Wednesday, June 8, 2011
Posted by D. Daniel Sokol
Jean-Yves Art (Microsoft) has written on Highway 102: A Nice Turn with Still some Miles to Go.
ABSTRACT: Are the European courts injecting some economics in Article 102 TFEU and turning that provision into an instrument of sound competition policy? The judgments recently rendered by the Court of Justice in Deutsche Telekom and TeliaSonera indicate an encouraging inflection in the case law, which should be praised … and pursued. Both cases concern the same pricing practice by two companies deemed to be dominant in the provision of some telecommunications services at the wholesale and the retail level, according to which the difference between the wholesale and retail prices charged by the dominant undertaking allegedly did not enable rivals from competing in the retail market. Through different avenues, both cases ended up at the Court of Justice which was thus called upon to rule on the conditions under which such ‘margin squeeze’ amounts to an abuse prohibited by Article 102 TFEU. In both cases, the Court embraced the ‘as efficient competitor’ test set out by the European Commission in its Guidance Paper and in substance ruled that a margin squeeze arises when the spread between the retail prices applied by a dominant undertaking and the wholesale prices it charges its competitors for comparable services is insufficient.