Member Article

Following consultation with national competition authorities and the public, the European Commission has published enforcement priorities guidelines, which it will follow when applying Article 82 to exclusionary conduct by dominant companies. Throughout the guidelines, the Commission reiterates that Article 82 should protect competition and consumers – rather than individual competitors (an approach previously advocated by Commissioner Kroes). To achieve this, the guidelines seek to distinguish between ‘competition on the merits, which has beneficial effects for consumers and should therefore be promoted [and] competition that is liable to lead to anticompetitive foreclosure’. The guidelines set out a number of general and specific principles to help dominant businesses to assess whether their commercial arrangements are likely to be of interest to the Commission. The following general principles will be applied in all cases:

Does the undertaking have market power?

Although the starting point for assessing market power will be market share, this must be interpreted in the light of market conditions, in particular ‘the dynamics of the market and the extent to which products are differentiated’. The Commission will also consider barriers to entry and countervailing buyer power. According to the Commission, the guidelines establish a ‘soft’ safe harbour by stating that dominance is not likely if a company’s market share is below 40%. In practice, this ‘safe harbour’ is unlikely to provide  xtra guidance, since findings of dominance below 40% are extremely rare.

Foreclosure leading to consumer harm

The Commission will only penalise conduct that is likely to harm competition – and ultimately consumers – rather than focusing on harm to individual competitors. The guidelines set out a number of general factors the Commission will consider (e.g. market conditions, position of competitors) as well as specific factors for particular types of abuse.

Exclusion of an ‘as efficient’ competitor

When looking at potentially abusive pricing conduct, the Commission will normally only intervene if behaviour excludes or impedes an ‘as efficient’ competitor.

A dominant firm will be able to rely on an ‘efficiency’ defence, similar to that available under Article 81(3). Since the Commission’s focus is consumer harm, if conduct generates ‘efficiencies’ so that there is a net benefit to consumers, then the conduct will not be prohibited. The burden of proving that efficiencies result in a net benefit to consumers will be on the dominant company. The guidelines then go on to set out specific considerations for several categories of exclusionary abuse, such as exclusive dealing (including rebates), tying and bundling, predation, and refusal to supply. In general, it is clear the Commission wishes to focus its enforcement efforts on conduct that  auses serious consumer harm. According to Commissioner Kroes, dominant companies should be ‘...in no doubt that they will find the Commission in their way wherever their conduct risks increasing prices, limiting consumer choice or dissuading innovation’. So, in practical terms, the guidelines – much shorter than the previous Commission Staff Paper – will be a useful ‘risk assessment’ tool for dominant companies when weighing up whether their commercial arrangements are likely to be a target for Commission action.