The European Commission has published for public consultation its long-awaited draft Guidelines on exclusionary abuses (draft Guidelines). The draft Guidelines aim at making it faster and easier for the Commission to pursue abuse of dominance cases, in particular by classifying a number of practices as "presumptively harmful". This represents a marked departure from the 2008 Guidance Paper, which had introduced a more economic approach into Article 102 TFEU.
Background and scope of application
In 2008, the Commission published its Guidance Paper on Enforcement Priorities for Exclusionary Abuses (2008 Guidance Paper), which introduced an effects-based approach (as opposed to a formalistic approach). While the 2008 Guidance Paper was only intended to set out enforcement priorities, it was later endorsed by the EU Courts for the biggest part. The 2008 Guidance Paper was intellectually innovative and influenced profoundly the EU case law, but at the same time was the target of criticism both internally (within the Commission) and by stakeholders who complained that it complicated the Commission's ability to intervene in abuse cases. Another problem for the Commission was that it was criticised on appeal in a number of cases for conducting incorrect assessments, in particular with the application of the so-called "as efficient competitor test".
In March 2023, the Commission announced that it was planning to publish new Article 102 guidelines and issued a call for evidence to inform their preparation. Pending the publication of guidelines, the Commission revised the 2008 Guidance Paper to provide certain clarifications on its approach.
The draft Guidelines focus on exclusionary abuses (conduct foreclosing competitors), where there have been more than 30 judgments from the EU Courts. They do not cover exploitative abuse (conduct imposing unfair prices/conditions on consumers), where there has been much less case law
The draft Guidelines are based on the Commission's own interpretation of the case law of the EU Courts and are without prejudice to the interpretation that the EU Courts may give in future cases.
Two cumulative conditions
According to the draft Guidelines, in order to determine whether conduct constitutes an abuse, it is necessary to establish:
(i) Whether the conduct departs from competition on the merits; and
(ii) Whether the conduct is capable of having exclusionary effects.
Where it is demonstrated that conduct is liable to be abusive, it remains possible for the dominant company to show that the conduct is either objectively justified or "counter-balanced or even outweighed by advantages in terms of efficiency that also benefit consumers".
New categorisation and introduction of a presumption-based approach
The key novelty of the draft Guidelines is the categorisation of conduct in three groups. In one category the Commission must prove that the conduct departs from competition on the merits, as well as the capability of producing exclusionary effects, and in the other two categories the departure from competition on the merits and the exclusionary effects can be presumed. In the second category, the presumption is rebuttable, whereas in the third one it is pretty close to being non-rebuttable.
The categories and proposed allocation of burden are as follows.
Assessment of dominance
The draft Guidelines include a chapter on the assessment of dominance, which includes modern considerations such as data-driven advantages and network effects, particularly relevant to digital markets. They also include a long chapter on collective dominance with a helpful analysis of the case law.
Legal tests for specific conduct and additional guidance
The draft Guidelines have short chapters explaining the specific legal tests applicable to exclusive dealing, tying and bundling, refusal to supply, predatory pricing and margin squeeze.
In addition, the Commission provides some guidance on the application of the general legal principles to conditional rebates that are not subject to exclusive purchase or supply requirements, multi-product rebates, self-preferencing, and access restrictions different from refusal to supply.
Assessment of objective justifications and efficiencies
The draft Guidelines contain a short chapter explaining how a dominant company can show that a conduct is either objectively justified (objective necessity defence) or is counterbalanced or outweighed by advantages in terms of efficiency (efficiencies defence). Aligning with Ursula von der Leyen's political guidelines for the next Commission 2024-2029, the draft Guidelines specifically refer to conduct contributing "to the Union's resilience as it is necessary to reduce dependencies and mitigate shortages and disruptions in supply chains" as a potential objective necessity defence.
Key takeaways and tension points
The effects-based approach is undermined. While the Commission accepts, in principle, the effects-based approach, the categorisation of practices based on their formal characteristics instead of their economic function and the introduction of presumptions for certain categories of practices as opposed to others, in reality, represents a certain departure from the so-called "new economic analysis" and the effects-based approach.
Reduced focus on consumer harm. The draft Guidelines shift the focus away from consumer harm, which was one of the central points in the 2008 Guidance Paper, and explicitly state that there is no need to prove direct harm on consumers to find a conduct liable to produce exclusionary effects. Connected to that, the draft Guidelines no longer rely on the concept of "anti-competitive foreclosure", i.e. foreclosure of competitors that produces consumer harm, as opposed to pro-competitive foreclosure.
The practical impact of the draft Guidelines on the ability of the Commission to intervene in abuse cases could be limited. While the Commission is suggesting a shift of the evidentiary burden in particular with Category 2 cases (where conduct is presumed to lead to exclusionary effects), the Commission will still be bound to consider any evidence that the dominant company puts forward that shows that conduct is not capable of having exclusionary effects. This comes as a consequence of the very explicit case law of the EU Courts. Therefore, it remains to be seen whether the introduction of presumptions will have any practical effects.
The Commission's suggested allocation of the evidentiary burden according to three categories and some of its legal tests for specific practices may not be accepted by the EU Courts that will have the last word. The suggested presumption that certain conduct in Category 2 is capable of exclusionary effects, is expected to be contentious. In addition, the Commission's reliance on case law to describe the legal tests for specific practices is, at times, controversial.
Next steps
The Commission invites comments on the Guidelines by 31 October 2024, and aims to adopt final Guidelines during 2025.
Antonio Fuentes Máiquez (White & Case, Legal Trainee, Brussels) and Marta Teixeira Pires (White & Case, Legal Trainee, Brussels) contributed to the development of this publication.
