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Friday, September 21, 2012

Sharpe on The Concept of Abuse in EU Competition Law

Posted by Tom Sharpe

This is an important an important and brave book.  Its genesis is a doctoral thesis awarded by
the University of East Anglia, yet another major contribution from the ESRC

Centre for Competition Policy located at UEA. It has all the strengths and none of the weaknesses of a book derived from such research.
Dr. Akman has read widely in several languages and a particular strength of the
book is its willingness to place “competition law” in its theoretical and
historical content and fully 100 pages derive from  archival research into the genesis of Article 102 and the latest economics. 
She is not afraid to grapple with some of the
complexities, and inconsistencies, of welfare
economics and goes well beyond
the usual (it must be said, superficial) treatment
found in many other
texts.  A further strength lies in her very careful analysis of the key cases involving abuse.
There is a lot of loose thinking in relation to “abuse” of dominant position: Article
102 does not express the requirement of “prevent, restriction or distort
competition”;  it does not stipulate either the objectives or the standard of harm of the provision itself.   And the mere
possession of a dominant position is not off itself  prohibited.
But there must be harm to something or something for Article 102 to be applicable.
Her thesis is that “abuse” should be understood as a component of the

prevention or distortion of competition, following Protocol 27.  Of course, it can mean harm to competition, harm to competitors, harm to consumers or a combination of these, and

more.  And, as Dr. Akman points out, Article 102 does not contain any comparable provision to Article 101(3), where the importance of consumers obtaining “a fair share of the benefits” of
an
agreement which does prevent, restrict or distort competition
is
emphasized. 
Dr. Akman analyses the various issues which arise from the vagueness of Article
102: does it relate to “consumer welfare; what is the standard which should be

applied; what relevance does a read across from Article 101(3) have to the

proper construction of Article 102; if there are efficiencies derived from

conduct, must they be demonstrably to the benefit of consumers.  She is notably critical of the European Courts in finding conduct abusive merely on the basis of alleged
anti-competitive object, given that dominance is not prohibited: an undertaking  can only abuse its position if it uses its power abusively.
Dr. Akman’s general conclusions are that after 50 years of enforcement the
application of Article 102 is still controversial and that it is unclear what
makes a practice abusive and what distinguishes abusive from normal commercial practice.  This has resulted in significant legal
uncertainty.
Her policy conclusion is that the three necessary and sufficient conditions for abuse are that there should be exploitation, exclusion and a lack of increase in efficiency. Exploitation is required by Article 102 itself; exclusion means distortion of competition, and lack of any increase
in efficiency excludes
conduct which is no more than normal commercial practice, which should not be proscribed.  She acknowledges, though, that we have a good deal further to go before the Courts catch up with this.
But this is a powerfully argued analysis.

 

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