Exclusionary abuses – more guidance to come

There has been no shortage of decisions by European courts dealing with exclusionary abuses cases in recent years. To make these cases and the Commission’s own experience more tangible, the Commission has announced the introduction of guidelines in this area. They will be the first of their kind dealing with Art. 102 TFEU (abuse of dominance). Although the process was just kicked off, the draft documents allow some interesting insights already.

Earlier this week, the Commission announced its plan to adopt guidelines on exclusionary abuses of dominance (Guidelines, which, together with other documents quoted in this post, can be found here). Whilst guidelines are generally well established for various areas of European competition law, up to now there have been no guidelines clarifying the application of an abuse of dominance in this respect. To kick off the process, the Commission published a “Call for Evidence”, giving interested parties the opportunity to submit their views within the next four weeks. A draft of the Guidelines for public consultation is expected by mid-2024 with the goal to have final Guidelines in place by 2025. 

At the same time and to bridge the interim period, the Commission amended its 2008 Guidance on enforcement priorities (Guidance) by revising parts of the Guidance which no longer reflect the Commission’s approach. The Commission plans to withdraw the Guidance on enforcement priorities once the new Guidelines are adopted.

The background of these initiatives is explained in a “competition policy brief” which gives insights into the Commission’s motivation and plans for the future, mainly on the amendments already implemented in the Guidance.

What kind of behaviour is covered?

The Guidelines as well as the Guidance only concern exclusionary behaviour and are therefore not related to exploitive conduct.  As a reminder, exclusionary practices are normally directed at competitors of a dominant undertaking and aim at preventing them from profitably entering or remaining active in a particular market. They are typically seen as the most harmful type of abuse.

Why now?

In its policy brief, the Commission emphasizes that global and European economies have undergone significant changes. In particular, the regulator notes that increasing evidence of market concentration and growing importance of digital markets and services could be observed. These markets are often characterized by strong network effects and “winner takes it all”-dynamics. The Commission concludes that a strong enforcement against abuses of dominance is key to tackle those concerns.

On top of that, the Commission acknowledges that there have been a number of important court decisions which could be better reflected in the Guidance overall.

What has changed already?

The amendments to the Guidance mainly concern five areas:

  • First, the Commission reflects recent court decisions, inter alia Unilever, by clarifying that foreclosure should not only cover situations where competitors are fully excluded or marginalised, but also conduct that weakens an effective competitive structure. In this respect, the Commission further makes it clear that a dominant undertaking’s conduct does not need to be profitable to be enforced against as a priority.
  • Second, with a view to pricing abuses, not only conduct of a dominant undertaking which may lead to the market exit or the marginalisation of as efficient competitors should be pursued as a matter of priority. In other words, also conduct concerning the market exit of less efficient competitors will be enforced against as a matter of priority.
  • Third, the old guidance referred to the “as-efficient-competitor” (AEC) test in the section on pricing abuses without specifying in which cases the test should be applied. The AEC test basically requires an analysis of the price level charged by the dominant undertaking and a comparison with its costs to see whether a as efficient competitor could profitably compete against a potentially abusive pricing practice by the dominant firm. Following recent decisions by the courts, the Guidance now states that an AEC test is not legally required in every situation and should in any event be assessed together with all other relevant circumstances.
  • Fourth, the Commission clarifies that constructive refusals and unfair access conditions should not be treated like an outright refusal to supply. As access has already been given, these situations are not comparable, although constructive refusals can still result in an abuse.
  • Fifth, the Commission emphasizes the independent nature of margin squeezes and the fact that the criteria for assessment are not the same as for refusal to supply.

Overall, the amendments to the Guidance are rather nitty-gritty. Still, the entire communication by the Commission sends the unmistakable signal that Art. 102 TFEU is high on the agenda – despite the DMA and other enforcement efforts. And, when it comes to winning or losing abuse of dominance cases, it is often the nitty-gritty legal stuff that matters.