Reflecting the new status quo: European Commission consults on replacement to its exclusionary abuse of dominance guidelines

The Commission's guidance on Article 102 TFEU is in need of a substantial update. To date, the Commission has published no all-encompassing guidance setting out its analytical framework for the prohibition of abuse of dominance. Instead, it currently relies on its Article 82 EC (now Article 102 TFEU) guidance on how it will prioritise enforcement of the prohibition, published way back in 2008 [1].  

In the fast-moving world of abuse of dominance, 2008 is ancient history. Since that date, the prohibition has found a new home in the TFEU, and the European Courts have handed down numerous seminal judgments, from Deutsche Telekom (2010), Teliasonera (2011) and Post Danmark (2012-2015) to Intel (2017), Slovak Telekom (2021), and SEN (2022). Many such judgments have been in sectors which looked very different back in 2008. In particular, abuse of dominance has been elevated to one of the preferred methods of competition law enforcement and regulation by the Commission and national regulators against so-called 'big tech', with many of the Commission's highest ever antitrust fines coming from decisions such as Google Android (2018, €4.34bn [2]) ,  Google Shopping (2017, €2.24bn [3]) and Apple – App Store Practices (2024, €1.8bn [4]).

Because of this, the Commission's enforcement priorities guidance has become increasingly out-of-kilter with the actual sectors and categories of conduct most firmly in regulators' crosshairs and has in many places been superseded by the law as developed by the European Courts. In March 2024, the Commission published a 'patch' amending certain parts of its enforcement priorities guidance that had become plainly inconsistent with recent case-law and practice [5],  but it was clear that in the longer-term a more significant update would be needed.

The Draft Guidelines represent the Commission's latest attempt to consolidate the various threads of European case-law and Commission practice. It is almost double the length of the current enforcement priorities guidance (171 paragraphs to the previous guidance's 90). Unlike that previous guidance, which was in principle merely a statement of enforcement priorities (notwithstanding that, in practice, the Commission and national regulators often treated it as de facto guidance on the law), the Draft Guidance is intended to be "guidance" in the same sense of the word as the Commission's guidance on, for example, the vertical agreements block exemption or horizontal co-operation. In other words, guidance on the Commission's view of the law and how the prohibition should be interpreted and applied. This means the Draft Guidance provides significantly more detail on concepts that were not covered at all in the enforcement priorities guidance seemingly because they were not considered an enforcement priority, including for example a brand-new section on collective dominance (which has seen relatively little enforcement to date).

The Draft Guidelines are however not the single source of truth for all abuse of dominance related issues.

First, it is important to note that the Draft Guidelines only cover exclusionary abuses, i.e. conduct with the object or effect of foreclosing competitors of the dominant undertaking or otherwise impacting on the structure of competition in a particular market. It does not cover exploitative abuses, i.e. conduct which directly harms customers by exploiting their 'stickiness' to the dominant undertaking, e.g. by imposing unfair trading conditions or excessive pricing that the customer is ill-equipped to resist. This was perhaps consistent with the idea of enforcement priorities guidance as it is clear that, at least in 2008, exploitative theories of harm were lower priority and saw less enforcement than exclusionary theories of harm. But in a full guidance document intended to reflect the current state of play, it is perhaps anachronistic that the Commission has still not published guidance on exploitative theories of harm. Indeed, these theories of harm are undergoing something of a resurgence, with recent Commission tech cases resurrecting the "imposing unfair trading conditions" abuse and (at a UK level) exploitative theories of harm being seen in the Competition and Markets Authority's pharmaceuticals excessive pricing cases and the recent Boundary Fares case brought in the Competition Appeal Tribunal by Justin Gutmann.

Second, it should be noted that the Draft Guidelines do not provide guidance on market definition, a crucial part of any dominance (and therefore abuse) assessment – but earlier this year the Commission also adopted an updated version of its Market Definition Notice, completing this jigsaw [6].

The Draft Guidelines aim to set out the Commission's interpretation of the current landscape of abuse of dominance rules and legal tests, consolidating disparate European Court judgments and reconciling these into one coherent framework. There is much to unpick in these sections of the Draft Guidelines, but we have listed some of the key headlines below.

General

The Draft Guidelines capture some controversial judgments and ideas which underscore the breadth of the prohibition. For example:

• The Draft Guidelines restate the Court of Justice's judgment, in Towercast (2023) [7],  that Member State competition authorities are in principle permitted to interpret the prohibition in a manner that could capture mergers falling below their thresholds for ex ante merger control.
• The Commission has confirmed its view that the prohibition may apply to conduct which is compliant with sectoral legislation and, vice versa, may under certain conditions apply even where a business has already been punished under other sectoral rules, effectively giving rise to the possibility of being sanctioned twice. This idea is controversial and, in some circumstances, may give rise to legal uncertainty and double jeopardy concerns. This is pertinent in the context of the EU's new Digital Markets Act which creates a regime of sectoral regulation for certain large tech players.

Dominance

The core structure of this section remains the same as in 2008. The Commission restates the widely accepted test for a dominant position (i.e. the ability to behave to an appreciable extent independently of competitors, customers or consumers), and sets out the same three key factors in undertaking this assessment: market position, barriers to entry and expansion, and countervailing buying power. But there are key changes in emphasis which reflect market developments since 2008. For example:

• In the market position sub-section, the Commission has removed the assertion, in its enforcement priorities guidance, that "The Commission's experience suggests that dominance is not likely if the undertaking's market share is below 40 % in the relevant market." The 40% yardstick had proved useful for many companies in carrying desktop assessments as to the risk that they could be deemed dominant in a relevant market.
• In the barriers to entry and expansion sub-section, the Commission has included significantly more detail on barriers which are particularly prevalent in tech contexts, including data driven advantages, first mover advantages, behavioural biases, and network effects. The same is true in the countervailing buyer power sub-section, with concepts such as a large, dispersed set of buyers being highlighting as factors weighing in favour of dominance.

Abuse

The abuse section in the Draft Guidelines has been fundamentally restructured since the 2008 version. Unlike the 2008 enforcement priorities guidelines, the Draft Guidelines sets up "competition on the merits" as the cornerstone concept of modern abuse of dominance enforcement, the idea being that conduct is abusive where it deviates from ordinary competition on the merits and either has or is capable of having exclusionary effects. Competition on the merits is a concept which saw relatively little attention in historic cases but has recently risen to prominence, in particular in cases such as SEN. This move has been criticised by many commentators, described as a move towards a less certain "vibes-based approach" to enforcement [8].  

The Draft Guidelines sets out the following framework for assessing abuse:

First, the abusive concept must depart from competition on the merits. This may be because:

• the conduct falls into an established category of abuse (each of which have dedicated sections in the Draft Guidelines), either with:
  • a well-established legal test, such as (i) exclusive dealing, (ii) tying and bundling, (iii) refusal to supply, (iv) predatory pricing, and (v) margin squeeze; or
  • wider guidance from the European Courts, such as self-preferencing, access restrictions and certain types of rebate.
• the conduct is a 'naked' abuse, i.e. it holds no economic interest for the dominant undertaking other than restricting competition. The Draft Guidelines provides various examples of such abuses from recent case-law.
• the conduct is otherwise shown to deviate from competition on the merits in the specific circumstances of the case. The Draft Guidelines provide non-exhaustive factors to assess what conduct may fall within this miscellaneous category.

Second, such conduct must (in the context of exclusionary abuses) be capable of having exclusionary effects. This is said to include:

• conduct where the capability to have exclusionary effects needs to be demonstrated, considered to be the general rule.
• conduct where there is a rebuttable presumption of exclusionary effects, including for example exclusive supply/purchasing, exclusive rebates, predatory pricing, margin squeeze and certain forms of tying.
• conduct where there is a near-irrebuttable presumption of exclusionary effects, including the naked abuses mentioned above.

For each of these categories, the Draft Guidelines set out non-exhaustive factors which may be relevant to the assessment of capability of exclusionary effects.

Third, the application of the objective necessity and efficiency defences must then be considered; in each case, the dominant undertaking has the burden of proof.

[1] See 2009/C 45/02 "Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings" (2008), available at https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2009:045:0007:0020:EN:PDF  
[2] See https://ec.europa.eu/competition/antitrust/cases/dec_docs/40099/40099_9993_3.pdf 
[3] See https://ec.europa.eu/competition/antitrust/cases/dec_docs/39740/39740_14996_3.pdf 
[4] See https://ec.europa.eu/competition/antitrust/cases1/202419/AT_40437_10026012_3547_4.pdf 
[5] See https://competition-policy.ec.europa.eu/system/files/2023-03/20230327_amending_communication_art_102_annex.pdf 
[6] See https://ec.europa.eu/commission/presscorner/detail/en/ip_23_6001 
[7] See https://curia.europa.eu/juris/document/document.jsf?text=&docid=271327&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=1810397
[8] See https://chillingcompetition.com/2024/02/14/the-dangers-of-the-notion-of-competition-on-the-merits-and-how-to-address-them/