance (section 2) and the justifications based on objective necessity and efficiencies (section 5) are also relevant for the assessment of other forms of abusive conduct, such as exploitative abuses” (paragraph 11 of the Draft Guidelines) and “the same conduct by a dominant undertaking may have both exclusionary and exploitative effects” (footnote 17 of the Draft Guidelines).

The Draft Guidelines also now cover collective dominance and not only single dominance, of which more below.

The Draft Guidelines are important because they signal not only how the Commission intends to apply Article 102 to dominant companies – arguably it is already doing so – but also how the Commission interprets the European Courts’ caselaw since the Priorities Guidance was adopted, and how the Commission wishes to influence the development of the caselaw in the future. In the period since the publication of the Priorities Guidance in 2009, the concepts set out in the Priorities Guidance have had mixed success in front of the European Courts. Some examples:

• The Court of Justice in the Telia Sonera preliminary ruling said that there can be a margin squeeze even absent an obligation to deal (paragraph. 59), in implicit contradiction of the Priorities Guidance;
• The General Court in Qualcomm, overturning the Commission’s decision, seemingly extends the relevance of the as efficient competitor test beyond the area of pricing abuses in the Priorities Guidance to exclusivity arrangements;
• The Court of Justice in the Unilever Italia preliminary ruling and the Intel appeal affirming the use of the as efficient competitor test; and
• The Court of Justice in the Post Danmark II preliminary ruling noting that less efficient competitors can sometimes constrain dominant companies (paragraph. 60).

Continue Reading From Concept to Precedent: The 2024 Draft Guidelines on Article 102

On 18 July 2024, the current President of the European Commission (“Commission”), Ursula von der Leyen, was reconfirmed by the European Parliament for a second 5-year term. As part of her reconfirmation, President von der Leyen delivered a speech before the European Parliament, complemented by a 30-page program, which lays down the Commission’s political program for the next five years.

A key pillar of the program – “A new plan for Europe’s sustainable prosperity and competitiveness” – has the objective of combining competitiveness and prosperity with the achievement of the European Green Deal goals.

Specifically on competition policy, according to President von der Leyen, a new approach is needed to achieve this objective. This blog post projects where competition policy is likely headed in the 2024-2029 period by commenting on the most relevant paragraphs of the program.

Von der Leyen: “I believe we need a new approach to competition policy, better geared to our common goals and more supportive of companies scaling up in global markets – while always ensuring a level playing field. This should be reflected in the way we assess mergers so that innovation and resilience are fully taken into account. We will ensure competition policy keeps pace with evolving global markets and prevents market concentration from raising prices or lowering the quality of goods or services for consumers. We will look at all of our policies through a security lens.”

• This statement reaffirms the classic principles underlying competition law, i.e., the focus on ensuring a level playing field, preventing market concentration, and ultimately avoiding a negative impact on prices/quality of goods or services.
• However, the President’s comments recognize the impact of global dynamics and the need for EU companies to be able to respond to global pressures. In the context of Siemens/Alstom and Lufthansa/ITA, there is growing pressure from EU Member States to allow European champions and this program could signal an openness to that effect.
• The President also calls for an increased focus on innovation and resilience in the substantive assessment of mergers. This could mean (i) that the Commission will expand its assessment of the impact of ESG (Environmental, Social, and Governance) standards and security, (ii) that the Commission would be open to a greater role of wider efficiency justifications/public interest considerations in merger control and competition law assessments, and/or (iii) that the impact on the overall economic competitiveness of the EU, and the aim of geopolitical de-risking for critical supply chains and technologies, may play an increasingly important role in the assessment of mergers.

Continue Reading The 2024-2029 Commission Political Guidelines: Where Is Competition Policy Likely Headed?

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