Guidelines vs Guidance: exclusionary abuse Guidelines due by 2025

On 27 March 2023, the European Commission launched a Call for Evidence seeking feedback on the adoption of Guidelines on exclusionary abuses of dominance under Article 102 TFEU. The Commission plans to publish a draft of these guidelines for public consultation mid-2024, with the aim of adopting them in 2025. In parallel, the Commission has published an Amending Communication (and Annex) amending its 2008 Guidance on enforcement priorities concerning exclusionary abuses by dominant undertakings and a Policy Brief outlining the changes. This package is the first major policy initiative in the area of abuse of dominance enforcement rules since 2008.

1. The Guidelines on exclusionary abuses

There are currently no official guidelines clarifying the application of Article 102 TFEU. The Commission’s objective is to codify the case law based on the Commission’s understanding of Article 102 TFEU. The ultimate goal is to provide legal certainty to national courts, national competition authorities and undertakings on the Commission’s enforcement policy.

The Commission’s enforcement priorities have evolved over time, thanks to the experience gained through the Commission’s practice, which took into account the evolution of the case law of the EU Courts, as well as market developments. Indeed, since the adoption of the 2008 Guidance, the EU Courts have rendered more than 30 judgments on exclusionary abuses.

2. The Amending Communication and Policy Brief

Until the Guidelines are adopted, the Commission is providing certain clarifications on its current approach to determine whether to pursue cases of exclusionary conduct as a matter of priority. The Commission has therefore adopted the Amending Communication, amending specific parts of the 2008 Guidance, and has published a Policy Brief explaining the background of the launch of the Guidelines and changes to the 2008 Guidance.

Key changes include:

• Input foreclosure: the Commission clarifies its approach towards anticompetitive input foreclosure, which is where a dominant company withholds key input from competitors. Traditionally, that input needed to be indispensable for competitors to operate. Indeed, the essential facilities test applies to ‘pure’ access cases only: it does not come into play where the dominant company, for instance, cannot legally refuse access due to a regulatory access obligation (see our February 2023 newsletter). The Commission clarifies that it may also investigate cases where a dominant undertaking imposes unfair access conditions to a particular input, even if there is no evidence that such input is indispensable.
• Margin squeeze: As clarified by EU case law, a margin squeeze is not a type of refusal to supply, but rather an independent form of abuse to which the essential facilities criteria, in particular the condition of indispensability, do not apply.
• As-efficient Competitors (AEC): While proposing for a broader interpretation of what constitutes an ‘as efficient competitor’, the Commission will no longer purely rely on the AEC test other than in predatory pricing and margin squeeze cases. But for instance in respect of exclusivity rebates it will not rely on the AEC test at all (although it will assess the probative value of the AEC test submitted by the undertaking concerned in these cases). In addition, in markets characterized by network effects or other high barriers to entry, the Commission may investigate practices by a dominant company, which are capable of foreclosing competitors that are not (yet) as efficient as the dominant company.

It appears that the Commission’s policy initiative might be a response to high-profile losses for the EU regulator in exclusionary abuses cases before the EU Courts. For instance, the Qualcomm EUR 1 billion fine was quashed partly because the General Court found that the Commission erred on its economic analysis (see our July 2022 newsletter). Similarly, in Intel and Unilever, EU Courts found that the Commission has to take into account evidence put forward by the dominant undertaking to argue that the practices are not capable of restricting competition (see our February 2022 and February 2023 newsletters).

Conclusion

• This policy initiative confirms that the Commission is committed to continuing its enforcement of Article 102 TFEU in line with the EU Courts’ case law.
• The effects-based approach to Article 102 TFEU is alive and here to stay, but with the amended guidance, the Commission appears to want to make an attempt to tune down the economic analysis in some cases.

This article was published in the Competition Newsletter of April 2023. Other articles in this newsletter:

• French supermarket dawn raids down the drain
• ECJ in Towercast: plan C for tackling concentrations?
• Forewarned is forearmed: RPM still top of mind
• Informal views issued in agricultural industry and banana sector