Authors: William Leslie, David-Julien dos Santos Goncalves, Daniel Green, Rachel Malloch
Background
On 3 September, the European Commission adopted its Guidelines on exclusionary abuses of dominance (the Guidelines), replacing its 2009 Guidance on Enforcement Priorities (the Enforcement Priorities). The Enforcement Priorities had been the cornerstone of the Commission’s more economic approach to Article 102, progressively endorsed by the EU Courts from Post Danmark (2012) through to Intel (2017). Commission officials have voiced concerns that a rigid approach to effects based enforcement risked setting the bar “at a level that would render enforcement against practices that restrict competition unduly burdensome or even impossible”.
Against that backdrop, in August 2024, the Commission published draft guidelines on exclusionary abuses of dominance. We examined some of the key changes in the draft guidelines in our earlier blog post. It attracted significant criticism for its more formalistic approach, including in the Draghi report and, most recently, in a joint letter from a number of academics calling for the Commission to delay adoption of the Guidelines.
Two years since the draft guidelines were published, the final text still marks a significant shift from the Enforcement Priorities, but the Commission has gone some way towards addressing criticisms of the draft guidelines in its attempt to find the middle ground between “effects” and “formalism”.
In this post, we set out the headline changes to the key legal principles and overarching framework of the adopted Guidelines.
Zooming in on the key changes
Following extensive feedback during the public consultation on the draft guidelines, the Commission has introduced welcome, though imperfect, changes to the Guidelines:
- Who needs to worry about the Guidelines: the return of the 40% market share safe harbour. In a widely criticised move, the draft guidelines abandoned the Enforcement Priorities’ (soft) presumption of no dominance below 40%. The Guidelines reinstate the safe harbour that dominance is “generally unlikely” below 40%, though still possible where customers are dependent on the firm or rivals face capacity constraints (para. 24). The backtracking is welcome, providing greater certainty to non-dominant companies who might otherwise have been cautious in pursuing procompetitive low pricing strategies and innovative business models that boost consumer welfare.
- How to spot “bad” competition: defining competition on the merits. The Guidelines retain the two-limb test articulated in the draft guidelines that abusive conduct must (i) depart from competition on the merits, and (ii) be capable of having exclusionary effects (para. 59). However, the Guidelines introduce some fluidity by identifying scenarios where the two limbs need not be analysed separately: conduct falling within a specific analytical framework; conduct capable of excluding an equally efficient competitor; or conduct “by its very nature harmful to competition” (formerly “naked restrictions” in the draft guidelines) (paras. 62–65). In these cases, it need not be separately analysed whether the conduct departs from competition on the merits. The Guidelines, however, shy away from any encompassing definition of “competition on the merits”.
- When does fierce competition become abusive: the “as efficient competitor” principle (reimagined). While the Guidelines stress that a dominant undertaking’s conduct must “as a rule” be capable of excluding equally efficient competitors (para. 85), they also state that conduct with the object or effect “of impeding at an earlier stage competitors from even entering the market” is also capable of being abusive (para. 86). The Guidelines distinguish between pricing conduct, for which the price-cost (AEC) test remains a primary tool for assessing compliance (para. 89), and non-pricing conduct, where “other types of exclusionary effects” may be relevant for establishing an abuse (para. 92). This codifies one of the most complex and contentious areas of the case law.
- Use of presumptions: the introduction of a sliding scale. The draft guidelines organised conduct into three tiers with different presumptions, an approach criticised for its rigidity. The Commission has retained the principle of presumptions but repackaged them within a sliding-scale framework: the more likely a type of conduct is to distort competition, the less case-specific evidence is required (para. 58). It is questionable whether some of the retained presumptions find sufficient support in the case law. At the most restrictive end, conduct “by its very nature harmful to competition” (section 4.10), the inference of anticompetitive effects is linked to the notion of “by object” abuses. At the other end, novel or ambiguous conduct will require fuller proof of capability.
- Efficiencies and objective justifications: major expansion. Following the trend in the draft EU Merger Guidelines, the objective justification framework grows from 5 paragraphs to 44 (paras. 202–245), expressly aligned with Article 101(3) TFEU (the exception to the prohibition on anticompetitive agreements) (para. 220). Three areas stand out, reflecting broader industrial policy drivers: sustainability is recognised as a qualitative efficiency (para. 217); EU resilience is a potential justification for conduct reducing dependencies or ensuring production capacity for security and defence (para. 210); and new guidance on out-of-market efficiencies allows benefits on related markets to count where affected consumers and beneficiaries “substantially overlap” (paras. 237–238).
Improvements and open questions
The Guidelines represent a significant effort to systematise years of evolving case law and decisional practice on exclusionary abuses under Article 102. The sliding-scale principle, the return of a meaningful 40% safe harbour, and the expanded treatment of efficiencies and objective justifications all reflect a genuine attempt to provide a more workable analytical framework.
Yet several questions remain, which give rise to challenges in day-to-day compliance advice for dominant undertakings. The retained presumptions, which arguably lack solid support in the case law beyond pricing below AVC, risk being applied more rigidly than the sliding-scale framework intends. The confinement of the AEC test to pricing conduct, and the recognition that less efficient competitors may warrant protection, mark a doctrinal shift whose practical consequences remain to be tested. The replacement of “anti-competitive foreclosure” with “distortion of effective competition” as the organising concept may lower the evidentiary bar in ways that are difficult to predict. And the absence of a general materiality or appreciability threshold means that any conduct by a dominant firm departing from competition on the merits and capable of producing exclusionary effects may, in principle, fall within Article 102, a breadth that sits uncomfortably with the stated aim of enhancing legal certainty.
A notable gap concerns exploitative abuses. Although the Commission is actively pursuing exploitative abuse cases, the Guidelines are expressly limited to exclusionary conduct, leaving companies facing unfair trading conditions or excessive pricing allegations without a comparable framework. There are, however, indications that further guidance from the Commission on exploitative abuses could follow.
