The European Commission moves away from Economics and proposes a presumption-based approach in its draft guidelines on exclusionary abuse
The European Commission published its long-awaited draft Guidelines (draft Guidelines) on exclusionary abusive practices for public The draft Guidelines are intended to make it easier for the Commission, and in particular, to pursue abuses of dominance by classifying certain This represents a marked departure from the 2008 Guidance Paper, which had introduced a more economic approach into Article 102 TFEU.
Background and scope of application
In 2008, the Commission published its Guidance Paper on Enforcement Priorities for Exclusionary Abuses (2008 Guidance Paper), which introduced an effects-based approach (as opposed to a formalistic approach). The 2008 Guidance Paper, which was intended to establish enforcement priorities only, was largely endorsed by EU Courts. The 2008 Guidance Paper, while intellectually innovative, influenced EU case law profoundly. However, it was also the subject of In March 2023, when the Commission announced its intention to publish new Article 102 Guidelines, it issued a request for evidence. The draft Guidelines
do not cover exploitative abuse (conduct imposing unfair prices/conditions on consumers), where there They do not cover exploitative abuse (conduct imposing unfair prices/conditions on consumers), where there has been much less case law.
The draft Guidelines are based on the Commission’s own interpretation of the case law of the EU Courts and are without prejudice to the interpretation that the EU Courts may give in future cases.
Two cumulative conditions
According to the draft Guidelines, in order to determine whether conduct constitutes an abuse, it is necessary to establish:
Whether the conduct departs from competition on the merits; and
Whether the conduct is capable of having exclusionary effects.
- Where it is demonstrated that conduct is liable to be abusive, it remains possible for the dominant company to show that the conduct is either objectively justified or “counter-balanced or even outweighed by advantages in terms of efficiency that also benefit consumers”.
New categorisation and introduction of a presumption-based approach
The key novelty of the draft Guidelines is the categorisation of conduct in three groups. In one category, the Commission must prove the conduct departs the competition on merits as well as its capability to produce exclusionary results In the second category, the presumption is rebuttable, whereas in the third one it is pretty close to being non-rebuttable.
The categories and proposed allocation of burden are as follows:
CATEGORY 1 – GENERAL PRINCIPLES
Scope
| Conduct not covered by Categories 2 and 3 below. | |
| Conduct departing from competition on the merits? | The Commission needs to prove that the conduct departs from competition on the merits based on the specific circumstances of the case. |
| Capability to produce exclusionary effects? | The Commission needs to prove that the conduct is capable of having exclusionary effects. The suggested evidentiary standard is not high. The suggested evidentiary threshold is not high. |
| CATEGORY 2 – THE PRESUMPTION-BASED APPROACH – SPECIFIC LEGAL TESTS | Scope
This category applies to: * exclusive supply or purchasing agreements; * exclusivity rebates; * predatory pricing; * margin squeeze; and * certain forms of tying. Conduct departing from competition on the merits? Conduct fulfilling the requirements of a specific legal test is deemed as falling outside the scope of competition on the merits. Capability to produce exclusionary effects? Conduct that is presumed |
| to lead to exclusionary effects. The Commission proposes that, once the existence of relevant conduct has been established, exclusionary effects may be presumed. However, These evidences can be economic in nature, and in pricing cases they can include “as efficient competitors test” as well as other analyses
CATEGORY 3 – NAKED RESTRICTIONS |
|
| Scope | Naked restrictions that have no economic rationale other than to restrict competition.
Examples provided in the draft Guidelines are: * payments by the dominant company to customers that are conditional on the customers postponing or cancelling the launch of products that are based on products offered by the dominant company’s competitors; * the dominant company agreeing with its distributors that they swap a competing product with its own under the threat of withdrawing discounts benefiting the distributors; and |
| * the dominant company actively dismantling infrastructure used by a competitor. | |
| Conduct departing from competition on the merits? | Conduct that holds no economic interest other than restricting competition is deemed as falling outside the scope of competition on the merits.Capability to produce exclusionary effects?The draft Guidelines state that “only in very exceptional circumstances” will a company be able to rebut this presumption. The draft Guidelines have short chapters explaining the specific legal tests applicable to exclusive dealing, tying and bundling, refusal to supply, The draft Guidelines include a short chapter that explains how dominant companies can demonstrate that their conduct is either objectively justifiable ( The effects-based approach has been undermined. |
| While the Commission accepts, in principle, the effects-based approach, the categorisation of practices based on their formal characteristics instead of their economic function and the introduction of presumptions for certain categories of practices as opposed to others, in reality, represents a certain departure from the so-called “new economic analysis” and the effects-based approach.
Reduced focus on consumer harm. |
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| The draft Guidelines shift the focus away from consumer harm, which was one of the central points in the 2008 Guidance Paper, and explicitly state that there is no need to prove direct harm on consumers to find a conduct liable to produce exclusionary effects. The draft Guidelines also no longer rely upon the concept of “anti-competitive foreclosing”, i.e foreclosure of competitors that produces consumer harm, as opposed to pro-competitive foreclosure. | The practical impact of the draft Guidelines on the ability of the Commission to intervene in abuse cases could be limited.
While the Commission is suggesting a shift of the evidentiary burden in particular with Category 2 cases (where conduct is presumed to lead to exclusionary effects), the Commission will still be bound to consider any evidence that the dominant company puts forward that shows that conduct is not capable of having exclusionary effects. This is due to the very explicit caselaw of the EU Courts. The EU Courts, who will have the final say , may not accept the Commission’s proposed allocation of the burden It is expected that the presumption, which states that certain conduct in category 2 can have exclusionary effects is controversial. In addition, the Commission’s reliance on case law to describe the legal tests for specific practices is, at times, controversial. Next steps The Commission invites comments on the Guidelines by 31 October 2024, and aims to adopt final Guidelines during 2025. |
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