Enforcement Priorities Newspaper On Article 102 Tfeu: Is A Championship Plenty To Overtake Constitutional Rules Too Substitution Rule-Of-Law Principles?

Konstantinos Sidiropoulos

DPhil Candidate at University of Oxford – Prof Steve Weatherill

Foundation for Education together with European civilisation scholar

Introduction

There has been an intense debate to a greater extent than or less the optimal criterion regarding abuse of ascendence command inward the EU. In an endeavor to address the multiple complaints against the approach adopted to unilateral bear control, inward the early on 2000s, the European Commission initiated a review of the police pull together with practise of the relevant provision (see the EAGCP Report together with the Discussion Paper). The recurring objective of the review was to inject to a greater extent than economical thinking into the enforcement of what is at nowadays Article 102 TFEU (see e.g. here together with here). In this context, the ‘traditional form-based analysis’ of the European Union Courts was contrasted to a allegedly superior ‘more economical approach’ to abuse of dominance.

In Dec 2008, the Commission adopted a guidance newspaper declaring its enforcement priorities when dealing alongside exclusionary abuses nether Article 102 TFEU (‘Enforcement Priorities Paper’). This represents the culmination of the debate that crystalised the Commission’s modern approach to abuse of ascendence control.

Legal Status

The Enforcement Priorities Paper is a soft police pull musical instrument of sui generis nature which is said to operate equally a declaration of prosecutorial discretion. The said newspaper is of sui generis nature alongside regard to both its shape together with its substance.

From a formal perspective, it is a ‘novel instrument’ inward that it has non been adopted inward the shape of a Notice or of Guidelines, but equally a Communication containing ‘guidance on enforcement priorities’. This is neither a legal human activeness envisaged inward Article 288 TFEU nor an musical instrument recognised yesteryear the case-law equally containing ‘rules of practice’ (see e.g. Dansk Rørindustri at para 209). Inevitably, this raises doubts equally to whether the Priorities Paper may hold out taken into consideration pursuant to the Grimaldi judgment (para 18). 

            The Priorities Paper is also a novelty from a noun perspective. Its content is said to hold out close enforcement priorities, together with non close noun guidelines, i.e. it allegedly explains where the Commission volition focus its resources rather than interpreting the police pull (paras 2-3). This label is due to the fact that the Commission was restricted yesteryear the European Union Courts’ jurisprudence inward its endeavor to evolve its policy alongside regard to Article 102 TFEU. Producing noun guidelines was non an attractive option, because this would hateful that it could do no to a greater extent than than depict the electrical flow Earth of the police pull (see the European Parliament’s report at points K, L together with N), together with this would stand upward at odds alongside the Commission’s economics-based agenda. Under these circumstances, the adoption of a document that would claim to educate enforcement priorities was seen equally a wise way for the Commission to suggest that the existing police pull is unsatisfactory, spell non straight challenging the interpretation of the jurisprudence.

At a superficial level, the constitutional inquiry of whether the Commission has the potency to dot ex ante which categories of practices it volition prioritise when enforcing Article 102 TFEU was answered inward the affirmative, yesteryear virtue of the judgment inward Automec, where the GC held that ‘setting priorities inside the limits prescribed yesteryear the police pull […]  is an inherent feature’ of the Commission’s administrative activeness (para 77). Nevertheless, Automec cannot hold out regarded equally an potency for the adoption of the Enforcement Priorities Paper for 2 reasons. To start with, its championship is misleading because nix is actually prioritised. The Priorities Paper is drafted equally noun guidelines together with mentions all the categories of exclusionary bear that receive got been found to hold out abusive inward the jurisprudence. Additionally, the recognition yesteryear the European Union Courts of the Commission’s discretion to prioritise cases is non unlimited.  Above all, the Commission must human activeness inside the limits prescribed yesteryear the law; it must respect, inter alia, the interpretation given to Article 102 TFEU yesteryear the CJEU, since the latter is entrusted alongside the monopoly inward the interpretation of European Union police pull yesteryear virtue of Article 19(1) TEU inward conjunction alongside Articles 267(3) together with 344 TFEU. In this connection, the Priorities Paper is inconsistent alongside the case-law inward several respects.

Consequently, the Priorities Paper is non close setting priorities inward the way that it is understood inward Automec; it is close providing noun guidelines. Neither the caveat inward para iii of the Priorities Paper which states that it ‘is non intended to constitute a declaration of the law’ nor the championship of the document may impact this conclusion. Moreover, the endeavor yesteryear for sure distinguished lawyers inward the Commission to reshape the objective of the Commission’s review, arguing that the case-law together with the Priorities Paper do non overlap (see e.g. here at p. 7), is non persuasive.

Even so, the Priorities Paper is deprived of legally binding force. Nonetheless, it could hold out argued that, beingness a soft police pull instrument, it stipulates ‘rules of bear which are designed to create external effects’ according to the Archer Daniels Midland judgment (para 91). These effects comprise 2 interrelated aspects, namely that they operate equally instructions on the Commission’s administrative practice, together with that the Commission cannot depart from these soft rules inward an private instance without giving reasons for doing so. However, 2 aspects of the Priorities Paper forestall it from producing the legal effects of all other soft police pull instruments. First of all, it departs from the case-law. For such a non-binding text to create legal effects, non only must it hold out inward conformity alongside primary together with secondary European Union police pull (see e.g. Dansk Rørindustri at para 252), but it must also hold out consistent alongside established jurisprudence (see e.g. Dansk Rørindustri at para 261).

Secondly, the CJEU recognises legal effects to soft police pull instruments only to the extent that this serves the advertisement of the protection of legitimate expectation together with the principles of equal handling together with legal certainty (see e.g. Dansk Rørindustri at para 211). The Priorities Paper all the same does non create legitimate expectations together with is unable to serve the principles of equality together with legal certainty. To start with, it cannot give ascension to legitimate expectations, since it does non give precise assurances that a firm’s bear volition become unpunished if it does non autumn inside the compass of its provisions (para 3). Reliance on the regulation of the protection of legitimate expectations is unacceptable if no precise assurances are given yesteryear the regime that they volition human activeness inward a detail way (see e.g. the GC’s judgment inward Intel at paras 161-166). In addition, a dominant occupation solid cannot invoke the correct of equal handling to protestation that the Commission did non focus its resources on pursuing another’s occupation solid exclusionary behaviour, because the proclamation that intervention against for sure practices volition hold out an enforcement priority does non imply the lawfulness of other behaviours that receive got been found to infringe Article 102 TFEU according to the case-law. Finally, the Priorities Paper fails to serve the regulation of legal certainty; if anything, it has led to to a greater extent than confusion than clarity.     

            All inward all, the Priorities Paper has no detail legal status. It has no binding legal force, together with cannot create whatever legal effects either, because it does non serve the enforcement of whatever of the full general principles of European Union law. Therefore, neither the Automec judgment nor the Grimaldi judgment may human activeness equally regime for the Priorities Paper to hold out taken into consideration, since it does non run across the requirements pose downward inward either of them.

Practical Significance

Despite the fact that the Priorities Paper lacks legal status, it may soundless hold out of decisive practical significance. In fact, the tension betwixt its content together with the case-law may hold out irrelevant for the undertakings together with their legal advisers when deciding to consult it. This is because it indicates the Commission’s threshold for intervention. From a practical standpoint, if the Commission decides to pursue cases on the ground of a detail test, companies together with their legal advisers would at 1 time endeavor to empathize it together with convey themselves into trace alongside it.

            Nevertheless, the practical significance of the Priorities Paper is obscured for several reasons. First, at that spot are few bright-line rules. The principles are dependent acre to meaning exceptions, which are non sufficiently explained. Second, the newspaper provides no safe-harbours, which inward plough reduces the overall grade of guidance that it provides. Third, the purpose of guidelines is to heighten transparency together with accountability, render a clarification of the law, ensure consistency of enforcement together with increase legal certainty (see e.g. Tréfilunion SA v Commission at para 142). This purpose was disregarded yesteryear the Priorities Paper, which is couched inward terms of theoretical economic science alongside minimal awareness of the practical consequences for companies. Finally, the Commission itself does non comply alongside its ‘guidance’ (see the Intel decision).

Compatibility alongside the Principle of Loyal Cooperation

The regulation of loyal cooperation lies at the pump of the European integration process, together with the CJEU has from an early on phase recognised it equally beingness a full general regulation of Union police pull (see e.g. the ERTA judgment at para 87). The regulation governs the entire Union competence, including contest policy (see e.g. Case C-344/98 Masterfoods at para 56). Moreover, equally the post-Lisbon Treaty formulation emphasises, the regulation of loyal cooperation has a usual nature (Article 4(3)(a) TEU), together with governs both the relations of the Member States alongside the European Union institutions, together with the relations betwixt the diverse European Union institutions (Article xiii TEU).

The adoption of the Priorities Paper, equally good equally its content, run counter to both these manifestations of the regulation of loyal cooperation.

Loyalty Between the European Union Institutions

To the extent that the Commission’s novel approach to abusive exclusionary bear is incompatible alongside the case-law, the Commission disregarded its duty of loyalty toward the CJEU. By derogating from established jurisprudence yesteryear way of guidelines, the Commission exceeded the limits of the powers conferred on it yesteryear the Treaties. Thus, it did non practise usual sincere cooperation equally required yesteryear Article 13(2) TEU. Additionally, the selection of the Commission to call the document ‘enforcement priorities’ aggravates its infringement, inward the feel that it was a manœuvre aiming at relaxing the tension betwixt the approach adopted inward the Priorities Paper together with the 1 followed inward the case-law.

Likewise, the Commission disregarded the regulation of sincere cooperation equally regards its relations alongside the Council. Specifically, the Commission’s Priorities Paper functionally amended the framework of Article 102 TFEU inward several respects, thus circumventing the Council’s legislative responsibleness inward the expanse of contest police pull (Articles 103(1) inward conjunction alongside 289(2) together with (3) together with 290(1)(b) TFEU). The Commission requires delegated potency to adopt acts inward this area, which may only concern non-essential issues (Article 290(2) TFEU). Otherwise, the Commission acts ultra vires, reverse to Article 17 TEU, which sets out its responsibilities. In this context, the Commission also breached the regulation of institutional balance.

Loyalty Between European Union Institutions together with Member States

The Commission also violated the duty of sincere cooperation inward the context of its relations alongside the Member States. This is so, despite the fact that the Commission states inward the Frequently Asked Questions accompanying the initial adoption of the Priorities Paper that the said newspaper has been discussed extensively alongside the NCAs (question 9).

This is because of the parallel competence that the Commission, the NCAs together with the national courts part equally regards the application of Article 102 TFEU (Articles 4-6 of Regulation No 1/2003), which entails that they must apply the relevant dominion inward unopen cooperation inward social club to avoid inconsistent and/or contradictory decisions (Articles 11(1) together with fifteen of Regulation No 1/2003). As such, inward principle, NCAs together with national courts must choose the Priorities Paper into occupation organization human relationship (see Grimaldi at paras 18-19; Commission Notice at para 8). Yet, they must observe the European Union Courts’ case-law pursuant to the regulation of supremacy of European Union law. Therefore, NCAs together with national courts may choose into occupation organization human relationship the Priorities Paper entirely to the extent that its approach is inward conformity alongside the CJEU’s jurisprudence. As if that province of affairs were non complicated enough, the hybrid approach that the Commission follows inward its post-Priorities Paper decisional practise farther perplexes things, since NCAs together with national courts cannot choose decisions running counter to Commission decisions (see Article xvi together with recital 22 of Regulation No 1/2003). This Earth of uncertainty endangers the uniform application of Article 102 TFEU at the national level.

Compliance alongside Fundamental Rule-of-Law Principles: Analysis of Rebates equally an Example

Even to a greater extent than disturbing is the content of the Enforcement Priorities Paper, which at times does non integrate economical together with legal analyses inward a fashion that would ensure compliance alongside telephone substitution rule-of-law principles, such equally the legal certainty together with the nullum crimen, nulla poena sine lege principles (Article 49 CFREU; Article vii ECHR). The observance of these principles is of utmost importance inward the context of the enforcement of Article 102 TFEU, which is performed through fines that may hold out skyrocketing, equally was the instance inward Intel.

            The Priorities Paper’s approach to rebates granted yesteryear dominant firms offers a prime number illustration of this (see paras 37-45). The ‘as-efficient competitor’ assay (‘AECT’) advocated inward that newspaper for the assessment of rebates is the prototype of a purely theoretical economical tool; although it is a sophisticated assay which is grounded on robust economics, it cannot receive got whatever practical functionality (for a listing of objections against this test, regard here). In other words, it is a perfect assay on newspaper that makes perfect feel alongside perfect numbers. The problem, however, is that at that spot is no such thing equally perfect numbers.

            For instance, this assay requires a dominant occupation solid to guess ex ante the units that its client would potentially buy from its competitors. The only possible way to do this is to inquire its client, who is really probable to mislead the dominant firm. Similarly, nether the assay proposed yesteryear the Priorities Paper, a dominant occupation solid must evaluate ex ante the pricing together with attain of products that a competitor has the capacity to produce. This depends on data on rivals’ costs together with sales, which the dominant occupation solid cannot hold out expected to possess. Furthermore, the AECT is assuming a unmarried competitor together with a unmarried customer. But what if the dominant occupation solid has, for example, xxx competitors; is the dominant occupation solid required to bear this complex analysis xxx times for each of its clients? This would hold out an impossible task. Hence, this assay tin only operate inward retrospect together with alongside access to confidential information. It is an unworkable assay for a society that attempts to self-assess its practices.

            It appears that the Commission, inward its zeal for injecting to a greater extent than economical analysis into the enforcement of Article 102 TFEU, was oblivious to the absurdity of bestowing a self-standing role for economic science inward the interpretation of this provision. Indeed, whatever declaration inward favour of a to a greater extent than economical approach to abuse of ascendence is vulnerable insofar equally it is non properly integrated alongside legal reasoning. In this connection, legal reasoning is, yesteryear definition, close categorical thinking, together with hence, formal. Only formal rules tin ensure that Article 102 TFEU volition hold out enforced properly inward low-cal of its goal, namely the maintenance of effective contest inside the internal market. Indeed, effective contest tin only be if the players inward the marketplace human activeness inward an environs where they tin assess inward advance together with at reasonable terms whether their bear violates Article 102 TFEU.

            All inward all, no thing how theoretically audio the economical arguments for using the AECT may be, this assay is non appropriate for the assessment of rebates nether Article 102 TFEU. This is, inter alia, because the assay fails to guarantee the observance of telephone substitution legal principles.

Conclusion

Overall, the Enforcement Priorities Paper is flawed, both constitutionally together with equally a thing of substance. Constitutionally, the Commission does non receive got carte blanche equally regards the interpretation of Article 102 TFEU; that is, the Commission is constitutionally incompetent to alter the interpretation given to the police pull yesteryear the CJEU. Thus, the Commission, yesteryear adopting the Priorities Paper, acted exterior its remit together with breached a plethora of full general principles of European Union law. Moreover, the Priorities Paper’s approach to rebates illustrates that its noun analysis is incompatible alongside telephone substitution rule-of-law principles. In this connection, the selected championship cannot remedy or conceal these deficiencies. It seems to me that keeping the Priorities Paper hold out would hold out akin to contempt of the CJEU together with would drive unnecessary confusion.

Barnard & Peers: chapter 17 

Photo credit: http://ec.europa.eu/competition/court/antitrust.html

Share this post