The statutory provision that governs abuses of dominance in the European Union is Article 102 of the Treaty of the Functioning of the EU (TFEU).2 The regulatory body with the power to investigate and sanction abuses is the Competition Directorate-General of the European Commission. National competition authorities of individual Member States (NCAs) are competent to apply Article 102 TFEU as long as the Commission has not opened a formal investigation into the same matter.
The procedure for the Commission’s enforcement and application of abuse of dominance rules is set out in Regulation 1/2003.3 There are a series of implementing regulations, notices and guidance papers, the most important of which for Article 102 TFEU is the Article 102 Guidance Paper.4
In broad terms, four conditions must be met for Article 102 TFEU to apply:
- the entity engaged in the relevant conduct constitutes an ‘undertaking’;5
- the undertaking must hold a dominant position on a relevant market;
- the conduct at issue must qualify as an abuse and restrict competition; and
- the conduct must affect trade between Member States.
II Year in Review
2017 and the first half of 2018 were particularly busy for the Commission and EU courts in terms of applying Article 102 TFEU. The Commission reached three infringement decisions, including in its high-profile Google Shopping and Qualcomm cases.6 It closed one investigation via commitments (concerning Amazon’s most-favoured nation clauses),7 and it closed two cases without taking any action (the Exhaust systems case, and the investigation into DuPont’s and Honeywell’s collaboration to develop an environmentally-friendly refrigerant).8
In the Google Shopping case, the Commission fined Google €2.42 billion for showing groups of ads for product offers differently to free results for comparison shopping services.9 The Commission found that the different way that Google ranks and displays product ads compared to free results for comparison shopping services amounts to unlawful favouring. As a remedy, the Commission requires that Google should show product ads from rival services based on the same processes and methods as for its own product ads.
Google has appealed the decision to the General Court in Luxembourg,10 explaining that:
- it ranks all its results based on consistent standards;
- the product ads at issue are in an enhanced ad format that helps users find relevant products, and are more efficient for advertisers;
- showing ads in a clearly marked ad space separate from free results is not favouring them: it is how Google monetises the free search service it offers to users; and
- Google has no obligation to supply rivals with access to its search results pages because it is not an essential facility.
Google also points to what it considers a thriving product search space, where Amazon (not Google) is the leading player.
In the Qualcomm case, the Commission fined Qualcomm almost €1 billion for granting exclusive rebates to Apple.11 Although at the time of publishing the non-confidential decision has not been released, it appears from a press release that the Commission reviewed and rejected Qualcomm’s price-cost test, holding that the results did not support Qualcomm’s claim that its exclusivity payments were not capable of having anticompetitive effects.12
In the Amazon case, Amazon offered commitments to address the Commission’s concerns (under Article 102 TFEU) concerning MFN-type clauses in its agreements with e-book publishers. In particular, Amazon’s price-related parity clauses required that publishers should provide Amazon with the same prices as rival platforms. The Commission raised concerns that this restricted other e-book retailers from competing with Amazon on price. Amazon agreed not to enforce the clauses in all EEA e-book agreements for five years.13
At the court level, 2017 was most notable for the Court of Justice’s long-awaited judgment in the Intel case.14 The Court of Justice set aside the General Court’s 2014 judgment,15 upholding a Commission decision16 fining Intel €1.06 billion for abuse of dominance through exclusivity rebates. The Court of Justice held that the General Court erred in failing to examine all Intel’s arguments calling into question the anticompetitive effects of the arrangements under an as-efficient competitor analysis.
The judgment brings important clarity to the treatment of ‘by nature’ abuses, such as exclusivity rebates, which the General Court had treated as akin to per se abusive. By nature abuses remain presumptively unlawful, but if a dominant firm submits evidence that its conduct is not capable of restricting competition, the Commission must assess all the circumstances to decide whether the conduct is abusive. This entails, in particular, an assessment of rivals’ efficiency, because competition law does not seek to protect inefficient rivals. In addition, even if the conduct does produce exclusionary effects, the Commission (or Court) must determine whether those effects ‘may be counterbalanced, or outweighed, by advantages in terms of efficiency which also benefit the consumer’.17
In his opinion in Orange Polska, Advocate General Wathelet confirmed that the Intel judgment does not merely set out a procedural requirement, but raises a matter of substance: if the dominant firm submits plausible evidence, the Commission must properly review that evidence and demonstrate that the conduct will nonetheless exclude equally efficient rivals.18
In MEO, the Court of Justice continued the theme of focusing on anticompetitive effects as a necessary element of an infringement of Article 102 TFEU.19 It confirmed that establishing a discrimination abuse under Article 102(c) TFEU requires the Commission to demonstrate – ‘having regard to the whole circumstances of the case’ – that the conduct leads to a distortion of competition.20
Finally, in AKKA-LAA, the Court of Justice reached a decision (supposedly) clarifying the circumstances to find an exploitative pricing abuse.21 The Court found that a comparison of prices in different Member States can be a valid way of assessing price levels (benchmark countries must be selected ‘in accordance with objective, appropriate, and verifiable criteria’). If prices are significantly and persistently above that benchmark, there may be room for an exploitative price abuse. By contrast, Advocate General Wahl’s Opinion in the same case had expressed strong scepticism about exploitative abuse cases, noting that ‘there is simply no need to apply that provision in a free and competitive market: with no barriers to entry, high prices should normally attract new entrants. The market would accordingly self-correct.’22
III Market Definition and Market Power
i Market definition
Market definition serves as an analytical framework to assess market power and competitive effects. A relevant market for the purpose of EU competition law circumscribes the sources of competitive constraint faced by companies under investigation.23 The Commission’s Market Definition Notice provides guidance on the Commission’s approach to market definition for all areas of EU competition law, including the application of Article 102 TFEU, as the Guidance Paper is silent on the topic. The relevant product market comprises all those products or services ‘which are regarded as interchangeable or substitutable by the consumer, by virtue of the products’ characteristics, their prices and their intended use’.24 This definition draws on the principles established by the Court of Justice in Michelin, holding that:25
for the purposes of investigating the possibly dominant position of an undertaking on a given market, the possibilities of competition must be judged in the context of the market comprising the totality of the products which, with respect to their characteristics, are particularly suitable for satisfying constant needs and are only to a limited extent interchangeable with other products.
The Commission acknowledges that qualitative differences only allow it as a first step to limit the field of possible substitutes.26 Actual interchangeability is assessed by the hypothetical monopolist (SSNIP)27 test. This asks whether a hypothetical monopolist could profitably impose a 5 to 10 per cent permanent price increase over the candidate products without a sufficient number of consumers at the margin switching to other products to render the price increase unprofitable.28
A number of EU court judgments have discussed basic principles of market definition in the context of Article 102 TFEU cases.29 However, some of these cases are relatively old and remain quite general.30 The Commission’s decisional practice and court case law in other areas of EU competition law, including merger control, provide additional insight that is also relevant for Article 102 TFEU cases.31
The application of Article 102 TFEU requires the company under investigation to have a high degree of market power that is referred to as ‘dominance’. The Court of Justice has described dominance as ‘a position of economic strength’ that provides a company with ‘the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of its consumers’.32
Despite the ubiquitous nature of this dictum (it is cited in virtually every Article 102 TFEU decision and judgment), it provides limited guidance for companies to understand whether they hold a dominant position. It does not explain, for example, how ‘independently’ an undertaking must be able to behave33 or when the threshold of ‘appreciable extent’ is crossed.34 What is clear is that no single factor is determinative in assessing a company’s dominance.35 Nor does dominance require that there is no competition on the relevant market.36
The Guidance Paper equates the concept of competitive independence with the ability to profitably raise prices above the competitive level.37 Unlike in the context of merger control, where the question is whether the merged entity will prospectively gain power to raise prices, in Article 102 TFEU cases the question is whether the company under investigation already has such power. This does not require the Commission to show that the company could raise prices beyond the level that it currently charges (this is known as the ‘cellophane fallacy’).38 If the company has market power, it will already charge above the competitive level at the profit maximising point. Direct proof of dominance would therefore involve comparing the company’s prices with what is expected to be the competitive price level. Because determining the competitive price level as a review benchmark is hard, if not impossible, case law has developed indicators for the existence of dominance. The Guidance Paper classifies these broadly into criteria relating to: constraints imposed by competitors (i.e., an assessment of market structure and market shares); constraints imposed by the threat of expansion and entry; and constraints imposed by the bargaining strength of customers.39
In the Akzo judgment, the Court of Justice established a (rebuttable) market share presumption for dominance under which a company is assumed to be dominant if it holds a market share of 50 per cent or more in the relevant market.40 The rationale is that shares of sales indicate whether a company can ‘more easily pursue a pricing policy independent of competitive conditions’ and therefore is ‘able to control prices’.41 The Guidance Paper notes that dominance is ‘not likely if the undertaking’s market share is below 40 per cent.’42
That said, even above the 50 per cent threshold it is necessary to consider the particular nature and competitive dynamics of the relevant market when assessing market shares. For example, in bidding markets characterised by a limited number of large orders, temporary high shares do not indicate market power.43 Similarly, in markets subject to a high degree of innovation or where services are offered for free, market shares are not a proxy for market power, either.44
Expansion and entry
Any presumption of market power that might accompany a high market share is inapplicable in markets where competitors are able to meet rapidly the demand from customers who want to switch away from the firm with the largest share.45 In other words, lack of barriers to entry and expansion can prevent a dominant position if a company faces no current competitive constraints, but the existence of barriers will not create a dominant position if a company already faces competitive constraints. As recognised in the Guidance Paper, ‘an undertaking can be deterred from increasing prices if expansion or entry is likely, timely and sufficient’.46 In assessing this likelihood, the Commission considers barriers that prevent timely entry or expansion. These can take the forms of legal barriers (such as legislation conferring a statutory monopoly,47 or intellectual property rights),48 or barriers such as economies of scale or scope,49 technological advantages50 or network effects.51
Customers with sufficient countervailing bargaining strength can prevent a company from exercising market power. Buyer power, however, may not negate dominance where a strong buyer can protect only itself, but not the entire market.52
Generally, exercising buyer power requires the buyer to have viable competitive alternatives to the dominant company, or the ability to develop such alternatives.53 Even a large buyer will have little or no power if it has no alternative supply options to which it can realistically turn.54 That said, in some instances, buyer power may also come from the buyer’s ability to retaliate against the seller. For example, in the case of patent licensing, a patent owner may be constrained by the patent portfolios of licensees if it is vulnerable to countersuits in the event of overcharging for its own patents. In the case of a multi-product firm that serves the same buyers in different product markets, buyers may constrain the firm’s ability to charge supra-competitive prices in a dominant market by threatening to switch their purchases in non-dominant markets.
Holding or acquiring a dominant position is not in itself unlawful under EU competition law. A dominant company only infringes Article 102 TFEU if it abuses its dominant position to restrict competition.
The classic formulation of an abuse is from Hoffmann-La Roche:
The concept of an abuse is an objective concept relating to the behaviour of an undertaking in a dominant position which is such as to influence the structure of a market where, as a result of the very presence of the undertaking in question, the degree of competition is weakened and which, through recourse to methods different from those which condition normal competition in products or services on the basis of the transactions of commercial operator, has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition.55
ii Exclusionary abuses
An exclusionary abuse takes place if a dominant company forecloses competitors in an anticompetitive manner. Not every foreclosure of competitors is anticompetitive. It is a normal (and desirable) part of the competitive process that competitors that have less to offer to customers may leave the market. This has been recognised in the Guidance Paper, and has now been affirmed by the Court of Justice in Post Danmark I and Intel, where the Court stressed that ‘not every exclusionary effect is necessarily detrimental competition’ and that ‘it is in no way the purpose of Article 102 TFEU to …. ensure that competitors less efficient than the undertaking with the dominant position should remain on the market’. To the contrary: ‘Competition on the merits may, by definition, lead to the departure from the market or the marginalisation of competitors that are less efficient and so less attractive to consumers from the point of view of, inter alia, price, choice, quality or innovation.’56 The key task in an abuse analysis is therefore to distinguish between anticompetitive conduct and competition on the merits.
Article 102 TFEU lists a number of abusive practices, but these are not exhaustive: sui generis abuses can be identified in individual cases.57 The Guidance Paper discusses legal criteria for categories of exclusionary abuses that have been identified in past cases. These legal criteria serve as successive filters to distinguish between abusive behaviour and legitimate pro-competitive conduct.
Outside the abuse categories discussed in the Guidance Paper, conduct must be assessed based on general principles. New abuses cannot be postulated without limitation: if a type of conduct falls within an existing category of abuse (such as refusal to supply or tying), the legal conditions necessary to establish that abuse need to be satisfied.
The case law qualifies certain categories of conduct as ‘by nature’ abuses (e.g., discounts conditioned on exclusivity, as discussed below). The recent Intel judgment brings important clarity to the treatment of these abuses: by nature, abuses remain presumptively unlawful, but if a dominant firm submits evidence that its conduct is not capable of restricting competition, the Commission must assess all the circumstances to decide whether the conduct is abusive. This entails, in particular, an assessment of rivals’ efficiency, because competition law does not seek to protect inefficient rivals.58
Outside the ‘by nature’ exceptions, a ‘fully-fledged analysis of effects has to be performed’.59 This fully fledged analysis requires proving at least the following five elements:
- the dominant company’s abusive conduct must hamper or eliminate rivals’ access to supplies or markets;60
- the abusive conduct must cause the anticompetitive effects.61 Proving causation requires comparing prevailing competitive conditions with an appropriate counterfactual where the conduct does not occur;62
- the anticompetitive effects must be reasonably likely.63 If conduct has been ongoing for some time without observable anticompetitive effects, that suggests the conduct is not likely to cause anticompetitive effects in the first place;64
- anticompetitive foreclosure must be determined by reference to equally efficient competitors.65 Any possible foreclosure of competitors can only conceivably be anticompetitive if it is liable to exclude competitors that are at least as efficient as the dominant company;66 and
- the anticompetitive effects must be sufficiently significant to create or reinforce market power.67
Even if a company abuses its dominance, it retains the possibility to justify its conduct – even for ‘by nature’ abuses (referred to as ‘objective justification’). To do so, the company must show that the conduct is either objectively necessary or produces efficiencies that outweigh restrictive effects on consumers.68 If a dominant company raises evidence of objective justification, it ‘falls to the Commission ... to show that ... the justification put forward cannot be accepted’.69
These general principles are discussed in relation to various different types of abuse below.
Predatory pricing arises where a dominant company prices its products below costs such that even equally efficient competitors cannot viably remain on the market. In Akzo, the Court of Justice established a two-test rule for the assessment of predatory pricing conduct under Article 102 TFEU:70 pricing below average variable cost (AVC) is presumptively abusive;71 and pricing below average total cost (ATC) but above AVC is abusive if it is shown that this is part of a plan to eliminate a competitor.72 The principle set out in the Guidance Paper in assessing predatory pricing conduct is that of a profit sacrifice (i.e., the dominant company deliberately foregoes profits in the short term so as to foreclose competitors with a view to strengthening market power).73 There may be cases where alternative benchmarks, such as average incremental costs, are more appropriate, where, for example, an industry is characterised by high fixed costs and very low variable costs.74
A margin squeeze occurs when a vertically integrated company sells an input to its downstream competitors at a high price and at the same time prices its own downstream product at a low price such that its competitors are left with insufficient margin to compete viably in the downstream market. This is abusive in EU law when ‘the difference between the retail price charged by a dominant undertaking and the wholesale prices it charges its competitors for comparable services is negative, or insufficient to cover the product-specific costs to the dominant operator of providing its own retail services on the downstream market’.75
Margin-squeeze cases were originally viewed as instances of a constructive refusal to supply. The Court’s judgments in TeliaSonera and Telefonica have held that it is not necessary to establish the legal conditions for an abusive refusal to supply in such cases. These judgments treat margin-squeeze practices as akin to predatory pricing behaviour, particularly as they analyse the margin squeeze under Article 102(a) TFEU. To end the margin squeeze, the dominant company is not required to provide access to its facilities; it only needs to change the level of prices to remove the squeeze.
The Guidance Paper describes exclusive dealing as an action by a dominant undertaking ‘to foreclose its competitors by hindering them from selling to customers through use of exclusive purchasing obligations or rebates’. Both Articles 101 TFEU76 and 102 TFEU can apply to exclusive dealing, although traditionally the approach under Article 101 TFEU has been more economic, while under Article 102 TFEU exclusive dealing has historically been treated as presumptively unlawful.77 The recent Intel judgment clarifies that this presumption remains, but if firms submit evidence that the conduct is not capable of restricting competition, the Commission must then assess all the circumstances to determine whether the conduct is abusive.78
An exclusive purchasing obligation requires a customer to purchase all or a large majority of its needs for a specific product from one supplier. The current approach of the Commission and the courts is to look closely at the actual or likely effects of a particular agreement on the relevant market and assess whether it harms consumers.79 Factors the Commission will take into account include the duration of the obligation, customers’ switching costs and whether the dominant undertaking is an unavoidable trading partner.80
While the grant of discounts (also known as rebates) is generally pro-competitive, certain forms of discounts may constitute an abuse if applied by a dominant company. The concern is that the dominant company leverages its larger base of sales for calculating discounts in ways that preclude smaller (but equally efficient) competitors from competing for the contestable portion of a customer’s demand. While the discount remains above costs for the dominant company because it can spread the discount across a larger base of sales, smaller competitors would be forced to price below costs to match the discounts since they would have to amortise it over a smaller base.
The case law generally distinguishes between three categories of rebates:
- volume-based rebates that pay out based on the volume of a customer’s purchases: reflecting gains in efficiency and economies of scale, volume-based rebates are presumptively lawful;81
- rebates conditioned on exclusivity, which require a customer to obtain all or most of its requirements from the dominant company in order to get the rebate, are presumptively unlawful (Hoffmann-La Roche, Michelin, British Airways82 and Tomra83). The recent Intel judgment clarifies that while exclusive dealing remains presumptively unlawful, if firms submit evidence that the conduct is not capable of restricting competition, the Commission must assess all the circumstances to decide whether the conduct is abusive; and
- fidelity-building rebates that possess a loyalty-building mechanism without being directly linked to exclusive or quasi-exclusive supply: these require an assessment of all the circumstances to determine whether the rebate is likely to foreclose equally efficient competitors.84 The relevant circumstances include:
• whether the rebates are individualised or standardised;
• the length of the reference period;
• the conditions of competition prevailing on the relevant market;
• the proportion of customers covered by the rebate; and
• whether a rebate is retroactive or incremental.85
Tying occurs when a supplier sells one product, the ‘tying product’, only together with another product, the ‘tied product’. The seminal case on tying involved Microsoft’s tying of its Windows operating system with its Windows Media Player.86 The Court found that Microsoft’s tying of Windows Media Player (a qualitatively inferior product) to Windows, the ubiquitous operating system, degraded the quality of the Windows operation system and foreclosed original equipment manufacturers as a distribution channel for rival media players. Rival means of distribution, notably internet downloads, were not viable because they were slow, difficult and prone to failure. The Commission, upheld by the General Court, identified five conditions for an abusive tying:
- a the tying and tied goods are two separate products;
- b the undertaking concerned is dominant in the tying product market;
- c customers have no choice but to obtain both products together;
- d the tying forecloses competition; and
- e there is no objective and proportionate justification for the tie.87
A central element of a tying analysis is to establish whether two components constitute separate products or an integrated whole. In Microsoft, the General Court held that such an assessment must be based on ‘a series of factors’, including ‘the nature and technical features of the products concerned, the facts observed on the market, the history of the development of the products concerned and … commercial practice’.88
A dominant company may achieve the same effect as tying by ostensibly offering a stand-alone version of the dominant tying product alongside a bundled version, but at a price that renders it commercially unrealistic for customers to take the stand-alone version. Past cases have condemned the grant of discounts on dominant products that are conditioned on customers also taking non-dominant products.89 In the Guidance Paper, the Commission takes the position that such bundled discounts must be assessed by allocating the discounts fully to the price of the non-dominant ‘tied’ product. If that calculation results in a price below the dominant company’s long-run average incremental costs of supplying the ‘tied’ product, the discount is anticompetitive (unless rivals are able to replicate the bundle).90
Refusal to deal
As a general rule, companies, including dominant companies, are free to decide whether to deal with a counterparty. As Advocate General Jacobs confirmed in Bronner, it is ‘generally pro-competitive and in the interest of consumers to allow a company to retain for its own use facilities which it has developed for the purpose of its business’.91 A refusal by a dominant undertaking to supply its products can therefore amount to an abuse under Article 102 TFEU only in exceptional circumstances. According to established case law, the following general conditions must be met for a refusal to supply to be abusive: the requested input must be indispensable to compete viably; the refusal is likely to eliminate all competition in the downstream market; and there is no objective justification for the refusal.92
The indispensability requirement is a high threshold: the input must be essential for a commercially viable business to compete on the downstream market. The test is whether there are ‘technical, legal or economic obstacles capable of making it impossible or at least unreasonably difficult’ to create alternatives, or to create them within a reasonable time frame.93 If there are ‘less advantageous’ alternatives, that means the input is not indispensable. For example, in Bronner, access to newspaper distributor Mediaprint’s delivery network was not indispensable because Bronner could have used kiosks, shops and post (even though these were less advantageous). Mediaprint’s refusal to grant access was, therefore, not abusive.
In its Google Shopping decision, the Commission appears to have imposed a duty on Google to grant rival comparison shopping services access to its search results pages, without establishing a duty to supply by reference to the Bronner criteria.94 Google has challenged this apparent change in the law in its pending appeal.95
If the refusal involves intellectual property rights (i.e., a refusal to license), it is moreover necessary to demonstrate that the refusal would prevent the emergence of a new product, or would hinder technical development and innovation more generally.96
Unlawful discrimination under Article 102(c) TFEU may arise if a dominant company applies different terms to different customers for equivalent transactions. However, such abusive ‘price discrimination’ requires proof that similar situations are being treated in a dissimilar manner without legitimate commercial reasons; and that some customers are placed at a ‘competitive disadvantage’ relative to other customers to such a degree that it creates a risk of foreclosing equally efficient competitors. In MEO, the Court of Justice has recently confirmed that establishing a discrimination abuse under Article 102(c) TFEU requires the Commission to demonstrate – ‘having regard to the whole circumstances of the case’ – that the conduct leads to a distortion of competition.97
Not every different treatment is discriminatory. As a general matter, the EU courts have recognised that differences arising from individual negotiations of terms can be explained by legitimate commercial reasons.98 Other considerations that may be taken into account include, for example, whether the transactions involve similar products,99 costs100 or timing.101 Moreover, even if there is ‘discrimination’, the ECJ’s Post Danmark judgment has made clear that such discrimination is only abusive if it is liable to foreclose equally efficient companies.102 ‘Pure’ discrimination cases are quite rare.103 In past cases, discrimination-type concerns have typically been raised as an ‘added’ consideration in connection with abusive exclusionary pricing practices, such as retroactive volume rebates.
iv Exploitative abuses
Article 102(a) TFEU provides that an abuse may consist of ‘directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions’. The difficulty in determining a benchmark by which prices can be assessed as being unfair has led to a dearth of decisional practice on this issue,104 although the Commission and national authorities have recently begun to pursue more exploitative abuse cases.105 In Scandlines Sverige, the Commission set out what it considers the most appropriate methodology for assessing unfair prices. The questions to be determined are whether the difference between the costs actually incurred and the price actually charged is excessive; and, if the answer to that is yes, then whether a price has been imposed that is either unfair in itself or when compared to the price of competing products.106
In AKKA-LAA, the Court of Justice has provided guidance on the conditions under which the imposition of high prices by a dominant firm might infringe Article 102(a) TFEU. The Court found that to identify unfair prices, comparisons with prices in neighbouring Member States may be appropriate, provided that the reference countries are selected ‘in accordance with objective, appropriate and verifiable criteria and that the comparisons are made on a consistent basis’.107 The Court also confirmed that excessive prices need to be significantly and persistently above the competitive level for there to be an exploitative abuse. Advocate General Wahl’s opinion appeared to set a higher threshold, advising that ‘in its practice, the Commission has been extremely reluctant to make use of that provision against (allegedly) high prices practiced by dominant undertakings. Rightly so, in my view. In particular, there is simply no need to apply that provision in a free and competitive market: with no barriers to entry, high prices should normally attract new entrants. The market would accordingly self-correct.’108
V Remedies and Sanctions
Regulation 1/2003 provides the mechanism by which the Commission sanctions infringements of Article 102 TFEU. The Commission is entitled to impose structural or behavioural remedies, interim measures, fines and periodic penalty payments.109 Alternatively, an undertaking can itself offer commitments to bring the infringement to an end, thereby avoiding a formal finding of an infringement and a fine.
The Commission can impose a fine of up to 10 per cent of a company’s total turnover of the preceding business year for infringements of Article 102 TFEU. The Commission has set out in detail the methodology by which it sets fines, which will take into account, among other things, the nature, length and scope of the infringement; the value of sales of goods affected by the infringement; and whether there are aggravating or mitigating circumstances.110
Before 2004, the Commission had never imposed a fine for an infringement of Article 102 TFEU that exceeded 1 per cent of the turnover of the undertaking involved. In recent years, the Commission has shown a tendency to impose increasingly high fines for abusive conduct, both in absolute and percentage terms, culminating in cases such as Tomra,111 where the fine represented 7 per cent of annual turnover; Intel,112 where the Commission imposed a fine of €1.06 billion (albeit the Court of Justice has quashed the General Court judgment upholding the Commission decision);113 and in Google Shopping, where the Commission imposed a record fine of €2.42 billion (the decision is currently under appeal).114
Fines can be imposed for a failure to abide by interim measures or commitment decisions. In 2013, the Commission fined Microsoft €561 million for failing to comply with its browser choice screen commitments. The Commission is also entitled to impose procedural fines of up to 1 per cent of an undertaking’s annual turnover if an undertaking provides false answers or answers late to the Commission’s requests for information.115 Finally, the Commission is empowered to impose periodic penalty payments to compel companies to abide by remedies and commitments decisions.116
Firms can also win a reduction in the fine if they admit liability. In the 2016 ARA waste management decision, the Commission for first time employed the settlement mechanism traditionally used for cartel cases. ARA admitted liability for refusing to supply its rivals with access to its essential household waste management infrastructure in return for a 30 per cent fine reduction.117
Remedies, whether imposed by the Commission or offered voluntarily by an undertaking as commitments, must fulfil certain objectives. They must bring the infringement to an end, be proportionate in both scope and duration, and not be easily circumvented.118
Where an infringement can be brought to end in different ways, the Commission cannot ‘impose … its own choice from among all the various potential courses of actions which are in conformity with the treaty’.119 This means that the Commission can only impose a specific behavioural remedy if it is ‘the only way of bringing the infringement to an end’.
Considerations of expediency and proportionality mean that behavioural remedies are preferred in Article 102 TFEU cases.120 Structural remedies are only a means of last resort. Behavioural remedies may require the dominant undertaking either to engage in a positive action to bring the infringement to an end or to abstain from a certain type of conduct.121 Positive obligations have included the granting of a compulsory licence;122 raising prices above an exclusionary level;123 and other forms of compulsory dealing.124
Structural remedies are used to rectify effects or abuses that have caused a change in the structure of the market. They will only be proportionate where ‘there is a substantial risk of a lasting or repeated infringement that derives from the very structure of the undertaking’.127 In ENI, the Commission identified concerns with regard to conduct by ENI that result from its ownership of strategic natural gas pipeline infrastructure.128 ENI offered to divest its stake in its international transport businesses and, as a result, the Commission held that ‘ENI will no longer be subject to the inherent conflict of interest it faced operating both as a transmission system operator and as a company active on the Italian wholesale market’.129
The procedural rules for the conduct of Commission investigations are laid out in Regulation 1/2003 and the Commission’s Implementing Regulation.130 In 2012, the Commission published a version of its internal manual of procedure, which provides additional guidance on the Commission’s handling of competition law proceedings.131 A brief summary of the main procedural steps in a typical Article 102 TFEU investigation follows.
- The Commission can begin investigations both as a result of complaints by third parties or on its own initiative. Sector inquiries can also provide the impetus for investigations.
- The Commission’s primary instrument of investigation is issuing requests for information. In the past few years, such requests have become increasingly detailed, and may involve the production of large quantities of data and internal documents. The Commission may oblige companies to respond to requests for information through the adoption of formal decisions that are subject to penalty payments.
- The Commission may conduct unannounced inspections, or ‘dawn raids’, at a company’s premises to obtain documents and information, although such dawn raids are relatively rare in Article 102 cases. Documents that contain advice from external counsel are protected by legal professional privilege, while in-house counsel documents do not benefit from such protection.132
- After considering the evidence, the Commission will decide whether to close proceedings, enter commitment discussions or issue a statement of objections (SO) to the company concerned.
- The addressee of the SO is entitled to review the Commission’s file and respond to the SO in writing. The Commission will also grant the company in question an oral hearing, if requested.
- Following the defendant’s reply to the SO, and a possible oral hearing, the Commission will proceed to a decision (this may occur only after a number of supplementary SOs or letter of facts that seek to bolster the Commission’s initial charges). An adverse decision can be appealed to the General Court on both points of fact and law, and from there to the Court of Justice on points of law only.
Commission proceedings can be resolved through the offer of commitments. Negotiation of commitments can take place both prior to adoption of an SO or following an SO and response. If the Commission considers the offered commitments to be acceptable, it will subject them to a public market test and, if confirmed, make them binding through adoption of a decision under Article 9 of Regulation 1/2003. Commitment decisions involve no finding of infringement and entail no fines. Regulation 1/2003 also makes clear that commitments are not appropriate if the conduct at issue is not sufficiently serious to warrant a fine.
In addition, the Commission can settle cases with companies under investigation. This involves the company admitting liability in exchange for a fine reduction. Traditionally, this procedural mechanism has been limited to cartels, but in the ARA case the Commission employed the settlement mechanism for the first time, rewarding ARA with a 30 per cent fine reduction in exchange for admitting liability.133
VII Private Enforcement
While public enforcement is the core of EU antitrust enforcement, actions brought by private claimants before national courts are an increasingly important complement to public enforcement activity.134 The Commission aims to encourage and facilitate such actions. To this end, it published a proposal for a Directive on private damages actions in 2013, which was signed into law on 26 November 2014135 together with a practical guide on quantifying harm resulting from competition infringements,136 and a recommendation for collective redress mechanisms in Member States.137 The Directive’s stated aim is to optimise the interaction between public and private enforcement of competition law; to minimise discrepancies between rules applicable to antitrust damages actions in Member States; and to ensure that victims of infringements of EU competition law can obtain full compensation for the harm they have suffered. Among other things, the Directive introduces rules on the disclosure of evidence in such cases, as well as on the standing of indirect customers, the length of limitation periods, the joint and several liability of infringers, and the passing-on of damages as a possible defence.
VIII Future Developments
We identify three main trends to watch out for in the coming year:
First, while exploitative abuse cases remain rare and exceptional, there seems to a renewed appetite to bring such cases. While the revival in these cases is spearheaded by national authorities, the Commission appears to be catching on. We see a risk, however, that the concept of exploitative abuse is stretched to address policy issues beyond the scope of competition law that require broader discussion outside individual cases. Much of the debate in the future may turn on the extent to which the high standard expressed by Advocate General Wahl in AKKA/LAA has been embraced by the more ambiguous Court of Justice judgment.
Second, the Commission will need to ensure that its enforcement complies with the Court of Justice’s Intel judgment and its focus on as-efficient competitors. Publicly, the Commission appears to take the position that Intel largely imposes a procedural requirement: Commissioner Vestager has stated that the Commission ‘can presume that this sort of rebate, from a dominant company, is against the competition rules’ and ‘in practical terms, our main conclusion is that you won’t see fundamental change’. This appears to conflict with Advocate General Wathelet’s opinion in Orange Polska that the obligations set out in the Intel judgment are ‘by no means a purely procedural requirement’.
Third, Commissioner Vestager’s term ends in 2019 and, despite rumours that she may seek an unprecedented second term as Competition Commissioner, she may look to wrap up several cases that have been on the Commission’s desk for some time during the coming year.
1 Thomas Graf is a partner and Henry Mostyn is an associate at Cleary Gottlieb Steen & Hamilton LLP.
2 With effect from 1 December 2009, Articles 81 and 82 of the EC Treaty became Article 101 and Article 102 TFEU. The two sets of provisions are, in substance, identical, and references in this paper to Article 102 TFEU should be understood as a reference to Article 82 of the EC Treaty.
3 Council Regulation (EC) No. 1/2003 of 16 December 2002 on the implementation of the rules on
competition laid down in Articles 81 and 82 of the EC Treaty (Regulation 1/2003), OJ L 1, 4 January
4 Guidance on the Commission’s enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings (the Guidance Paper), OJ 2009 C 45/7.
5 The concept of ‘undertaking’ has been interpreted widely by the European courts. See Case C-41/90, Höfner and Elsner v. Macroton GmbH, judgment of 23 April 1991, EU:C:1991:161, paragraph 21: ‘The concept of an undertaking encompasses every entity engaged in an economic activity, regardless of the legal status of the entity or the way in which it is financed.’
6 Case AT.39740, Google Search (Shopping), Commission decision of 27 June 2017; Case AT.40220, Qualcomm (exclusivity payments), Commission decision of 24 January 2018 (no public version available); and Case AT.39813, Baltic Rail, Commission decision of 2 October 2017.
7 Case AT.40153, E-book MFNs and related matters (Amazon), Commission decision of 4 May 2017.
8 Case AT.40170, Exhaust systems, closed on 28 April 2017; and Case AT.39822, Refrigerants, closed on 25 October 2017. In the Refrigerants case, the Article 102 TFEU aspect of the case focused on whether Honeywell and DuPont had committed a patent ambush by not disclosing IP protection during the testing procedure for the new refrigerant. The Commission closed the case without taking any action.
9 Case AT.39740, Google Search (Shopping), Commission decision of 27 June 2017.
10 Case T-612/17, Google and Alphabet (2017/C 369/51).
11 Case AT.40220, Qualcomm (exclusivity payments), Commission decision of 24 January 2018 (no public version available).
12 European Commission, ‘Antitrust: Commission fines Qualcomm €997 million for abuse of dominance market position’, 24 January 2018.
13 Case AT.40153, E-Book MFNs and related matters (Amazon), Commission decision of 4 May 2017.
14 Case C-413/14 P, Intel, judgment of 6 September 2017, EU:C:2017:632 (Intel).
15 Case T-286/09, Intel, judgment of 12 June 2014, EU:T:2014:547.
16 Case AT.37990, Intel, Commission decision of 13 May 2009.
17 Intel, paragraph 140.
18 Case C-123/16 P, Orange Polska, Opinion of Advocate General Wathelet of 21 February 2018, EU:C:
19 Case C-525/16, MEO, judgment of 19 April 2018, EU:C:2018:270.
20 Ibid., paragraph 27.
21 Case C-177/16, AKKA-LAA, judgment of 14 September 2017, EU:C:2017:689.
22 Case C-177/16, AKKA-LAA, Opinion of Advocate General Wahl of 6 April 2017 EU:C:2017:286, paragraph 3.
23 Commission Notice on the definition of the relevant market for the purposes of community competition law (Market Definition Notice), OJ 1997 C 372/5, paragraph 2.
24 Market Definition Notice, paragraph 7. Either ‘demand-side substitutability’ (the ability of consumers to switch their consumption to alternative products in the case of a small change in relative price) or ‘supply-side substitutability’ (the ability of suppliers to switch production to the products under consideration and market them in the short term without incurring significant additional costs or risks in response to a small change in relative price) can provide effective competitive constraints, and when either is present the relevant market ought to be widened, although the Commission considers that ‘demand substitution constitutes the most immediate and effective disciplinary force on the suppliers of a given product’. See the Market Definition Notice, paragraph 13. The same basic principles apply to geographic market definition (in geographic market definition, barriers to trade such as language, import tariffs or regulatory features may be specific additional considerations).
25 Case 322/81, Michelin, judgment of 9 November 1983, EU:C:1983:313 (Michelin), paragraph 37.
26 Market Definition Notice, paragraph 36.
27 Small but significant non-transitory increase in price.
28 Market Definition Notice, paragraph 17.
29 For example, Case 6/72, Continental Can, judgment of 21 February 1973, EU:C:1973:22 (Continental Can); and Case 85/76, Hoffmann-La Roche, judgment of 13 February 1979, EU:C:1979:36 (Hoffmann-La Roche).
30 For an example that engages in a detailed discussion of market definition principles in the pharmaceutical sector, see the judgment of the General Court in Case T-321/05, AstraZeneca, judgment of 1 July 2010, EU:T:2010:266; confirmed in Case C-457/10 P, AstraZeneca, judgment of 6 December 2012, EU:C:2012:770 (AstraZeneca).
31 See Nicholas Levy, European Merger Control Law: A Guide to the Merger Regulation (Matthew Bender & Co, 2017), Chapter 8, for a discussion of market definition in EU merger control.
32 Case C-27/76, United Brands, judgment of 14 February 1978, EU:C:1978:22 (United Brands), paragraph 65; and Hoffmann-La Roche, paragraph 38. The Commission’s Guidance Paper relies on the same definition: Guidance Paper, paragraph 10.
33 Of course, no undertaking can literally act ‘independently’ of its customers: even a monopolist is constrained by the demand curve for its product, which is affected by extra-market constraints, and the reduction in demand from customers as price increases.
34 See Bo Vesterdorf, ‘Article 102 of the TFEU and sanctions: appropriate when?’, ECLR 2011, 32(11), 573–579.
35 United Brands, paragraph 66.
36 United Brands, paragraph 113.
37 Guidance Paper, paragraph 10.
38 For further discussion of the cellophane fallacy, see S Bishop and M Walker, The Economics of EC Competition Law: Concepts, Application and Measurement (third edition, London, Sweet & Maxwell, 2010).
39 Guidance Paper, paragraph 12.
40 Case C-62/86, Akzo Chemie, judgment of 3 July 1991, EU:C:1991:286 (AKZO), paragraph 60: ‘With regard to market shares the Court has held that very large shares are in themselves, and save in exceptional circumstances, evidence of the existence of a dominant position. That is the situation where there is a market share of 50 per cent such as that found to exist in this case.’
41 Case C-62/86, Akzo Chemie, Opinion of Advocate General Lenz of 19 April 1989, EU:C:1989:154, paragraphs 111, 114.
42 Guidance Paper, paragraph 14.
43 For this reason, the Guidance Paper notes that ‘the higher the market share and the longer the period over which it is held, the more likely it is that it constitutes an important preliminary indication of the existence of a dominant position’, Guidance Paper, paragraph 15.
44 Thus, in IBM/Telelogic, the Commission held that market share data did not represent a ‘direct proxy for market power’ in markets characterised by competition on quality and innovation, in particular because ‘competitors who do not regularly upgrade their products, or who do not introduce new products meeting increasing customers’ requirements, will rapidly lose out’, Case COMP/M.4747, IBM/Telelogic, Commission decision of 5 March 2008, paragraph 151. See also Case T-79/12, Cisco Systems and Messagenet, judgment of 11 December 2013, EU:T:2013:635 where the General Court confirmed that because of the high degree of innovation and the fact that services are provided for free (so that any attempt to increase prices ‘would encourage consumers to switch supplier’), market shares of 80 to 90 per cent were not indicative of market power.
45 Hoffmann-La Roche, paragraph 41.
46 Guidance Paper, paragraph 16.
47 See, for example, Case 89/113/EEC, Decca Navigator Systems, Commission decision of 21 December 1988.
48 See, for example, Case COMP/35.141, Deutsche Post, Commission decision of 20 March 2001.
49 United Brands, paragraph 122. The extensive investments that a new entrant to the banana market would need to make were held to be ‘particular barriers to competitors entering the market’ since they generated ‘economies of scale from which newcomers to the market cannot derive any immediate benefit and … the costs of which are irrecoverable if the [entry] attempt fails’.
50 See, for example, Hoffmann-La Roche, paragraph 48.
51 This refers to the phenomenon whereby a product or service becomes more valuable to each user when more people use it. See, for example, Case COMP/39.530, Microsoft (Tying), Commission decision of 16 December 2009, paragraph 420.
52 Guidance Paper, paragraph 18.
53 Guidance Paper, paragraph 18.
54 See, for example, Case COMP/37.990, Intel, Commission decision of 13 May 2009, paragraphs 886 and 889: ‘Throughout its argumentation on buyer power, Intel ignores the fundamental element in its relationship with OEMs, namely the fact that it is an unavoidable trading partner for them: OEMs depend on Intel for what is the most important single hardware component in their computers. As such, Intel is a must-stock brand.’
55 Hoffmann-La Roche, paragraph 121.
56 Case C-209/10, Post Danmark A/S, judgment of 27 March 2012, EU:C:2012:172 (Post Danmark I), paragraphs 21–22. Intel, paragraphs 133–134.
57 See Continental Can, paragraph 26. AstraZeneca, with its regulatory-type abuses, represents another example.
58 Intel, paragraph 142.
59 Intel, paragraph 142.
60 Guidance Paper, paragraph 19.
61 Case C-23/14, Post Danmark II, judgment of 6 October 2015, EU:C:2015:651, (Post Danmark II) paragraph 47.
62 Guidance Paper, paragraph 21.
63 Case T-201/04, Microsoft, judgment of 17 September 2007, EU:T:2007:289 (Microsoft), paragraph 1089.
64 Case T-70/15, Trajektna luka Split, judgment of 30 September 2016, EU:T:2016:592, paragraph 24.
65 Post Danmark I, paragraphs 21–22; and Guidance Paper, paragraphs 25–27. Intel, paragraphs 133–134.
66 Although the exclusion of equally efficient competitors is the usual litmus test for abusive conduct, in limited, specific circumstances, a finding of abuse is possible without relying on the test. In Post Danmark II, the Court of Justice held that the Commission’s Guidance Paper was a statement of the Commission’s priorities but was not binding on the Union’s courts. The Court found that, with respect to rebate schemes, there is no legal obligation that the effects of the scheme applied by a statutory monopoly must be measured against an as-efficient competitor (paragraph 57). In cases where the extent of an undertaking’s dominance or where rigidities in the market’s structure precluded the entry of an as-efficient competitor, the test was ‘of no relevance’ (paragraph 59).
67 Guidance Paper, paragraphs 11 and 19.
68 Post Danmark I, paragraph 41; Guidance Paper, paragraph 28.
69 Microsoft, paragraph 688.
70 Confirmed in Case C-333/94 P, Tetra Pak, judgment of 14 November 1996, EU:C:1996:436; and Case C-202/07 P, France Telecom, judgment of 2 April 2009, EU:C:2009:214.
71 See Akzo, paragraph 71: ‘A dominant undertaking has no interest in applying such prices except that of eliminating a competitor so as to enable it to subsequently raise its prices by taking advantage of its monopolist position.’
72 Ibid., paragraph 72: ‘Such practices can drive from the market undertakings which are perhaps as efficient as the dominant undertaking but which, because of their smaller financial resources, are incapable of withstanding the competition waged against them.’
73 See Guidance Paper, paragraphs 64–66. The Guidance Paper in fact refers to cost benchmarks of average avoidable cost and long-run average incremental cost, but recognises that these are likely to be good proxies for AVC and ATC respectively. See Guidance Paper, paragraphs 26–27.
74 See, for example, Post Danmark I, paragraph 33. The Court of Justice in Post Danmark I (at paragraphs 39–40) also appeared to suggest that proof of anticompetitive effects can substitute for proof of intent in the second Akzo scenario (i.e., where a dominant firm’s price is between AVC and ATC).
75 Case COMP/C-1/37.451, Deutsche Telekom, Commission decision of 21 May 2003, paragraph 107, upheld on appeal by the General Court. Confirmed in Case C-52/09, TeliaSonera, judgment of 17 February 2011, EU:C:2011:83, paragraphs 31–34. A test for a margin squeeze formulated in the Guidance Paper at paragraph 80 is as follows: ‘Finally, instead of refusing to supply, a dominant undertaking may charge a price for the product on the upstream market which, compared to the price it charges on the downstream market, does not allow even an equally efficient competitor to trade profitably in the downstream market on a lasting basis (a ‘margin squeeze).’
76 In many cases the block exemption regulation on vertical agreements will apply to exempt such agreements from Article 101 TFEU, provided that the supplier has a market share of no more than 30 per cent; the exclusive purchasing contract contains no hard-core restrictions; and the exclusivity lasts for less than five years. See Commission Regulation (EU) 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices, OJ 2010 L 102/1.
77 See, for example, Hoffmann-La Roche. This approach was partially questioned in Case T-65/98, Van den Bergh Foods, judgment of 23 October 2003, EU:T:2003:281 (Van den Bergh Foods).
79 See Van den Bergh Foods, paragraph 160.
80 Guidance Paper, paragraph 36.
81 Hoffmann-La Roche, paragraph 90; Case T-203/01, Michelin, paragraph 58.
82 Case C-95/04 P, British Airways, judgment of 15 March 2007, EU:C:2007:166.
83 Case C-549/10 P, Tomra, judgment of 19 April 2012, EU:C:2012:221, paragraph 24.
84 Post Danmark I, paragraphs 31–32.
85 Post Danmark II. Post Danmark held a market share of 95 per cent in bulk mail. It calculated its retroactive rebates across customers’ total demand for bulk mail, covering both non-contestable demand protected by the statutory monopoly and contestable demand. In this way, the retroactive rebates enabled Post Danmark to tie contestable demand to its non-contestable share, which represented around 70 per cent of total demand. Customers switching contestable demand to competitors would lose discounts on their large portion of non-contestable demand. This protected Post Danmark’s position in bulk mail, where competition was already limited by the partial statutory monopoly. The Court held that for determining whether the discount system was abusive, it was necessary to consider ‘all the circumstances’ of the case. Unsurprisingly, in the circumstances, the Court concluded that Post Danmark’s retroactive rebate system infringed Article 102 TFEU.
86 Prohibition decisions have been adopted in a number of other cases involving tying allegations, including Case T-30/89, Hilti, judgment of 12 December 1991, EU:T:1991:70; and Case C-193/83, Windsurfing, judgment of 25 February 1986, EU:C:1986:75.
87 See Case COMP/C-3/37.792, Microsoft, Commission decision of 24 March 2004, paragraph 794. The Court of First Instance confirmed that the five conditions were ‘consistent both with Article 82 EC and with the case law’ and followed from ‘the very concept of bundling’. See Microsoft, paragraph 859. See also Guidance Paper, paragraphs 47–74.
88 See Microsoft, paragraph 925.
89 See for example, Hoffmann-La Roche, paragraphs 110–111; Case COMP/37.859, Hays/La Poste Belge & Key Mail, Commission decision of 5 December 2001.
90 Guidance Paper, paragraph 60.
91 Case C-7/97, Bronner, Opinion of Advocate General Jacobs of 28 May 1998, EU:C:1998:264 (Bronner Opinion), paragraph 57.
92 Bronner Opinion, paragraph 41; Case T-374/94, European Night Services, judgment of 15 September 1998, EU:T:1998:198; Case T-504/93, Tiercé Ladbroke, judgment of 12 June 1997, EU:T:1997:84.
93 Case C-7/97, Bronner, judgment of 26 November 1998, EU:C:1998:569, paragraph 44.
94 Case AT.39740, Google Search (Shopping), Commission decision of 27 June 2017.
95 Case T-612/17, Google and Alphabet (2017/C 369/51).
96 Microsoft, paragraph 332; Case C-418/01, IMS Health, judgment of 29 April 2004, EU:C:2004:257, paragraph 52; and Case C-241/91 P, RTE and ITP, judgment of 6 April 1995, EU:C:1995:98 (Magill), paragraphs 50–56.
97 Case C-525/16, MEO, judgment of 19 April 2018, EU:C:2018:270, paragraph 27.
98 Michelin, paragraph 90.
99 See, for example, Case COMP/38.096, Clearstream, Commission decision of 2 June 2004; Case T-301/04, Clearstream, judgment of 9 September 2009, EU:T:2009:317; and Case COMP/36.568, Scandlines Sverige, Commission decision of 23 July 2004.
100 See, for example, Case 95/364/EC, Brussels National Airport, Commission decision of 28 June 1995.
101 See, for example, Case IV/28.841, ABG/Oil Companies, Commission decision of 19 April 1977.
102 Post Danmark I, paragraph 30: ‘The fact that the practice of a dominant undertaking may, like the pricing policy in issue in the main proceedings, be described as ‘price discrimination’, that is to say, charging different customers or different classes of customers different prices for goods or services whose costs are the same or, conversely, charging a single price to customers for whom supply costs differ, cannot of itself suggest that there exists an exclusionary abuse.’
103 See, for example, press release of 5 March 2014, ‘Commission fines Romanian Power Exchange OPCOM for discriminating against EU electricity traders’, IP/14/214. In that case, the Commission found that OPCOM had wrongfully discriminated against electricity traders from outside Romania by requiring them to have a Romanian VAT registration for accessing the spot electricity markets. Through this provision, OPCOM managed to impose a competitive disadvantage on electricity traders that were already registered for VAT in other EU Member States.
104 See, for example, United Brands, paragraphs 248–268: the Court of Justice annulled the Commission’s decision that unfair prices had been charged for Chiquita bananas in Germany, Denmark and Benelux since the difference in prices between branded Chiquita bananas and non-branded bananas was not deemed to be excessive.
105 In May 2017, the Commission opened an investigation into whether Aspen Pharma committed an exploitative abuse by allegedly imposing sudden price increases for cancer medicine of up to several hundred per cent. See European Commission, ‘Antitrust: Commission opens formal investigation into Aspen Pharma’s pricing practices for cancer medicines’, 15 May 2017.
106 Case COMP/36.568, Scandlines Sverige, Commission decision of 23 July 2004, paragraph 147.
107 Case C-177/16, AKKA-LAA, judgment of 14 September 2017, EU:C:2017:689, paragraph 51.
108 Case C-177/16, AKKA/LAA, Opinion of Advocate General Wahl of 6 April 2017, EU:C:2017:689, paragraph 3.
109 Articles 7, 8, 23 and 24 of Regulation 1/2003 respectively. Interim measures can only be imposed where there is a prima facie infringement of Article 102 TFEU; there is urgency due to the risks of serious and irreparable damage to competition; damage is considered ‘irreparable’; and the balancing exercise between the public interest and the harm caused weighs in favour of the interim measure.
110 Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No. 1/2003 (Fining Guidelines), OJ C 210, 1 September 2006.
111 Case COMP/E-1/38.113, Prokent-Tomra, Commission decision of 29 March 2006.
112 Case COMP/C-3 /37.990, Intel, Commission decision of 13 May 2009.
113 See also Frances Dethmers and Heleen Engelen, ‘Fines under article 102 of the Treaty on the Functioning of the European Union’, ECLR, 2011, Issue 2, pp. 86 and 88; and Bo Vesterdorf, ‘Article 102 TFEU and sanctions: appropriate when?’ for criticism of the trend of higher fines, in particular considering the lack of legal certainty in the concepts of both abuse and dominance.
114 See Case AT.39740, Google Search (Shopping), Commission decision of 27 June 2017.
115 Article 23(1) of Regulation 1/2003.
116 Article 24(1) of Regulation 1/2003. These can amount to 5 per cent of an undertaking’s average daily turnover.
117 Case AT.39759, ARA foreclosure, Commission decision of 20 September 2016.
118 See Article 5(4) TFEU and Case C-441/07 P, Alrosa, judgment of 29 June 2010, EU:C:2010:377 (Alrosa), paragraph 36; see also Commission Notice on Best Practices for the Conduct of Proceedings concerning Article 101 and 102 TFEU, paragraph 115: the Commission has undertaken to verify ‘that the commitments address the identified competition concerns and that the commitments offered do not manifestly go beyond what is necessary to address these concerns’. The Court of Justice has confirmed that these principles apply both to remedies imposed under Article 7 and remedies voluntarily offered under Article 9. See Alrosa, paragraph 36.
119 Case T-24/90, Automec, judgment of 18 September 1992, EU:T:1992:97, paragraph 52; Case T-167/08, Microsoft, judgment of 27 June 2012, EU:T:2012:323, paragraph 95; Case T-69/89, RTE, judgment of 10 July 1991, EU:T:1991:39, paragraph 98.
120 This is evident from the text of Article 7 of Regulation 1/2003: ‘Structural remedies can only be imposed either where there is no equally effective behavioural remedy or where any equally effective remedy would be more burdensome for the undertaking concerned than the structural remedy.’
121 Joined Cases 6 and 7/73, Commercial Solvents, judgment of 6 March 1974, EU:C:1974:18, paragraph 45.
122 Case C-238/87, Volvo v. Erik Veng (UK), judgment of 5 October 1988, EU:C:1988:477.
123 Case COMP/38.233, Wanadoo, Commission decision of 16 July 2003.
124 See, for example, Magill: certain broadcasting companies were forced to make available their TV listings and to permit their reproduction subject to payment of reasonable royalties.
125 See, for example, Case COMP/34.579, MasterCard, Commission decision of 19 December 2007; and Case COMP/36.518, EuroCommerce, Commission decision of 19 December 2007.
126 Case COMP/37.990, Intel, Commission decision of 13 May 2009.
127 Recital 12 of Regulation 1/2003.
128 Case COMP/39.315, ENI, Commission decision of 29 September 2010.
129 Ibid., paragraph 89.
130 Commission Regulation EC No. 773/2004 of April 2004 on the conduct of proceedings pursuant to Articles 81 and 82 of the EC Treaty.
131 DG Competition Antitrust Manual of Procedures: Internal DG Competition working documents on procedures for the application of Articles 101 and 102 TFEU (Procedure Manual), March 2012.
132 Privilege applies only to independent external counsel; advice given by in-house lawyers is excluded from the scope of legal professional privilege. See Case C-550/07 P, Akzo Nobel, judgment of 14 September 2010, EU:C:2010:512.
133 Case AT.39759, ARA foreclosure, Commission decision of 20 September 2016.
134 Private enforcement is facilitated and encouraged by Recital 7, Article 6 and Article 15 of Regulation 1/2003. For commentary, see, for example, C Cook, ‘Private Enforcement of Competition Law in Member State Courts: Experience to Date and the Path Ahead’ (2008) 4(2) Competition Policy International; M Siragusa, EU Competition Law – Cartels and Horizontal Agreements (Leuven Claeys & Casteels 2012), paragraph 4.226 et seq.; J Temple Lang, ‘Commitment Decisions and Settlements with Antitrust Authorities and Private Parties Under European Antitrust Law’, Fordham Antitrust Conference, September 2005.
135 Directive 2014/104/EU of the European Parliament and of the Council on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union, 26 November 2014.
136 Communication from the Commission on quantifying harm in actions for damages based on breaches of Article 101 or 102 of the Treaty on the Functioning of the European Union, C(2013) 3440, 11 June 2013; and Commission Staff Working Document – Practical Guide on quantifying harm in actions for damages based on breaches of Article 101 or 102 of the Treaty on the Functioning of the European Union, SWD(2013) 205, 11 June 2013.
137 Commission recommendation on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning violations of rights granted under Union Law, C(2013) 3539/3, 11 June 2013; and Commission communication ‘Towards a European Horizontal Framework for Collective Redress’, COM(2013) 401/2, 11 June 2013.