abuse of dominance · guidance paper not binding and does not apply, decision still in line with it...

10 April 2018

Abuse of dominance - recent

developments

Mette Alfter, Frontier Economics

2frontier economics

Two very hot topics…

… and one a bit less hot perhaps

Effects-based approach in

rebates cases

How to handle “internet giants”?

Revival of excessive pricing

3frontier economics

Agenda

Mette Alfter

[email protected]

1 The Intel rollercoaster

2 What about Qualcomm?

3 The Google cases

4 Facebook in Germany

5 Excessive pricing back from the dead?

6 Conclusions

4frontier economics



3 The Google cases



6 Conclusions

5frontier economics

Conditional

Rebates /

Naked Restraints

What the case was about

Exclusivity

Payments

6frontier economics

What the EC said

… fined Intel €1.06 billion

▪ Intel dominant in x86 CPU market

▪ Rebates/payments de facto exclusive

▪ Case law: exclusivity rebates by a

dominant firm = abuse

▪ Guidance Paper not binding and does not

apply, decision still in line with it

▪ Analysis of likely effect not necessary, still

did it and confirmed finding

7frontier economics

What the GC said

Category 1

Quantity rebates

Category 2

Exclusivity rebates

Allowed

Category 3

Target rebatesEffects-based analysis

Prohibited

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Ongoing

What the ECJ said

Category 1

Quantity rebates

Category 2

Exclusivity rebates

Allowed

Category 3

Target rebatesEffects-based analysis

… the same as Advocate General Wahl

Effects-based analysis

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“The §139 factors”

“[…] the Commission [needs to analyse…]

▪ the extent of the undertaking’s dominant position on the relevant

market […]

▪ the share of the market covered by the challenged practice […]

▪ the conditions and arrangements for granting the rebates in question,

their duration and their amount […]

▪ the possible existence of a strategy aiming to exclude competitors that

are at least as efficient as the dominant undertaking from the market […]

10frontier economics

So what’s the verdict?

But but but

Challenge

No help on the fundamental question whether the very

form of an exclusivity rebate could itself constitute

proof of capacity to foreclose

Define boundary

Its been done before: Art 101

“The EC

Guidance Paper

is back from the

dead!”

“The return to

effects-based

analysis in

rebates cases!”

“The EC

Guidance Paper

is alive!”




3 The Google cases



6 Conclusions


Very similar to Intel

Exclusivity

Rebates (again!)

Extent of

dominance

Amount of

rebates

Conditions

Apple internal

documents

Key customerMarket

coverage

(own) AEC

or other

price-cost

test

+ But

no

Decision

EC fined Qualcomm €997M, decision to be published soon

Enough?




3 The Google cases



6 Conclusions


Ongoing

Investigations…

The Google saga

EU fines Google €2.4bn


Google Shopping

Giving prominent

placement to its own

comparison shopping

service

Demoting rival

comparison shopping

services in its search

results via its algorithms

The EC looked at effects…


Traffic to competing sites decreased…

EC Decision, Graph 29


... traffic to its own site increased

EC Decision, Graph 54


Google Android

EC Press Release


What about Apple?

Promote competition in search –

has that ship sailed?

Wider innovation in mobile space –

too speculative?

Potentially more difficult for the Commission?




3 The Google cases



6 Conclusions


BKartA vs. Facebook

▪ Facebook collects user data

“on-Facebook” and

“off-Facebook”

▪ Off-Facebook data usage rights

unreasonable

▪ “Konditionenmissbrauch”?

Scraping the barrel?


Part of a wider debate

Internet giants Big data Competition v regulation

Competition authorities

of the view that existing

tools are enough

But

▪ Chief Technology Officer / Digital Task Force

▪ Considering new rebuttable presumptions (BKartA)

▪ Putting in place some “light-touch regulation” (EC)




3 The Google cases



6 Conclusions


What’s new?

Collecting society

Pharma


Spoiler alert!

… several appeals pending

It’s still

United Brands

(1978!)

Leg 1

The difference between costs and the

price is excessive

and,

if so,

Leg 2

The price is either unfair in itself or when

compared to competing products




3 The Google cases



6 Conclusions


So what?

The rebate saga continues

… but don’t hold your breath!

Regulating internet giants?

One to watch!

Excessive pricing: much ado about nothing?


Questions?

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abuse of dominance · guidance paper not binding and does not apply, decision still in line with it...

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