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Saturday, April 11, 2009

From Formalism to Effects? – The Commission’s Guidance on Article 82 EC

Posted by D. Daniel Sokol

Nicolas Petit, University of Liege Law (and Howrey) discusses From Formalism to Effects? – The Commission’s Guidance on Article 82 EC in his latest working paper.

ABSTRACT: Recently, the Commission has sought to stray away from the forms-based approach (or per se approach), and endorse the “effects-based approach”, which requires a real “verification of competitive harm”. This paradigmatic shift, which was initiated in three abuse of dominance cases (i.e. the Wanadoo, Microsoft I and Télefonica cases), culminated with the adoption on 3 December 2008 of the Guidance Communication on the Commission’s enforcement Priorities in Applying Article 82 of the EC Treaty to Abusive Exclusionary Conduct by Dominant Undertakings (the “Commission Guidance” or the “Guidance”). Whilst most observers have welcomed the Commission’s endorsement of the effects-based approach, there has so far been limited, if no, attempts to review the content of the Guidance’s effects-based approach. In turn, no commentators have yet sought to assess whether the Guidance’s effects-based approach effectively enshrined a sound analytical framework for the review of anticompetitive effects, devoid of the forms based approach’s flaws. The primary purpose of the present article is thus to offer preliminary thoughts on this issue, by clarifying the standard of proof which the Commission must discharge under Article 82 EC when it purports to apply the effects-based approach pursuant to the Guidance.8 To this end, the present article is divided into three sections. Section I explains that any finding of unlawful exclusionary abuse under the effects-based approach is contingent upon proof that the dominant firm’s conduct leads to actual or potential “anticompetitive foreclosure”. Section II describes the evidentiary method which the Commission must follow to reach a finding of actual or potential “anticompetitive foreclosure” under the effects-based approach.  Finally, Section III seeks to determine whether the Guidance is likely to modify the future enforcement practice of the Commission or, whether, on the contrary, the Commission will continue to rely on the dissonant, laxer, case-law of the Court of First Instance (the “CFI”) to by-pass a burdensome effects-based analysis.

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