Abusive Practices In Competition Law

Abusive Practices in Competition Law tackles the difficult questions presented to competition lawyers and economists regarding abusive practices: where and when is the red line crossed in competitive advances? When is a company explicitly dominant? How do you handle those who hold superior bargaining power over others but are not classed as dominant?

Under Article 102 TFEU, dominant firms are allowed to compete, but only to the extent their market behaviour does not constitute an abuse. Needless to say, the wording of the article neither explains what an abusive restriction of competition is nor how such a practice can be identified. Rather than developing a one-size-fits-all test applicable to all forms of market behaviour by dominant firms, the European Court of Justice (ECJ) and the General Court (ex; Court of First Instance) have set out a system of tests for separate categories of conduct. Drawing on the full range of the EU Courts’ relevant case law, this very useful book analyses the conditions that must be fulfilled for a broad range of business practices to be deemed abusive within the meaning of Article 102 TFEU, and also identifies the criteria that must be fulfilled for a practice to be ‘objectively justified’. The potentially abusive practices studied here (as defined in the relevant case law) include the following: predatory pricing; margin squeezing; exclusivity agreements; loyalty rebates; refusals to supply to induce exclusivity; secondary line price discrimination; vexatious litigation; acquisitions of intellectual property rights (IPRs); refusals to supply necessary inputs; provision of storage equipment on the condition of exclusive use; selective above-cost price cuts; tying; technological integration; and refusal to license IPRs. The author also contrasts the Commission’s decisional practice with the case law, assesses approaches under U.S. antitrust law to similar forms of conduct, and incorporates insights from economic theory. This study greatly enhances our understanding of the distinction between abusive conduct and lawful competition. In the course of its clarification of the EU Courts’ responses to individual forms of market behaviour, an overall approach to the identification of exclusionary abuses under Article 102 TFEU begins to come into view. Apart from the important new synthesis the work offers legal scholars, there can be little doubt this book will prove a valuable asset and even an inspiration to competition lawyers.

Granting rebates to a customer or refusing to supply a competitor are examples of ordinary commercial practices, which become ‘abusive’ under Article 102 of the Treaty on the Functioning of the EU (TFEU) when carried out by ‘dominant’ firms. This topical book provides an up-to-date account of the emerging trends in the enforcement and interpretation of this provision at both the EU and national level.

This book offers an original interpretation of the case law on exclusionary abuses under Article 82 EC (now Article 102 TFEU, according to the numbering introduced by the Treaty of Lisbon), and it identifies the various factors that have shaped the application of this provision through its history. The book provides an in-depth analysis of the European Commission's Guidance on enforcement priorities under Article 82 and it makes a provocative proposal for further modernisation of the analysis of exclusionary abuses by recasting the prohibition of abuse of dominance as a norm which deals only with unilateral conduct. The first part of the book reconsiders fundamental legal and economic concepts underpinning the assessment of exclusionary abuses and identifies the difficulties posed by the principal forms of abusive practices (refusals to deal, predatory pricing, rebates and tying). The EU case law is compared with the US experience under Section 2 of the Sherman Act. The second part of the book explores solutions, based on the premise that the reform of Article 82 (now Article 102 TFEU) should be in line with the modernisation of Article 81 (now Article 101 TFEU) and the EU merger control rules. The last chapter demonstrates the gradual convergence of the application of Articles 81 and 82 in the area of vertical restraints. It points towards a redefined division of labour between these two provisions with a view to ensuring efficient enforcement, better protection of consumer interests, and clearer incentives for dominant firms to invest in desirable commercial practices. The book will be of interest to students and practitioners of EU competition law, and to those in other jurisdictions where the application of competition law to practices of dominant firms is controversial.

The objective(s) of Article 102 TFEU, what exactly makes a practice abusive and the standard of harm under Article 102 TFEU have not yet been settled. This lack of clarity creates uncertainty for businesses and, coupled with the current state of economics in this area, raises an important question of legitimacy. Using law and economic approaches, this book inquires into the possible objectives of Article 102 TFEU and proposes a modern approach to interpreting 'abuse'. In doing so, this book establishes an overarching concept of 'abuse' that conforms to the historical roots of the provision, to the text of the provision itself, and to modern economic thinking on unilateral conduct. This book therefore inquires into what Article 102 TFEU is about, what it can be about and what it should be about regarding both objectives and scope. The book demonstrates that the separation of exploitative abuse from exclusionary abuse is artificial and unsound. It examines the roots of Article 102 TFEU and the historical context of the adoption of the Treaty, the case law, policy and literature on exploitative abuses and, where relevant, on exclusionary abuses. The book investigates potential objectives, such as fairness and welfare, as well as the potential conflict between such objectives. Finally, it critically assesses the European Commission's modernisation of Article 102 TFEU, before proposing a reformed approach to 'abuse' which is centred on three necessary and sufficient conditions: exploitation, exclusion and a lack of an increase in efficiency.

As part of its review of competition law that started in the late 1990s, the European Commission proposes to revise its interpretation and application of the Treaty’s prohibition of abuses of dominant positions. Also, it has instigated a debate about the promotion of private enforcement of EC competition law. On the former subject, the Commission published a Discussion Paper in 2005; on the latter, a Green Paper in 2005, followed by a White Paper in 2008. The chapters in this volume critically appraise the Commission’s proposals, including the most recent ones. The authors also highlight the repercussions of the proposed ‘more economic approach’ to abuses of dominant positions on private litigants’ opportunities to bring damages actions in national courts for such abuses.

This sub-chapter explains the concept of abuse under EU competition law, in particular the distinction between exploitative and exclusionary abuses and the special responsibility of dominant undertakings not to abuse of their dominant position. It seeks to question the objective concept of abuse and what might amount to methods different from those which condition normal competition and whether a subjective concept of abuse would not extend the area of application of EU competition law to unfair methods of competition and unfair hindrance of competitors. From Hoffman-LaRoche to Intel undistorted competition serves both the purpose of EU competition and the law against unfair competition amongst competitors and it would need further clarification, including proper delimitation by the EU courts. It also draws parallels between the German concept of competition based on performance and competition based on merits as emphasized by the Act against Restraints of Competition, which is the public enforcement mechanism against anti-competitive practices, and the Act against Unfair Competition which is enforced by the courts via private litigation. This being said, the latter Act has as EU counterpart a Directive against unfair commercial practices. This questions, however, whether the action against Intel would extend the ambit of competition intervention based on an objective concept of abuse to a subjective concept where internal strategies amount to unfair methods of competition. If these strategies aim to foreclose rivals and competition law is concerned about the 'viability' of competitors would this mean that in effect EU competition law protects or should competitors?

A ground breaking study of how the interaction between the European Commission and the EU Courts has shaped EU competition law.

Although it is commonly assumed that consumers benefit from the application of competition law, this is not necessarily always the case. Economic efficiency is paramount; thus, competition law in Europe and antitrust law in the United States are designed primarily to protect business competitors (and in Europe to promote market integration), and it is only incidentally that such law may also serve to protect consumers. That is the essential starting point of this penetrating critique. The author explores the extent to which US antitrust law and EC competition law adequately safeguard consumer interests. Specifically, he shows how the two jurisdictions have gone about evaluating collusive practices, abusive conduct by dominant firms and merger activity, and how the policies thus formed have impacted upon the promotion of consumer interests. He argues that unless consumer interests are directly and specifically addressed in the assessment process, maximization of consumer welfare is not sufficiently achieved. Using rigorous analysis he develops legal arguments that can accomplish such goals as the following: replace the economic theory of ‘consumer welfare’ with a principle of consumer well-being; build consumer benefits into specific areas of competition policy; assess competition cases so that income distribution effects are more beneficial to consumers; and control mergers in such a way that efficiencies are passed directly to consumers. The author argues that, in the last analysis, the promotion of consumer well-being should be the sole or at least the primary goal of any antitrust regime. Lawyers and scholars interested in the application and development and reform of competition law and policy will welcome this book. They will find not only a fresh approach to interpretation and practice in their field – comparing and contrasting two major systems of competition law – but also an extremely lucid analysis of the various economic arguments used to highlight the consumer welfare enhancing or welfare reducing effects of business practices.

Traditionally, competition law has viewed issues of abuse of economic dependency or relative power as peripheral, focusing primarily on abuses rooted in dominance or substantial market power. However, this perspective is now being increasingly challenged by enforcers and policymakers. They are calling for a more comprehensive and effective approach to addressing abusive practices by firms that, although not entrenched in dominance in the traditional sense, still exert consequential influence. Several jurisdictions, particularly in Europe and East Asia, are responding to this call by integrating the prohibition of abuse of economic dependence or superior bargaining position into their competition law frameworks and actively enforcing it. Despite these developments, however, the prohibition of abuse of economic dependence, especially in the absence of dominance, remains an under-researched area within mainstream competition law discussions.This research endeavors to fill this gap by examining the prohibition of abuse of economic dependence as a competition law tool. The goal of this study is to advocate for the integration of the prohibition of abuse of economic dependence as a complementary mechanism to the existing abuse of dominance framework in competition law.Specifically, this study adopts a combination of theoretical exploration and empirical research. Theoretical discussions critically scrutinize the traditional dominance-centered and exclusion-focused approach to abuse, highlighting its inherent conceptual limitations and proposing a re-conceptualization of power, abuse, and harm. On the empirical side, the research surveys the legislative landscape in major jurisdictions and provides a practical analysis of potential strategies for implementing the prohibition of abuse of economic dependence in competition law. This analysis is based on the author's preliminary research conducted across 34 jurisdictions in 2021.This study concludes by advocating for a more holistic and comprehensive understanding of market power and abuse, and for a more active role of competition law in cases of power asymmetry. Ultimately, this study posits that the inclusion of a separate provision prohibiting the abuse of economic dependence within competition law, as seen in France and Germany, is the most desirable approach. In instances where the prohibition of abuse of dependency is enforced outside but through the competition law framework, as in the cases of Japan or Korea, this study argues that certain limiting principles, such as relevance to competition or public interests, must be implemented to ensure harmony with other competition law tools.