Restrictions of EU Competition Law in the Digital Age : The Meaning of 'Effects' in a Digital Economy

This book offers an in-depth legal analysis concerning the notion of restrictions of competition, be it by object restrictions according to Article 101 TFEU or prima facie abusive practices treated according to the form-based approach under Article 102 TFEU. Although extensive research has been conducted on the notion of object infringements of competition, there is no systematic review of this topic covering both competition provisions, namely Articles 101 and 102 TFEU. This book fills that gap by providing an extensive analysis of the relevant case law, while also covering new phenomena stemming from the digital revolution and its impact on the functioning of traditional markets. In this regard, particular attention is paid to the concept of prima facie infringements and the analysis necessary for their successful establishment. Object restrictions and object abuses are not infringements per se in the sense that they can be established in the abstract and without consideration of the actual legal and economic context (context analysis) within which a measure is implemented. Hence, the indispensable context analysis is informed by the potential economic effects of a given measure. Examining the changes regarding the economic reality and how markets work in the digital economy, this book makes a valuable contribution to the current debate about whether our competition law toolkit is fit and proper to deal with the challenges posed by digitalization. The author argues that while there is a coherent framework covering both Treaty competition provisions as regards object restrictions of competition, the increased use of an actual effect analysis and thus the concept of a restriction of competition by effect represents an underestimated (and underused) weapon for combating measures that are ambivalent from a competition law perspective as regards their (anticompetitive or non-detrimental) nature in a digital economy. Foreword 8 Acknowledgement 10 Contents 11 Abbreviations 15 Chapter 1: Introduction 16 1.1 General Remarks 16 1.2 Research Questions and Outline 17 1.3 Background 20 1.3.1 Setting the Scene 20 1.3.2 The Underlying Conceptual Approaches of Article 101 and 102 TFEU 23 Chapter 2: Competition Law, Economics and the `More Economic Approach ́: The Necessity of a Broader Perspective 26 2.1 Setting the Scene 26 2.2 Pluralism and the Goals of Competition Law: Their Meaning for the Use of Economics in Competition Law 28 2.2.1 General Remarks 29 2.2.2 Goals, Values and Other Normative Foundations: The Competition Law Mosaic of Diversity 32 2.3 The `more Economic Approach ́ and the Goals of Competition Law 34 2.4 Conclusions 36 Chapter 3: Effects and Article 101 TFEU 38 3.1 The Concept of Restrictions by `Object ́ or `Effect ́ 39 3.1.1 General Remarks 39 3.1.2 Object vs. Effect: Pros, Cons, the `More Economic Approach ́ and Enforcement Priorities 44 3.1.3 The Role of Economic Theory and Competition Policy 47 3.2 Object Restrictions: General Principles 50 3.3 Object Cases: `Context Analysis ́ and the `Context-Specific ́ Outcome 53 3.3.1 Horizontal Agreements 54 3.3.1.1 Price Fixing and Market Sharing Agreements 54 3.3.1.2 Information Exchange 55 3.3.2 Vertical Agreements 56 3.3.2.1 Exclusive Distribution 56 3.3.2.2 Selective Distribution 57 3.3.2.3 Export Bans 58 3.3.3 Making Sense of the Case Law? 60 3.4 The Notion of `Context Analysis ́: The Relevant Test 61 3.4.1 Peeperkorn 62 3.4.2 AG Bobek in Budapest Bank 63 3.4.3 The Compatibility of the Two Tests of Peeperkorn and AG Bobek 63 3.4.4 Content, (Legitimate) Objectives and the Legal and Economic Context: `Context Analysis ́ and Pro-Competitive Aspects unde... 64 3.5 `Context Analysis ́ vs Pro-Competitive Aspects under Article 101(3) TFEU 68 3.6 `Context Analysis ́: From T-Mobile to Cartes Bancaires 69 3.6.1 General Remarks 70 3.6.2 T-Mobile 70 3.6.3 Allianz Hungria 71 3.6.4 Slovak Banks 73 3.6.5 Cartes Bancaires 74 3.7 The Age after Cartes Bancaires 75 3.7.1 Maxima Latvija 75 3.7.2 Hoffmann-La Roche v Autorità Garante della Concorrenza e del Mercato 77 3.7.3 Budapest Bank 78 3.7.4 The Pharma Cases (Generics and Lundbeck) 80 3.7.4.1 Generics 80 3.7.4.2 Lundbeck 81 3.7.4.3 Reverse Payment Settlement Agreements from a Competition Law Perspective: A Critical Analysis 83 3.8 The `Appreciable Effect ́ 86 3.8.1 The Concept of Appreciability 86 3.8.2 The De Minimis Notice 87 3.8.3 Object Restrictions and Appreciable Effects 88 3.9 Conclusions 89 Chapter 4: Effects and Article 102 TFEU 92 4.1 The Notion of Abuse: Are There by Object and by Effect Abuses? 93 4.1.1 General Remarks, Principles and Competition Policy 93 4.1.2 The `More Economic Approach ́ and Enforcement Priorities 97 4.2 Different Types of Abuse: An Overview 100 4.3 Object Abuses: An Overview and Analogies to Object Restrictions Pursuant to Article 101(1) TFEU 103 4.4 Object Abuses: Case Law, Context Analysis and Context-Specific Outcomes 106 4.4.1 Exclusive Dealing and Practices Leading to De Facto Exclusivity 108 4.4.1.1 General Remarks 109 4.4.1.2 The Early Case Law: Suiker Unie, 111 4.4.1.3 Van den Bergh Foods: Old Wine in New Skins or Shifting Baselines? 116 4.4.1.4 Exclusive Dealing: A Coherent Framework under Article 101 and 102? 118 4.4.2 Loyalty Rebates 120 4.4.2.1 General Remarks 120 4.4.2.2 Categories of Rebates in the Case Law 122 4.4.2.3 The Early Case Law: Hoffmann LaRoche, Michelin I and II 123 4.4.2.4 Tomra, Post Danmark II and Intel 125 4.4.2.5 Analysis of the Case Law 128 4.4.3 Tying and Bundling 129 4.4.3.1 General Remarks 129 4.4.3.2 The Case Law 131 4.4.3.3 Analysis of the Case Law 134 4.4.4 Predatory Pricing 137 4.4.4.1 General Remarks 137 4.4.4.2 The Case Law 139 4.4.4.3 Analysis of the Case Law 142 4.4.5 Removal of a Railway Track 144 4.4.5.1 The Case: Lithuanian Railways 144 4.4.5.2 Analysis 144 4.5 The Concept of Appreciability, De Minimis and Article 102 TFEU 145 4.6 Conclusions 147 Chapter 5: Particularities of the Digital Economy 150 5.1 The Age of Digitisation: Setting the Scene 150 5.2 Online Markets, E-Commerce and Digital Platforms: Challenges in a Digital Economy 154 5.2.1 General Remarks 154 5.2.2 Online Platforms 157 5.2.2.1 In Search for a Definition 157 5.2.2.2 Economic Characteristics 158 5.2.2.2.1 Platform Markets and Network Effects 158 5.2.2.2.2 Economies of Scale 161 5.2.2.2.3 Single- and Multi-Homing, Switching Costs and Platform Differentiation 161 5.2.2.2.4 User Data and Innovation Potential 163 5.2.3 Online Markets, E-Commerce and Free-Riding 164 5.3 Chapter 5 Conclusions 166 Chapter 6: Competition Cases in the Digital Economy 167 6.1 Assessment Categories 167 6.2 Article 101 TFEU Cases in the Digital Economy 172 6.2.1 General Remarks 172 6.2.2 Eturas 173 6.2.3 Commission Cases in Asus, 174 6.2.4 Coty 176 6.2.5 Most Favoured Nation Clauses: Amazon, 179 6.2.5.1 Amazon, NRS and Booking: The Jungle of EU and National Cases 179 6.2.5.2 Price Relationship Agreements: A Disputed Practice? 181 6.2.5.3 Uniform Competition Law Application vs. National Solutions 185 6.2.6 Interim Conclusion 186 6.3 Article 102 TFEU Cases in the Digital Economy 188 6.3.1 General Remarks 188 6.3.2 Google Shopping 190 6.3.2.1 The Decisions of the Commission and the General Court 190 6.3.2.2 Analysis of the Decisions 191 6.3.2.3 Self-Preferencing as a Standalone Category of Abuse? 194 6.3.3 Google Android 196 6.3.3.1 The Decisions of the Commission and the General Court 196 6.3.3.1.1 The Tying of Apps 197 6.3.3.1.2 The `Anti-Fragmentation ́ Obligations 198 6.3.3.1.3 The Exclusivity Payment 199 6.3.3.2 Analysis of the Decisions 200 6.3.3.2.1 The Practices Raising Exclusivity Concerns (Exclusivity Payments in Form of RSA and `Anti-Fragmentation ́ Agreements) 200 6.3.3.2.2 The Effects-Approach to Tying 202 6.3.4 Google AdSense 204 6.3.4.1 The Commission Decision 204 6.3.4.2 Analysis of the Decision 205 6.3.5 Interim Conlusion 206 6.4 Chapter 6 Conclusions 209 Chapter 7: Conclusions 211 7.1 An Overall Analytical Framework of Articles 101 and 102? 211 7.2 A Hymn to Effect Analysis 216 Primary Sources 217 EU Legislation and Policy Documents 217 Cases 219 Court of Justice 219 General Court 221 Commission Cases 222 Pending Cases 224 AG Opinions 224 Commission Pending Investigations and Proocedings 225 Press Releases, Fact Sheets and Online Content 225 Decisions of National Competition Authorities 225 French Autorité de la concurrence 225 German Bundeskartellamt (Federal Cartel Office - FCO) 225 Italian Autorità Garante della Concorrenza e del Mercato 226 Swedish Konkurrensverket 226 UK Competition Authority (CMA and Former OFT) 226 US and European National Court Decisions 226 Bibliography 227 Secondary Sources 227 Monographies, Commenteries, Book Contributions and Articles 227 Government and Ministry White Papers, Reports, Working Papers 233 Speeches 235 Online Contributions 235