The Good, the Bad, and the Ugly of the Essential Facility Doctrine & Google Android Auto Case C233/23
The essential facility doctrine has been a topic that has appeared in EU case law surprisingly often over the last few years. This has continued to refine the scope of Bronner’s application. The recent preliminary proceeding in the case against Google Android Auto is bound to become part of this procedure, which could have significant implications in the context of digital platform. The opinion of AG Medina provides a new perspective on assessing the applicability Bronner by examining the commercial and functional purpose of the facility in question. It also outlines the limits of objective justification in accordance with art. In cases of restriction or denial in market access, the 102 TFEU is applicable. Both issues are important in the contexts of the digital economy, and more specifically, digital platforms, where conflicts regarding access and quality are expected to arise whenever a misalignment occurs between the interests of the respective platform, and its commercial clients. Clarification by the CJEU will be valuable for future cases and have significant implications for big tech platforms. Background to the case
The case is based on a dispute between ENEL and Google, a provider of electric car charging services. The conflict between ENEL and Google stems from the incompatibility between Google Android Auto, and the app that ENEL developed to allow users (i) to search for charging stations and book them; (ii), to transfer the search into Google Maps and navigate to the selected station; (iii), to start, stop, and monitor the charging sessions and payment relating to them. The app was already available on Google Android OS for smartphones but not for Auto (i.e., the dedicated car version installed on the cars’ entertainment system).
Given the evident relevance of ENELs app by the name of Juicepass for owners of electric cars that run Android Auto, it requested access to Android Auto. Google informed ENEL, upon request, that it was unable to grant access because the technical template required for apps such as Juicepass hadn’t yet been developed. Google had only developed templates for Google’s navigation applications (Maps and Waze) and media and messaging apps at the time of the request. ENEL then requested that Google make their templates compatible with ENEL’s Juicepass app. Google refused, citing security concerns and a need to allocate resources wisely for developing new templates. Following this refusal, ENEL filed a complaint to the Italian competition authority (AGCM), claiming that such actions constituted an abuse of dominance.
The AGCM confirmed the position of ENEL and found that Google’s refusal constituted an abuse of dominance under art. The AGCM confirmed ENEL’s position and found that Google’s refusal constituted an abuse of dominance under art. 102 million euro. The AGCM also found that Google had intended to favor its proprietary Google Maps app at the expense of other apps like Juicepass, which could compete with it. The AGCM also found Google intended to favor their proprietary Google Maps app at the expense of other apps such as Juicepass, that could compete with them. The Council of State’s questions allow the Court to clarify whether Bronner is applicable in general, and the challenging context of digital platform that concerns this case. If the CJEU adopts the approach to Bronner outlined in the Opinion, it can be a valuable addition to current practice, despite the compromises that are required with regard to objective justification arguments. The Good: A new perspective on the essential facilities doctrine
Over recent years, multiple cases refined and clarified boundaries of Bronner
case law. In Slovak Telekom
it was stated that Bronner does not apply when the restriction of access results from an outright refusal, but rather a so-called “constructive refusal” consisting of unfair trade conditions that make the access to the facility economically unviable. This is reasonable, as the right of dominant enterprises to deal with third-parties is protected by the fundamental rights. However, the right to impose unfair and exploitative trading conditions on them is not. In this scenario, Bronner’s balancing act is not required, and therefore its application is not necessary. Bronner will also not apply if the issue of access to a facility is already covered by secondary or national legislation. Bronner’s balancing act is assumed to have been included in the legislative process for such a framework, with the result that access to the facility is mandated. Under such circumstances, there would be no room for redoing such exercise in the context of a competition law case
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This second point was also confirmed in Lithuanian Railways
, which added that the application of Bronner may also depend on whether the respective facility resulted from an entrepreneurial risk. The Bronner criteria were developed to encourage undertakings to invest in the creation of such facilities. Bronner is not applicable in situations where the facility was created through public funding or other means. This would be because the entrepreneurial risk and incentive would not be present. The Court also stated that destroying a facility does not constitute a refusal as defined by Bronner
that is intended to do the opposite, namely to reserve it to the dominant undertaking. The GC also addressed how the dominant undertaking viewed the facility in question. The GC stated that ownership is not required, but an exclusive right to use the facility is sufficient. What was important in this respect, however, was that the dominant undertaking paid a fixed yearly fee to obtain this exclusive right, which constituted an investment and, thus, an entrepreneurial risk in the sense of Bronner, according to the GC .Now, with the recent case of Google Android Auto, the CJEU will have the chance to make another refinement to the application of Bronner, focusing this time on the nature of the facility. According to the AG opinion Bronner shouldn’t apply to this refusal due to the nature the facility. Google Android is a software platform that was designed in principle to be developed by third parties. It was also designed to facilitate third party participation (i.e. app developers and providers). In this regard, the creation and viability of this platform depends on its popularity with third parties, and therefore, inherently, also their access to it. The Android Auto platform’s nature and its business model are heavily dependent on third-party developers. The logic is that, if the platform was designed to be a platform for third parties, and in fact may not survive without them, it is presumed that access is granted by default as a principle. In the Bronner balance act, it would mean that the dominant enterprise, in this instance, Google, used its fundamental right to open up to third parties, rather than refuse them access. Bronner would not be needed if access was later denied. Furthermore, in such circumstances, the refusal cannot have the purpose of reserving the facility (the Android Auto platform) for the dominant undertaking.
Overall, as a matter of principle, this approach is sensible and could represent a valuable development of current practice. If a facility was created to facilitate access and harness it as part of its core business model, there would appear to be no need to re-evaluate the aspect every time a third-party is denied access. This is similar to situations in which access is mandated through a regulatory framework as seen with Slovak Telekom or Lithuanian Railways. In addition, lifting the protection in the Bronner case, would not, in principle, impact the entrepreneurial incentives to invest in the respective facility as the facility was always designed to be accessed and used by third parties. A remedy for access would not limit the commercial freedoms of the dominant enterprise, as it was never intended to be used exclusively by it. Android Auto, just like Android OS for smartphones, was developed to allow developers to participate. Windows Mobile, Symbian and BlackBerry have all shown that without such participation, they would not have survived. These aspects relate to the conditions and quality of access, not to the question of access as such, and therefore do not require Bronner to be applied.When applying this same logic to platforms outside the specific context of this case, caution is required to ensure that the added value of this approach does not implicitly make it impossible for platform entities to rely on Bronner. These aspects relate, however, to the conditions and quality of access and not to the question of access as such and, therefore, do not require Bronner to be applied
.When applying this same logic to platforms outside the specific context of this case, caution is required to ensure that the added value of this approach does not implicitly make it impossible for platform entities to rely on Bronner.[paras. 263-269]
The (Potentially) Bad: defining platforms as inherently open facilities in the context of Bronner The potential concern associated with the approach of AG Medina stems from the lack of nuance that the opinion has when it comes to the discussion of platforms and the implications of their structure for the application of Bronner. The discussion of platforms’ open nature, showcased in the case of Android Auto, is formulated in general terms almost throughout.[paras. 36-40]This seemingly minor issue can have, however, significant consequences if adopted similarly by the CJEU. This is because platforms are designed to act as intermediaries, bringing together different groups of customers in order to maximize their interactions. All platforms are designed to allow third parties access. Without participation from these parties, the existence of such structures is simply not possible.
Consequently, if the matter of openness in the abstract is sufficient to determine that Bronner does not apply to a refusal to grant access to a respective platform, adopting the AG’s approach will eliminate the protection offered by this case law by default. Evidently, this cannot be the goal or desired outcome of the case to develop the case law regarding the essential facility doctrine. Excluding
Therefore, preserving the added value of this new approach would require looking further into the matter of openness in each case based on its specific circumstances and applying it in a that is suitable for the character of the respective platform. In the case of Android Auto, given its open nature and intended use, it is reasonable to differentiate between car-related and other apps when it comes time to mandate access. Bronner may be applicable when the refusal is for non-car related applications, such as a retail marketplace, a text editing app, or an app for booking a hotel. In these cases, it is not possible to argue that the platform’s goal was to attract third parties, and therefore, the acceptance of access could be presumed to be granted by design. Consequently, an access remedy would interfere with the fundamental rights protected by Bronner as well as the entrepreneurial incentive to invest in the creation of the platform.
Therefore, making use of the approach offered by the AG Opinion in an optimal manner in the case of digital platforms would dictate accounting for their inherent open nature in tandem with their respective business model and functional purpose. It is important to note that this approach should be dynamic as the platform’s features may change over time. This is when it’s important to re-evaluate whether Bronner can be relied upon in a case-bycase basis. The topic of objective justification has been considered a theoretical rather than practical one for a long time, as the number of cases where such arguments were successful is extremely limited. 102 TFEU assessment. As with many other art. The AG considered that Bronner should not be applied in this case, but the discussion on the objective justification constitutes an integral part of the refusal to supply the test of Bronner and is therefore also relevant for such cases in the future. The AG did not consider Bronner to be applicable in this case. However, the discussion of the objective justification is an integral part of refusing to supply the Bronner test and is, therefore, relevant for future cases. This leads to a compromise that is both logical and problematic. According to the AG, the party making the request must make a genuine access request and take a proactive approach to help facilitate it in the event that it is granted. This is a sensible requirement that should be introduced in order to prevent parties from making requests which they know will be denied, just to get the dominant enterprise involved in an abuse claim under art. 102 TFEU. This is particularly so in cases where Bronner would not apply, thereby lowering the difficulty of finding an infringement, which could be problematic where the abuse is established based on potential rather than actual effects on competition.
Regarding the dominant undertaking, the AG accepts that the refusals due to technical and financial considerations are, in principle, legitimate. However, these arguments cannot be used in perpetuity by the dominant undertaking. This motive will eventually fail to meet the objective justification requirement of proportionality. Therefore, for refusals stemming from technical or financial reasons to be legitimate, the dominant undertaking must discuss these reasons with the party requesting access to seek a mutually acceptable solution.Overall, until this point, the approach offered by the AG seems once more logical. The situation becomes more complex when it comes to determining how the discussion and solution envisaged should be implemented. According to the AG’s opinion, if the refusal is due to technical or financial issues, the dominant undertaking must provide the requesting party an overview of costs and allow them to finance it. To ensure that this is a feasible option, the dominant undertaking must ensure that its calculations and proportions are reasonable and appropriate
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On their face, these additional requirements may seem intuitive. If all parties act in good faith it could work well. In practice, this suggestion does not do much more than shift the potential for misconduct to another factor that is introduced later in the discussion about facilitating access. The requesting party may insist that the costs provided to it by the dominant undertaking is unreasonable in order to keep costs as low as they can. The dominant undertaking could also use this opportunity to allow third parties co-finance certain of its developments. The AG’s approach is a good one, despite some flaws. It is hard to see what a more optimal solution would look like.
Conclusion
The case of Android Auto offers yet another opportunity for the CJEU to refine the applicability of the essential facility doctrine. The AG Opinion’s suggestions would provide a valuable new way to assess when Bronner should be applied based on the characteristics of each facility. This approach, especially in the context platforms, should take into account the (open) nature and functional purpose of the facility, as well as its business model. When assessing the objective justification of refusal (whether it falls under Bronner’s scope or not), the disingenuous intent of all parties should be filtered as much as possible in order to remove (financial and technical) barriers to entry in good faith. It remains to be seen if and to what extent, the CJEU decides to follow AG Medina’s suggestions.
