The European Court of Justice and the More Economic Approach to EU Competition Law—Is the Tide Turning?

• Author: Anne C. Witt
• Date: 01 June 2019
• DOI: 10.1177/0003603X19844637
• Published date: 01 June 2019
• Subject Matter: Articles

Article

The European Court of Justice

and the More Economic

Approach to EU Competition

Law—Is the Tide Turning?

Anne C. Witt*

Abstract

In the late 1990s, the European Commission embarked on a mission to bring EU competition policy

more into line with contemporary economic theory. Over a period of ten years, it systematically

revised key legal concepts of all three pillars of EU competition law. Most importantly, it adopted the

consumer welfare aim, revised its understanding of competitive harm and countervailing effects

accordingly, and committed itself to carrying out more in-depth assessments of the investigated

conduct’s effects instead of relying on form-based presumptions of illegality. Initially, many tenets of

the more economic approach were in conflict with the case law of the European Court of Justice,

which had a broader understanding of the aims of EU competition law. However, after a few initial

set-backs for the Commission, several recent judgments in cases such as MEO,Intel,Post Danmark I,

and Cartes Bancaires suggest that the Court’s understanding of EU competition law is evolving and that

it is willing to embrace at least a few of the Commission’s revised principles. In particular, it is adopting

a more effects-based approach to assessing business conduct and is cautiously curbing its former

concept of harm in exclusionary situations. At the same time, however, it continues to adhere to

many of its former freedom- and fairness-based principles, so that a number of uncertainties and

inconsistencies remain.

Keywords

EU competition law, economic theory, consumer welfare, economic freedom, fairness, effects-based

analysis, form-based presumptions

I. Introduction

Over the past twenty years, the European Commission has radically reformed the way in which it

interprets and enforces the EU competition rules addressed to undertakings. It designed a new enforce-

ment system for Articles 101 and 102 of the Treaty on the Functioning of the European Union

*Associate Professor, Leicester Law School, University of Leicester, Leicester, UK

Corresponding Author:

Anne C. Witt, Leicester Law School, University of Leicester, Leicester LE1 7RH, UK.

Email: anne.witt@le.ac.uk

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2019, Vol. 64(2) 172-213

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(TFEU),

1

which abolished the burdensome notification requirement for potentially anticompetitive

agreements and decentralized the enforcement of Article 101.

2

It created a leniency program to

enhance the detection of cartel infringements

3

and introduced a settlement procedure.

4

In addition

to these important procedural changes, the Commission also fundamentally revised its interpretation of

the substantive prohibition rules by introducing what has becom e known as the “more economic

approach” to EU competition law. The more economic approach is premised on the consumer welfare

aim, welfare-based concepts of harm and countervailing effects, and the idea that legal presumptions

of legality or illegality should only be used sparingly, so that, with a few exceptions, business conduct

should not be prohibited as anticompetitive without prior in-depth economic assessment of the inves-

tigated conduct’s actual effects on competition and consumer welfare.

Many of these changes are reminiscent, in substance, of the changes that the Chicago Revolution

triggered in the interpretation of U.S. antitrust law from the late 1970s onwards.

5

However, there is one

important difference. In the United States, it was the judiciary, in particular the U.S. Supreme Court,

which brought about this paradigm shift, having been swayed by the theories of the then up and coming

Chicago School.

6

In Europe, by contrast, it was the key enforcement body, namely, the European

Commission, that initiated and implemented these changes by means of soft law instruments and

decisional practice, around twenty years after the U.S. Antitrust Revolution.

This contribution argues that many of the changes introduced by the Commission’s more economic

approach initially ran counter the European Court of Justice’s interpretation of the substantive com-

petition rules, compelling the Commission to introduce the more economic approach to Article 102, in

particular, in a remarkably roundabout way. However, after several years of resistance, and under the

guidance of a more economically inclined Advocate General, a number of recent cases, such as Post

Danmark I,

7

Intel,

8

MEO,

9

Allianz Hung ´

aria,

10

and Cartes Bancaires,

11

signal a shift in the Court’s

attitude and a greater willingness to embrace key principles advocated by the Commission’s more

economic approach, in particular the welfare- and effects-based approach to assessing anticompetitive

conduct.

The aim of this contribution is to demonstrate the tensions that initially existed between the

Commission’s more economic approach and the case law, and to examine to what extent these

differences have now been eliminated. Section II sets the scene for this analysis by briefly explaining

1. Consolidated Version of the Treaty on the Functioning of the European Union (TFEU), 2012 O.J. (C 326/47). Unless

otherwise specified, the Articles cited in this contribution are those of the TFEU.

2. White Paper on modernisation of the rules implementing Articles 85 and 86 of the EC Treaty, 1999 O.J. (C 132/1), followed

by the Commission’s Proposal for a Council Regulation on the implementation of the rules on competition laid down in

Articles 81 and 82 of the Treaty, 2000 O.J. (C 365 E/284), resulti ng in Council Regulation (EC) No 1/2003 on the

implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, 2003 O.J. (L1/1).

3. Notice on the non-imposition or reduction of fines in cartel cases, 1996 O.J. (C 207/4), which has since been replaced by the

2006 Notice on immunity from fines and reduction of fines in cartel cases, 2006 O.J. (C 298/17).

4. Commission Regulation (EC) No 773/2004 relating to the conduct of proceedings by the Commission pursuant to Articles

81 and 82 of the EC Treaty, 2004 O.J. (L 123/18).

5. For a brief historical overview, see,e.g., Eleanor M. Fox & Lawrence A. Sullivan, Antitrust—Retrospective and

Prospective: Where Are We Coming From? Where Are We Going? 62 N.Y.U. L. REV. 336 (1987); William E Kovacic

& Carl Shapiro, Antitrust Policy: A Century of Economic and Legal Thinking 14 JEP 43 (2000).

6. From the late 1970s onwards, the U.S. Supreme Court overruled a number of precedents that were no longer deemed in line

with economic theory, e.g., in Continental T. V., Inc v. GTE Sylvania Inc, 433 U.S. 36 (1977); State Oil v. Khan, 522 U.S. 3

(1997); Leegin Creative Leather Products, Inc v. PSKS, Inc, 127 S. Ct. 2705 (2007).

7. C-209/10, Post Danmark A/S v. Konkurrencera

˚det, ECLI: EU: C:2012:172 (hereafter, “Post Danmark I”).

8. C-413/14P, Intel Corp. v. Commission, ECLI: EU: C:2017:632.

9. C-525/16, MEO – Servic¸os de Comunicac¸o

˜es e Multim´edia SA v Autoridade da Concorreˆncia, ECLI: EU: C:2018:270.

10. C-32/11, Allianz Hung ´aria Biztos´ıt´o Zrt. and Others v. Gazdas ´agi Versenyhivatal, ECLI: EU: C:2013:160.

11. C-67/13 P,Groupement des cartes bancaires v. Commission, ECLI: EU: C:2014:2204.

Witt 173

the key changes introduced by the Commission’s more economic approach. Section III examines the

discrepancies that originally existed between the Commission’s revised interpretation and the case law

of the European Court of Justice. Section IV discusses several recent judgments that indicate that the

Court’s position is evolving. Section V analyzes these developments and argues that, while the Court

has embraced a number of the Commission’s economic principles, there remains a fair amount of

uncertainty and inconsistency. Section VI provides concluding remarks.

II. The European Commission’s More Economic Approach to EU

Competition Law

A. Background and Process

In the mid-1990s, the European Commission embarked on a comprehensive process of revising core

substantive principles of EU competition law, with the aim of elevating EU competition policy from its

former “legalistic approach” to one “based on sound economic principles.”

12

This journey spanned the

better part of fifteen years.

13

The Commission began with the review of Article 101,

14

moved on to EU

merger law in the early 2000s,

15

and concluded the process with the reform of Article 102 in 2009.

16

While these are three separate prohibition provisions that target different types of conduct,

17

they share

many core concepts. In particular, they pursue the same legal objective.

The Commission’s reform process sought to address increasingly vocal criticism that EU compe-

tition law was out of touch with economic reality and learning. Its approach to assessing vertical

relationships was deemed especially outdated. In particular, it was criticized for considering the

exclusion of competitors sufficient to make business conduct anticompetitive, rather than making this

finding dependent on whether such exclusion also had a detrimental effect on consumer welfare, which

U.S. antitrust law has required since the late 1970s.

18

Another key criticism was that EU competition

12. See, e.g., the publications and speeches of former Commissioner for Competition Policy: Mario Monti, A Competition

Policy for Today and Tomorrow, 23 W. COMP. 1 (2000); Antitrust in the US and Europe: A History of Convergence, Speech

at the General Counsel Roundtable, American Bar Association (Washington, DC, Nov. 14, 2001); EU Competition Policy,

Fordham Annual Conference on International Antitrust Law and Policy (New York, October 31, 2002), amongst many

others. The speeches are available at: www.ec.europa.eu/competition/speeches.

13. For a more detailed account of the process, see AW

ITT,THE MORE ECONOMIC APPROACH TO EU ANTITRUST LAW ch. 1–3

(2016).

14. Green Paper on Vertical Restraints in EC Competition Policy, COM(96) 721.

15. Green Paper on the Review of Council Regulation (EEC) No 4064/89, COM(2001) 745.

16. Guidance on the Commission’s enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary

conduct by dominant undertakings (hereafter, “Guidance on Article 102”), 2009 O.J. (C 45/7).

17. There are three substantive prohibition provisions: Article 101 TFEU, prohibiting agreements that have the object or effect

of restricting competition (formerly Article 81 EC/85 EEC); Article 102 TFEU, prohibiting the abuse of a dominant position

(formerly Article 82 EC/86 EEC); and Article 2(3) of Council Regulation (EC) No 139/2004 of 20 January 2004 on the

control of concentrations between undertakings (hereafter, “EU Merger Regulation”), 2004 O.J. (L 24/1), formerly Council

Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings, 1989 O.J.

(L 395/1).

18. See, e.g., John Vickers, Abuse of Market Power, 115 ECON. J. 244 (2005); John Kallaugher & Brian Sher, Rebates Revisited:

Anti-Competitive Effects and Exclusionary Abuse Under Article 82, 25 E.C.L.R. 263 (2004); Derek Ridyard, Exclusionary

Pricing and Price Discrimination Abuses Under Article 82—An Economic Analysis, 23 E.C.L.R. 286 (2002); William

Kolasky, Conglomerate Mergers and Range Effects: It’s a Long Way from Chicago to Brussels,10G

EO.MASON L. R. 533

(2002); David S. Evans, The New Trustbusters, Brussels and Washington May Part Ways,81FOREIGN AFFAIRS 14 (2002);

Donna E. Patterson & Carl Shapiro, Transatlantic Divergence in GE/Honeywell: Causes and Lessons,16A

NTITRUST 18

(2001); Gary Becker, What US Courts Could Teach Europe’s Trust Busters,B

US.WK., Aug. 6, 2001, at 20; Barry Hawk,

System Failure: Vertical Restraints and EC Competition Law,32C.M.L.R

EV. 973 (1995); Valentine Korah, EEC

Competition Policy—Legal Form or Economic Efficiency, 39 C.L.P. 85 (1986), amongst many others.

174 The Antitrust Bulletin 64(2)