by Stavros Makris and Todd Davies

We’ve come a long way since 2009 when the Guidance Paper on Article 102 TFEU was published, and even further since 2005 when the Discussion paper came out. The EU Courts have issued numerous landmark judgments (Intel, Servizio Elettrico, Qualcomm, Towercast, Unilever, Superleague, Google Shopping, Google AdSense). In parallel to these legal developments the world has been changing. We are entering new territory as we experience the twin ‘digital’ and ‘green’ transitions, and observe the emergence of the complex digital economy. At the same time, we also see rising concentration, structural inequalities and gatekeeping power, which raise concerns about the conditions and dynamics of competition in the EU. In this context, it is not surprising that the European Commission decided to publish its long-awaited draft Guidelines on Article 102 TFEU this August.  These guidelines are a key document aimed at capturing Commission’s experience and understanding of the law. 

However, the competition law community has mixed opinions about the draft guidelines. Some are worried that they will bring back formalism or create uncertainty. Others consider them an important shift in the Commission’s approach and an attempt to harness the openness of Art. 102 TFEU to make sure that effective competition is protected without undermining law’s integrity (its clarity and predictability).

To contribute to these discussions, the Centre for Law, Economics and Society (CLES) at UCL and the Inclusive Competition Forum (ICF) organised a workshop bringing together the various stakeholders involved in this reform process – including enforcers, academics, practitioners and civil society actors – to engage in a critical and constructive discussion on the future of Article 102 TFEU. The workshop designed and organised by Prof. Ioannis Lianos took place in Brussels on the 27^th of September 2024.

After a warm welcome by Jean-Benoit Maisin and  Prof. Ioannis Lianos, the first panel, moderated by Stavros Makris, explored the future of the Draft Guidelines in light of the recent case law. Jean-François Bellis took us on a fascinating historical tour from the Guidance Paper to the Guidelines (working in stories about ex-Commissioner Neelie Kroes and ex-Chief Economist Damien Neven), while Andriani Kalintiri explored whether the Draft Guidelines are an accurate representation of the EU Courts’ case law and whether they may achieve their stated objective (i.e. ensuring that Article 102 TFEU is applied vigorously and effectively yet in a predictable and transparent manner). Her view is that the Commission has largely managed to synthesise and consolidate the current doctrine on Article 102 TFEU in a logical manner. She also emphasized the role of legal and evidential presumptions in the enforcement of Article 102 TFEU and engaged in a discussion with Ioannis Lianos regarding the possible rebuttal of these presumptions. Although noting the explicit embrace of a polycentric approach in the introductory paragraphs of the Draft Guidelines, Simon Holmes highlighted the missed opportunity to include a specific section on sustainability (an equivalent to Chapter 9 of the Horizontal Guidelines) and explored how Art. 102 TFEU could be used as a sword to address abuses likely to cause environmental harm (e.g. when a dominant company derives a competitive advantage from environmental harm). Last but not least, Stijn Huijs used his experience both from his time at the CMA and from representing claimants to explore how national courts may approach the Guidelines and the extent to which such Guidelines could be helpful to NCAs and private claimants. Stavros Makris noted that the draft Guidelines seem to interpret the as-efficient competitor principle by putting an emphasis on the notion of ‘performance competition’ instead of the as-efficient competitor test (considering that an important interpretative improvement). He also observed that ‘competition on the merits’ may not be analytically distinct from ‘capability of anticompetitive effects’ since the practices enumerated as “off merits” in paras 54 and 55 of the draft Guidelines are also capable of anticompetitive effects and remarked that the criterion for capability of para 62 (conduct ‘capable of removing the commercial uncertainty’) remains vague.

In the second session, Massimiliano Kadar from the Commission presented the Commission’s Perspective on the Guidelines in a clear and well-articulated manner. Massimiliano mentioned that Art. 102 TFEU has beenatypical because there haven’t been any guidelines so far, and that the Commission’s intention for the new guidance is to distil its Art. 102 enforcement experience into a “workable” effects-based approach that ensures legal certainty and systematises the case law. Massimiliano explained the rationale of the two-pronged test at the heart of the Guidelines, and showed how the Guidelines are organised around the notion of competition on the merits which is central in the recent case law. ‘Naked restrictions’, ‘presumptively abusive practices’, ‘abuses with specific legal tests’, and ‘other type of abuses without a legal test’ are all ways to identify unilateral conduct that is off the merits. A fascinating Q&A with Ioannis Lianos followed, where Massimiliano had the chance to clarify what the difference is between the new “workable” more economic approach and the current (dare we say unworkable) more economic approach, what the Guidelines mean by ‘effects’, why the Commission did not use terms such as ‘anticompetitive foreclosure’ and ‘by-object abuse’ in the Guidelines, and explained the emphasis put on “naked restrictions” and presumptions and whether there may be differences between the analytical frameworks of Art. 101 and Art. 102.

A vigorous discussion moderated by Ioannis Lianos followed, with a panel composed of (in order of appearance) Ana Sofia Rodrigues, Cristina Caffarra, Martijn Snoep, Damien Geradin, and Damien Gerard (not to be confused!). Ana Sofia Rodrigues observed that Art. 102 underenforcement might have extensive externalities for the EU economy; that presumptions do not necessarily mean less economics (instead they enable an economisation of enforcement resources); and that the Guidelines could be improved with the use of examples explaining Commission’s rationale and with better articulation of the theories of harm. Cristina Caffarra, after her usual disclosure statement, noted that the 2009 Guidance Paper was the by-product of successful lobbying of the Commission by economists and a triumph of neoclassical neoliberal economics. She also described how the so-called More Economic Approach – consisting of the “terror of the Type I error”, a monolithic focus on efficiency, an impractical case-by-case mode of analysis, and an emphasis on the dubious (actually she called it ‘snake oil’) as-efficient competitor test – had failed when faced with the reality of competition enforcement. Its overwrought, snake oil analyses and the impossible timelines of real-world cases made it almost entirely ineffective in practice. Martijn Snoep observed that high standards of proof in abuse of dominance cases are unworkable and unjustified, and highlighted that enforcement has become extremely hard as judges convinced by economic orthodoxy are looking for hard evidence. Insightfully, he also noted that in Article 102 cases there are no cooperating witness (unlike in cartel cases), and that other market participants like suppliers are often scared of the dominant company. Damien Gerard wondered why pricing below average avoidable cost was not classified as a naked restriction and expressed his concerns about the two-pronged approach. According to him, the two limbs are not sufficiently delineated from each other in the draft guidance. For him, the Guidelines could be improved if they were to include a less efficient competitor test as  an evidential shortcut for cases for which there needs to be some analysis of effects, more examples, and a note on abusive acquisitions (which have become an issue especially after Towercast and Illumina). In this context, Ioannis Lianos remarked at this point that it is not clear in the case law of the European EU Courts that the two prongs are cumulative or alternative, observing that there is some conceptual confusion, and in any case, it is clear from the case law that there is no requirement of economic or effects analysis in the context of “naked restrictions”.  Damien Geradin, drawing on his experience as a practitioner, stressed that what matters most in Art. 102 enforcement is not words in the guidelines, but a) whether the regulator has time and motivation, and b) whether rights of defence can derail investigations. In essence, he said that we should be talking much more about procedure. He noted how Art. 102 is largely broken in the status quo (because it’s slow, costly, ineffective, etc) and that its resuscitation should therefore entail revising the institutions and process of competition enforcement, not simply new Guidelines or presumptions.

A general concern shared by most, if not all, panellists, was the absence of exploitative abuses as well as concepts and theories of harm related to digital markets, and there was a general agreement that the abandonment of the New Competition Tool was a missed opportunity (aligning with Mario Draghi’s recent report, which also advocated for its revival).

The workshop closed with a refreshing panel of civil society representatives (how often do you see that in competition law conferences?) moderated by Ioannis Lianos. The theme, quite simply, was that contemporary competition law is not aligned with the public interest. Again, going in order of appearance, Vanessa Turner(BEUC) discussed how the existing competition law regime – from merger control to Article 102 – is unfit for European Consumers; it appears that the consumer welfare standard has truly failed on its own terms! She noted that underenforcement, ultimately, is a policy choice, and called on the competition enforcers in the room to do more. Claire Godfrey (Balanced Economy) discussed how the language of competition enforcement is technocratic and uninclusive. She attacked the rhetoric of innovation that pervades the discipline, noting that large firms are often not very innovative at all. She, along with many others throughout the day, called for more enforcement action relating to exploitative abuse of dominance.  Joakim Smedman (European Trade Union Confederation) discussed how employees lose out when dominant firms exploit their market power against them, and implored competition authorities to look more closely at behavioural remedies when firms abuse their market power on labour markets. Mark Dempsey (Article 19) was broadly supportive of the Commission’s new draft guidelines but noted that it would be good to see the connection between the law’ and its policy values spelled out more explicitly. Like Claire, he noted the importance of the guidelines being broadly understandable by everybody, not just by competition law specialists. Ulrich Mueller, (Rebalance Now) took the view that the draft Guidelines were a good start but, concurring with Damien Gerard, could include more practices in the category of naked restrictions. He emphasised the importance of a plural and polycentric approach to competition law, where the importance of economic reasoning is constrained, and sits alongside other approaches such as one looking through the lens of power. Irene Keizer (SOMO) suggested that dominance should be seen an issue as such, echoed the importance of the draft guidelines being understandable by the wider public, and emphasised the value that NGOs can bring to both competition policy and competition law enforcement through dialogue with regulators. Last but not least, Ioannis Kouvakas(Privacy International) made a plea for additional guidance from the Commission on exploitative abuse, not least to help kick-start enforcement in such cases. Like Mark Dempsey, he also spoke on the wider connection between competition law enforcement and the European social contract. Given the above, there is little room for doubt that civil society is pushing competition law in the direction of polycentrism, and will be instrumental in doing so.

All in all, it was an exciting and engaging day, with lots more covered both in the main discussions and on the sidelines than we could hope to include here. We’re planning several other events and initiatives, which we will post about on our website and on social media. Hopefully we’ll see you there!