La propuesta de Kelly

During the last two decades, both the Commission and the EU Courts had been criticised for their “structuralist” positions in their decisions and judgments which often showed a high level of formalism and did not adequately take into account economic arguments or efficiency considerations. Both under Art.101 TFEU and under Art.102, they placed too much emphasis on forms or categories of behaviour, but too little emphasis on their effects on the market and/or consumers. Particularly Art.102 was subject to harsh criticism in the literature for lacking economic rigour.⁸⁵ Before the modernisation, some commentators

78 Case COMP/39.316 Gaz de France [2010] OJ C57/13; Case COMP/39.317 E.ON Gas [2010] OJ C278/9.

79 Case COMP/39.315 ENI [2010] OJ C352/8.

80 Case AT.39727 CEZ [2013] OJ C251/4.

81 Press Release, “Antitrust: Commission probes allegations of antitrust violations by Google”, IP/10/1624, Brussels, 30 November 2010.

82 Whish (2009), p.189.

83 OECD (2005), p.18.

84 Goyder and Albors-Llorens (2009), p.651.

85 See generally Venit, J. S. (2005) ‘Article 82: The Last Frontier-Fighting Fire with Fire?’, 28 Fordham Int’l L.J, p.1158 (‘[Art.102] has too often been based on an approach that has ignored the need for sound economic analysis.’); Gormsen (2005), p.20 (‘It is accepted that some cases decided under Article [102]… are based on assumptions and not on solid economics.’); Petit, N. (2009) ‘From Formalism to Effects? The Commission’s Communication on Enforcement Priorities in Applying Article 82 EC’, World Competition, 32(4), p.485 (‘[T]he debate on Article [102] has been replete with passionate criticism of the European Commission’s…

“forms-based approach”... of abuses of dominance.’); Geradin (2010), p.39 (‘Article 102 has been enforced

even regarded Art.102 as ‘a Community problem child’,⁸⁶ while for others the Article was

‘the last of the steam-powered trains’⁸⁷ because of it being the last piece of EU competition law that was finally subject to a review after almost 50 years of enforcement.

In spite of the case law, the Commission has listened to criticism and to calls for it to abandon its formalistic methodology.⁸⁸ To address the concerns and calls for changes in the enforcement, the Commission engaged in a series of reforms with the ultimate aim of modernising the way it enforces EU competition law rules. The modernisation of EU competition law was not confined to Art.102 and instead began in the area of vertical restraints under Art.101 TFEU with the adoption of Regulation 2790/1999.⁸⁹ The modernisation started with vertical agreements because the view was that these seldom restrict competition and often lead to efficiencies for the benefit of consumers.⁹⁰ The officials in the DG Comp, who came to believe in the objective of encouraging efficiency after the first EUMR in 1989,⁹¹ started by considering reform of the treatment of vertical agreements on the grounds that their reform would be easier than that of horizontal agreements or abuse of a dominant position.⁹²

As the first formal document of the modernisation of EU competition law, Regulation 2790/1999 started the shift towards a consumer welfare-oriented approach to vertical agreements. Regulation 2790/1999 introduced a “safe harbour” for vertical agreements: Where the market share of the undertaking (supplier) does not exceed 30 very strictly by the Commission, which often took positions hard to reconcile with basic economics.’); Whish and Bailey (2012), p.208 (‘[T]here has been much criticism that the law and policy of Article 102 has been insufficiently aligned with sound economic principles.’); O’Donoghue and Padilla (2013), p.267 (‘One of the recurrent criticisms of the older decisional practice and case law under Article 102 TFEU is that abuses were made out on largely formalistic grounds, with little or no regard to any forensic demonstration of anticompetitive effects.’); and Jones and Sufrin (2014), p.382 (‘One of the most criticised aspects of the application of Article 102 over the years has been the use of “form” rather than “effects” based analysis.’).

86 Venit (2005), p.1159.

87 Sher (2004), p.243.

88 Downing and Jones (2010), p.222.

89 Commission Regulation (EC) No 2790/1999 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices [1999] OJ L336/21. This Regulation is replaced with Commission Regulation (EU) No 330/2010 on the application of Article 101(3) TFEU to categories of vertical agreements and concerted practices [2010] OJ L102/1.

percent, vertical agreements which do not contain “hard-core restrictions” are thought to create efficiencies in production or distribution and yield consumer benefits.⁹³ Shortly after, the Commission issued Guidelines on vertical restraints⁹⁴ which, together with Regulation 2790/1999, formed the basis for a more economic competition policy towards vertical agreements.⁹⁵ Guidelines on vertical restraints state that the Commission will adopt ‘an economic approach’ based on vertical agreements’ ‘effects on the market’ and will analyse vertical agreements ‘in their legal and economic context’.⁹⁶ Guidelines on the applicability of Art.101 TFEU to horizontal cooperation agreements similarly adopt an effect analysis to horizontal cooperation agreements.⁹⁷

Published in 2004 as a further reform in this respect, Guidelines on the application of Art.81(3) EC (now Art.101(3) TFEU) made the shift even clearer. This time, the objective of ‘enhancing consumer welfare and of ensuring an efficient allocation of resources’ is clearly attributed to Art.101 TFEU.⁹⁸ These Guidelines also employ an effects-based approach to “restrictions of competition by effect”, and thus differentiate them with “restrictions of competition by object”.⁹⁹ Many other consumer welfare-oriented rules and effects-based assessments are included in other Regulations and Guidelines such as Regulation 772/2004 on the application of Art.81(3) TFEU to technology transfer agreements,¹⁰⁰ Guidelines on the application of Art.81(3) TFEU to technology transfer agreements,¹⁰¹ Regulation 1217/2010 on application of Art.101(3) TFEU to research and

93 Regulation 2790/1999, para.8.

94 Guidelines on vertical restraints [2000] OJ C291/1. These Guidelines are replaced with the Guidelines on vertical restraints [2010] OJ C130/1 which state in para.7 that the objective of Art.101 TFEU is to ensure that undertakings do not use vertical agreements to restrict competition ‘to the detriment of consumers’.

95 Lowe, P. (2007) Consumer Welfare and Efficiency - New Guiding Principles of Competition Policy?, Speech at 13^th International Conference on Competition and 14^th European Competition Day, Munich 27 March 2007 <http://ec.europa.eu/competition/speeches/text/sp2007_02_en.pdf> [accessed 30/09/2014], p.4.

96 Guidelines on vertical restraints [2000], para.7.

97 Guidelines on the applicability of Article 81 of the EC Treaty to horizontal cooperation agreements [2001]

OJ C3/2, para.17. These Guidelines are replaced with the Guidelines on the applicability of Article 101 TFEU to horizontal co-operation agreements [2011] OJ C11/1.

98 Guidelines on the application of Article 81(3) of the Treaty [2004] OJ C101/97, para.13.

99 ibid at paras.19-25.

100 Commission Regulation (EC) No 772/2004 on the application of Article 81(3) of the Treaty to categories of technology transfer agreements [2004] OJ C123/11. This Regulation is replaced with the Commission Regulation (EU) No 316/2014 on the application of Article 101(3) TFEU to categories of technology transfer agreements [2014] OJ L93/17.

101 Guidelines on the application of Article 81 of the EC Treaty to technology transfer agreements [2004] OJ C101/2. These Guidelines are replaced with the Guidelines on the application of Article 101(3) TFEU to technology transfer agreements [2014] OJ C89/3.

development agreements¹⁰² and finally Regulation 1218/2010 on the application of Art.101(3) TFEU to specialisation agreements.¹⁰³

The other pillar of EU competition law, namely mergers, was not left outside the scope of the modernisation. An important reform was made in 2004 with the issue of the new EUMR.¹⁰⁴ The EUMR forms the basis for the Commission’s more-economic approach, which is intended to ground EU merger analysis more firmly in modern industrial organisation theory, based on a consumer welfare standard.¹⁰⁵ The EUMR moved away from the more structural concept of dominant position to make clear that all anti-competitive mergers resulting in higher prices, less choice or innovation -in other words:

causing consumer harm- are covered.¹⁰⁶ The old dominance test was replaced with the new significant impediment to effective competition (SIEC) test which is more suitable for evaluating the effects of complex mergers. Similar to agreements under Art.101 TFEU, the structuralist approach to mergers was thus reformed and the idea that mergers may also create efficiencies and benefit consumers gained ground.

The primary legislation on mergers is complemented with Guidelines on horizontal and non-horizontal mergers. Guidelines on the assessment of horizontal mergers state that the Commission will prevent mergers that would be likely to deprive consumers of low prices, high quality products and innovation through its control of mergers.¹⁰⁷ These Guidelines involve an effects-based approach to mergers based on “coordinated” and “non-coordinated” effects that may arise out of mergers,¹⁰⁸ and accept the notion that mergers may bring about various types of efficiency gains that can lead to benefits to consumers.¹⁰⁹ Guidelines on the assessment of non-horizontal mergers also contain many references to

102 Commission Regulation (EU) No 1217/2010 on the application of Article 101(3) TFEU to certain categories of research and development agreements [2010] OJ L335/36.

103 Commission Regulation (EU) No 1218/2010 on the application of Article 101(3) TFEU to certain categories of specialisation agreements [2010] OJ L335/43.

104 Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings [2004] OJ L24/1.

105 Maier-Rigaud, F. and Parplies, K. (2009) ‘EU Merger Control Five Years after the Introduction of the SIEC Test: What Explains the Drop in Enforcement Activity?’, European Competition Law Review, 30(11), p.565.

106 Lowe (2007), p.5.

107 Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings [2004] OJ C31/5, para.8.

108 ibid at paras.22-57.

109 ibid at para.80.

efficiency and consumer welfare¹¹⁰ and take the view that the fact that competitors may be harmed because the merger creates efficiencies cannot in itself give rise to competition concerns.¹¹¹ All of these documents reflect a clear willingness on the part of the Commission to embrace the economic thinking in the areas of agreements and mergers at the time.¹¹² No comparable documents had existed under Art.102 until late 2008 before the publication of the Guidance.