EU Competition Law Enforcement Vis---Vis Exploitative Conducts in the Data Economy Exploring the Terra Incognita

The advent of big data analytics has favoured the emergence of forms of price discrimination based on consumers’ profiles and their online behaviour (i.e. personalised pricing). The paper analyses this practice as a possible exploitative abuse by dominant online platforms. The paper argues that, in view of its “mixed” effect on consumers’ welfare, personalised pricing requires a case-by-case assessment under EU competition law and thus it should not be banned a priori. However, in view of the recent case law of the European Court of Justice on price discrimination, the National Competition Authorities (NCAs) and the European Commission would face a high burden of proof to sanction this conduct under Art. 102(c) TFEU. Finally, the paper argues that, due to its case-by-case approach, competition law seems more suitable than omnibus regulation to tackle the negative effects that personalised pricing could have on consumers’ welfare. In particular, an NCA/the European Commission could negotiate with online platforms different kinds of behavioural commitments: transparency requirements, limits on data collection/user profiling, rights to opt out of personalised pricing and the obligation to share customers’ data with competitors could significantly tame the risks of personalised pricing.

To Discriminate or Not to Discriminate? Personalised Pricing in Online Markets as Exploitative Abuse of Dominance

Pricing Abuses by Essential Patent Holders in a Standard-Setting Context: A View from Europe

Any strategic vision for European antitrust enforcement rests on one fundamental pillar: the continuous development of a common competition culture shared by the European Commission and national competition authorities (NCAs). In this respect, the innovative model of institutional governance for the enforcement of European Union (EU) competition law set out by Regulation 1/2003 has proved key: the achievements accomplished within the European Competition Network have probably exceeded the initial expectations in terms of scale of enforcement, its effectiveness as well as its consistency. It is indeed on this solid basis that a more far-reaching evolution and consolidation of the ‘institutional infrastructure’ in the area of competition law enforcement can be promoted and should be achieved in the EU. To this end, the public consultation that is being carried out by the European Commission has identified three sensitive areas on which convergence should be fostered: investigative and sanctioning powers, leniency programmes, and the institutional position of NCAs. All NCAs enforce the same substantive rules, and many Member States have also voluntarily aligned their procedures with those set out for the Commission in Regulation 1/2003. Soft convergence initiatives on procedural matters within the ECN have led to the adoption of a number of valuable recommendations and should continue to be pursued in the future. However, experience shows that margins for further voluntary convergence might be rapidly eroding: soft law instruments alone are unlikely to provide all NCAs across Europe with an effective competition law toolbox. There is thus scope for further legislative harmonisation of NCAs’ investigative and decision-making powers in the application of EU antitrust rules. An objective that becomes all the more important since effective enforcement in increasingly sophisticated markets cannot be achieved with blunt investigative and enforcement tools. A minimum set of powers should therefore be granted to all NCAs, including at least: the power to carry out compulsory interviews, the power to collect digital evidence, and the power to adopt structural and behavioural remedies within the prohibition decision. NCAs should also be enabled to provide assistance to each other when serving administrative acts and enforcing fining decisions upon undertakings established in a different Member State. This is essential to ensure a level-playing field for undertakings, as well as to safeguard the effectiveness of the application of European competition rules by NCAs. There is also scope for fostering a certain degree of convergence on the quantification of antitrust fines across the EU: substantially diverging approaches on the determination of pecuniary sanctions may jeopardise the acceptability of fines in all jurisdictions, and may undermine the very legitimacy of the system of parallel enforcement competences within the ECN. The harmonisation of legal rules concerning parental liability, legal and economic succession, and the ceiling of antitrust fines may contribute to achieving this objective, at least to some extent. At the same time, as some of the relevant legal notions may be further refined by judicial interpretation, it is crucial to ensure some degree of flexibility to make room for future developments. More generally, increased harmonisation does not mean that maximum convergence of existing sanctioning regimes is necessary. In fact, it is important to be aware that antitrust sanctions are only one part of broader national sanctioning regimes, which differ significantly across Member States. The existence of possible criminal sanctions applying to the same offences, the diffusion of private enforcement, and the general level of sanctions imposed for economic offences are all elements that affect the perception of the optimal level of fines, their acceptability, and, ultimately, their fairness.

Price discrimination is pervasive in all sectors of the economy. Businesses, including postal operators, use price discrimination to stimulate demand. Given the downward pressure on mail volumes due to electronic alternatives, postal operators have had to respond rapidly and effectively. Postal operators, for instance, adopt pricing strategies designed to stimulate demand by offering rebates and other forms of price incentives to their business counterparts. The present paper analyses the extent to which these price discrimination strategies raise competition law issues and, if so, how these issues have been dealt with by competition law authorities and courts.One of the difficulties for competition lawyers and economists is that price discrimination is a polymorphic concept that covers a variety of practices, which are not necessarily apprehended by the same competition rules and principles. For competition lawyers, price discrimination typically covers pricing conduct falling within the scope of Article 102(c) of the Treaty on the Functioning of the European Union (hereafter, the “TFEU”), which considers as an abuse the fact for one or several firms holding a dominant position of “applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage.” By giving a better price to Customer A than customer B, dominant firm X may thus place Customer B at a competitive disadvantage. When selling at different prices is objectively justified by the fact that customers are “differently situated” (which is often the case), the practice in question does not fall within the scope of Article 102(c). This practice may, however, fall within other sections of Article 102, when they have exclusionary effects. Rebates may have such effects when they are set in such a way that they exclude “as efficient competitors.” Price discrimination schemes are common in the postal sector and some such schemes have come under the scrutiny of the European Commission (hereafter, the “Commission”) and the national competition authorities. More recently, the adoption of preferential tariffs by a number of postal operators to the benefit of large mail senders has been a source of controversy, especially when the benefit of such schemes is not extended to mail intermediaries, such as “mail preparers” and “aggregators.” In this respect, an Opinion rendered by the French Competition Council (the Conseil) on 20 December 2007 in relation to the institution of a rebate scheme envisaged by La Poste, and the French court decisions rendered on such scheme, have generated a lot of attention. This paper will thus devote significant space to this Opinion and these decisions. It will also discuss the judgment of the Court of Justice of March 2008 in the Dedat Deniz case concerning the interpretation to be given to Article 12(5) of Directive 97/67, which is of direct relevance to the issues addressed in the French Opinion and court decisions.This paper is organized as follows. It first discusses the concept of price discrimination from an economic and an EU competition law perspective (Parts II and III). The paper then examines price discrimination in the postal sector by reviewing a number of postal cases in which price discrimination claims were made. This section will focus almost exclusively on rebate pricing schemes and how they are treated under EU competition law (Part IV). Price discrimination in France – where the postal incumbent La Poste has often been under antitrust scrutiny – will then be looked at. In particular, this paper will discuss the Opinion rendered by the Conseil on 20 December 2007 in relation to the institution of a rebates regime envisaged by La Poste. It will also look at judgments adopted by the French civil courts on this subject, as well as the judgment of the CJ in Dedat Deniz (Part V). Finally, a brief conclusion is provided (Part VI).

Price Discrimination in the Postal Sector and Competition Law

EU competition law is enforced parallel by the EU Commission and 28 national competition authorities (NCAs) in a multi-level governance system composed of EU and national procedural laws. Regulation 1/2003 established the European Competition Network (ECN) in order to coordinate parallel proceedings between the Commission and the NCAs. This chapter analyses the shared enforcement of EU competition law from the perspective of political and judicial accountability. The chapter focuses on the accountability of the Commission, the NCAs and the ECN in their role of/as main actors of the shared enforcement. Two jurisdictions are used to illustrate the role and powers of the NCAs: the Netherlands and Hungary. After analysis of the powers and roles of the three respective actors (the Commission, the NCAs and the ECN) of parallel enforcement, section 3 examines judicial and political accountability and section 4 concludes.

Parallel Enforcement and Accountability: The Case of EU Competition Law

The chapter illustrates the recent evolution of the debate on the notion of abuse of dominant position for excessive prices, by finding a revival of the concept of "unfair prices", as evidenced by the growing number of cases handled by the national competition authorities (starting from the recent "Aspen case" decided by the Italian Competition Authority), by the initiatives taken by the European Commission and by the cases brought before the European Court of Justice. EU competition law regards as an anticompetitive practice any abuse of a dominant position that consists of "directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions". For a long time, the Commission and the national competition authorities pursued that type of anticompetitive practice on a rather limited basis. To explain this situation, it should be noted that the identification of a price as unfair and thus contrary to competition law is an extremely difficult process: normally in a competitive market, high prices are corrected by the fact that because they are high they attract new entrants, thereby increasing supply and resulting in lower prices. The market is thus self-correcting. It is not always possible for markets to self-correct, least of all where there are legal barriers to the entry of other operators, for example because a legal monopoly exists. Moreover, it is not always the case that there is a maximum price that the consumer is willing to pay for a product, with a result that, in those situations, there are no obstacles to the introduction of excessive prices. In the case of a life-saving medicine, for example, the only spending limit is the financial capacity of the purchaser. The European Court of Justice, starting form leading case in unfair pricing (United Brands, 27/76) and up to the most recent decisions (AKKA/LAA, C-177/16 and SABAM, C-372/19) defined a two-part test for determining whether the price lacks any reasonable relation to the economic value of the service provided.

Over the years, both the European Commission and the national competition authorities have played a crucial role in the enforcement of Articles 101 and 102 TFEU. In the last year, the network of competition authorities has become a multi-center, united network supporting innovative ideas and legal principles. In contrast, European Courts, at least during the last year, appear to have been over formalistic in their approach, all too often in line with the Commission, paying more attention to procedural rather than substantive issues. In the last year, the European Commission and the European Courts have analyzed many important cases in different economic sectors in relation to the application of Articles 101 and 102 TFEU, which have raised many complex legal and factual issues. In some cases the European Commission and the European Courts were confronted with new questions, while the outcome of other cases helped to clarify long-lasting debates. The analysis of decision-making practice and case law highlights some major issues in recent antitrust enforcement, namely: (i) the boundaries of the notion of restriction “by object”; (ii) the enhanced role of economic analysis in the assessment of unilateral exclusionary conduct, in line with the European Commission’s Guidance Paper on Article 102 TFEU; (iii) the notion of potential competition and market definition, as well as the interplay between the regulatory framework and EU competition law; and (iv) the growing importance of e-commerce, which has led the European Commission to step up its scrutiny of vertical restraints in online distribution, and the interplay between e-commerce and copyright. There have been further interesting developments at the EU level in antitrust procedure, legislation and policy.

The Illumina/Grail and Towercast rulings of July 2022 and March 2023 create new avenues for the control of concentrations below the European Union (EU) and national turnover thresholds. These new avenues concern (i) a referral to the European Commission by a national competition authority (NCA) and (ii) a review under the EU provision on abuse of dominance by an NCA. In both cases, the rationale seems predominantly based on the need to have effective competition law oversight on the so-called killer acquisitions of emerging competitors and undertakings that aim to extend their dominance by acquiring existing (small but) effective or particularly innovative competitors. The obvious drawback of increasing possibilities of the ex-post merger control is that this comes at a cost to legal certainty and the one-stop-shop principle that has characterized the EU merger control so far. Especially the Towercast judgment calls into question the structure, purpose, and merits of merger control in the EU over the past 35 years. Looking forward, much will depend on how the NCAs and the European Commission will use their new-found powers; some reorganization of merger vetting procedures at the national level may be required. However, it appears likely that the system of merger control in the EU will come to focus more sharply on mergers that raise serious competitive concerns and less on providing a system of comprehensive administrative review, based mainly on size. This may also provide opportunities to rationalize the application of public enforcement capacity.

EU Competition Law and Sustainability EU competition law potentially has a role to play in the pursuit of sustainability goals and the fight against climate change. The need to interpret the EU competition law provisions in a manner consistent with the sustainability objectives that the EU is committed to – the sustainable development goals (SDGs), and the EU Green Deal and derived policies – is emphasised in this article. While agreements between competitors are generally prohibited by Article 101 TFEU, cooperation agreements among market actors pursuing sustainability objectives (sustainability agreements) might in certain situations fall under the cartel exception of Article 101(3) TFEU. In recent years, there have been numerous calls to clarify conditions under which sustainability agreements can be allowed under EU competition law, especially under Article 101(3) TFEU, and there is a heated debate among academics, national competition authorities (NCAs) and the European Commission. After questioning whether the objectives and measures of the agreements are being properly assessed with the current trends (for example, with the willingness-to-pay method), this article will add to the debate another possibility involving a broad interpretation of Article 101(3) TFEU under which the pursuit of sustainability agreements will be facilitated. Such a possibility will largely depend on the objectives of the agreements themselves and may allow a proper consideration of the objectives of a sustainability agreement for certain cases, by focusing on agreements that pursue pre-established objectives derived from international or national standards or concrete policy objectives that are not previously mandatory for the companies involved.

Differentiated treatment is a key focus in current competition investigations of the European Commission and national competition authorities, ranging from more prominent placement of one's own services in a ranking to preferential access to data and the favouring of businesses that pay higher levels of commission. Based on their exclusionary and/or exploitative character, the paper distinguishes three types of differentiated treatment on online platforms in order to provide an analytical framework for assessing the extent to which such practices are abusive under Article 102 TFEU, namely: pure self-preferencing, pure secondary line differentiation and hybrid differentiation. The paper points out that the main area where EU competition law currently does not offer effective protection is in the most far-reaching situation where a business is blocked from a platform without legitimate justification. To address harm in such cases, the paper suggests giving a stronger role to economic dependence both within and outside EU competition law and explores possible measures building upon the Platform-to-Business (P2B) Regulation as well as the notion of fairness of platform-to-business relations.

On 9 July 2014 the European Commission published the White Paper “Towards more effective EU merger control”. The White Paper takes stock of the working of the EU Merger Regulation 10 years after the last reform in 2004. It evaluates what degree of coherence and convergence has been achieved in the application of merger control rules and practices at the EU and at Member State level. The White Paper supports recent suggestions to move towards a “European Merger Area”, in which the Commission and national competition authorities (NCAs) apply the same rules to mergers and acquisitions, but does not make concrete proposals in that respect. However, the White Paper proposes amendments to the Merger Regulation in two main areas. First, in order to address an enforcement gap in EU competition law with respect to acquisitions of non-controlling minority shareholdings, the Commission should have the possibility to review certain minority stake transactions creating a “competitively significant link” between the acquirer and the target, without however making all acquisitions of minority shareholdings subject to the prior notification obligation. Second, the system for referring merger cases between the Commission and NCAs should be streamlined in order to reduce the administrative burden on companies and better ensure that cases are being dealt with by the best placed competition authority. Additional proposals made by the White Paper relate to removing joint ventures established outside the European Economic Area (EEA) and with no effect on EEA markets from the scope of the Merger Regulation and alleviating notification obligations for certain categories of unproblematic mergers.

This chapter provides an overview of the institutional actors, design and history of the competition law systems in the European Union and the UK. It begins with a discussion of the legal framework, focusing on the main competition law provisions in the EU and UK. The role of EU competition law provisions within the EU treaties is considered, along with provisions applying to all undertakings such as antitrust and merger control, application of Articles 101-102 TFEU to state conduct, the INNO doctrine, and UK laws such as Competition Act 1998. The chapter also looks at the main actors in the EU competition law process, including the European Commission and national competition authorities, and the main actors in the UK competition law process such as the Competition and Markets Authority. Finally, the history of competition law as well as the interaction between EU competition law and UK competition law are analysed.