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The European Commission has launched a public consultation among all interested parties to discuss the draft guidelines on exclusionary abuses of dominant position; the previous guidelines adopted about two decades ago seemed quite outdated. Commission is planning to finalize the redrafted guidelines on “exclusionary abuses” on the basis of acquired comments by the end of 2025.
Background
The EU law (mainly art. 102 TFEU), which also is applied by the national competition authorities and courts, prohibits the abuse of a dominant position that may affect trade within the EU member states and prevent or restrict competition; the implementation of this provision has been defined in the Regulation No 1/2003.
In its 2008 guidance on the Commission’s enforcement priorities, the Commission set out its priorities regarding exclusionary abuses of dominance. The 2008-guidance contributed to promote an approach focused on the potential effects of alleged abusive conduct, through the analysis of market dynamics, through the so-called “effects-based approach”.
Since the adoption of the 2008-guidance, the Court of Justice of the European Union has delivered 34 judgments on exclusionary abuses. This rich body of case law endorsed the effects-based approach to Article 102 TFEU promoted by the Commission and substantially clarified the scope of the rules.
In March 2023, the Commission launched a “call for evidence” seeking feedback on the adoption of guidelines on exclusionary abuses of dominance. Stakeholders generally welcomed the initiative and called for clarity and legal certainty in the application of Article 102 TFEU to the exclusionary conduct.
In parallel to the call for evidence, the Commission published a Communication (and Annex) amending its 2008-guidance on enforcement priorities concerning exclusionary abuses. Following the adoption of the guidelines, the Commission will withdraw the 2008 Guidance on enforcement priorities, as amended by the March 2023 Communication.
On 2008 guidance in: https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A52009XC0224%2801%29
The Directorate-General for Competition also published in March 2023 a Policy Brief titled “A dynamic and workable effects-based approach to Article 102 TFEU” which further explains the background to the launch of the guidelines initiative as well as the changes to the 2008-guidance on enforcement priorities introduced in the Communication.
More information on this initiative can be found in the dedicated webpage of DG Competition, which contains a link to the draft guidelines.
More in: https://competition-policy.ec.europa.eu/public-consultations/2024-article-102-guidelines_en
The legal background
TFEU’s art.102 prohibits dominant companies from engaging in abusive behavior, including behavior that excludes competitors from the market. Examples of such exclusionary abuses of dominance include predatory pricing, margin squeeze, exclusive dealing and refusal to supply.
The enforcement of this article is vital for ensuring that the EU-wide competition works effectively, that all businesses get a fair chance to compete and that consumers can reap the benefits of competitive markets.
The Commission has gained extensive experience in enforcing the EU competition law (e.g. art. 102 TFEU), in particular with regard to exclusionary abuses. At the same time, this article in the Treaties is the only area of European competition law where no guidelines currently clarify its application.
Note. Dominance in “market power” has been defined under Community law as a position of economic strength enjoyed by an undertaking, which enables it to prevent effective competition being maintained on a relevant market, by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of consumers.
This notion of independence is related to the degree of competitive constraint exerted on the undertaking in question.
Dominance entails that these competitive constraints are not sufficiently effective and hence that the undertaking in question enjoys substantial market power over a period of time. This means that the undertaking’s decisions are largely insensitive to the actions and reactions of competitors, customers and, ultimately, consumers. The Commission may consider that effective competitive constraints are absent even if some actual or potential competition remains. In general, a dominant position derives from a combination of several factors which, taken separately, are not necessarily determinative. The assessment of dominance will take into account the competitive structure of the market, and in particular the following factors: = constraints imposed by the existing supplies from, and the position on the market of, actual competitors (the market position of the dominant undertaking and its competitors; = constraints imposed by the credible threat of future expansion by actual competitors or entry by potential competitors (expansion and entry); and = constraints imposed by the bargaining strength of the undertaking’s customers (countervailing buyer power).
Source, Guidance-2008in: https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A52009XC0224%2801%29
New draft guidelines published in March 2023 aimed at reflecting the Commission’s interpretation of the EU courts’ case law on exclusionary abuses and the Commission practice. This will help increase legal certainty to the benefit of consumers, and businesses, as well as national competition authorities and courts.
In particular, the draft provides guidance on various key issues concerning exclusionary abuses by dominant companies, including:
= The purpose of competition law enforcement and the concept of consumer welfare under EU law, including in relation to exclusionary abuses.
= The main principles applicable to the assessment of single and collective dominance.
= The application of general principles to determine if a conduct by a dominant company is likely to constitute an abuse and, in particular, on the concepts of “competition on the merits” and “exclusionary effects”.
= The evidence necessary to show that a conduct is capable of producing exclusionary effects. In particular, the draft Guidelines identify: a) categories of conduct for which it is necessary to demonstrate the capability of producing exclusionary effects; b) categories of conduct that have a high potential to lead to exclusionary effects, and c) naked restrictions, which by their very nature lead to exclusionary effects.
= The substantive legal standard to establish a conduct’s capability to produce exclusionary effects.
= The analytical framework applicable to certain types of conduct by dominant companies; the draft distinguishes between: a) conduct subject to a specific legal test set out in EU case law (i.e. exclusive dealing, tying and bundling, refusal to supply, predatory pricing and margin squeeze); and b) conduct not subject to a specific legal test (i.e. conditional rebates, multi-product rebates, self-preferencing and access restrictions).
= The general principles applicable to the assessment of objective justifications that the dominant company may argue.
Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_24_3623