Abstract
Vertical access disputes are frequent in the ICT sector. Prominent cases before the European Commission, such as Google, and some regulatory debates—and in particular discussions about “net neutrality”—are evidence of this. The purpose of this piece is to identify a legal framework for the assessment of unilateral discriminatory practices under competition law. Three main approaches could be considered: (1) a welfare-based approach, based alone on the economic impact of the practice on welfare; (2) an approach based on the (presumed or alleged) intent of the firm; and (3) one that seeks to achieve consistency by examining the substantive standards applying to similar practices. It is shown that the latter approach is to be preferred, as it seems to be not only sound from an economic perspective, but in line with the purpose and logic of competition law regimes.
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Notes
- 1.
Commission Decision of 24 March 2004 relating to a proceeding under Article 82 of the EC Treaty (Case COMP/C-3/37.792 – Microsoft) (summary decision in [2007] OJ L 32/23) (hereinafter, “Microsoft I”) and Commission Decision of 16 December 2009 relating to a proceeding under Article 102 of the Treaty on the Functioning of the European Union and Article 54 of the EEA Agreement (Case COMP/39.530—Microsoft (Tying)) (summary decision in [2010] OJ C 36/7) (hereinafter, “Microsoft II”).
- 2.
Commission Decision of 13 December 2011 relating to proceedings under Article 102 of the Treaty on the Functioning of the European Union and Article 54 of the EEA Agreement (Case COMP/39.692—IBM Maintenance Services) (notified under document C(2011) 9245) (summary decision in [2012] OJ C 18/6).
- 3.
European Commission: “Statement on Apple’s iPhone policy changes” (IP/10/1175, 25 September 2010).
- 4.
European Commission: “Antitrust: Commission probes allegations of antitrust violations by Google” (IP/10/1624, 30 November 2010). See also Case AT.39.740 – Foundem v Google, ongoing.
- 5.
Ofcom, Pay TV Statement, 31 March 2010, available at http://stakeholders.ofcom.org.uk/consultations/third_paytv/statement/.
- 6.
An (unofficial) translation of the relevant text can be found at http://www.government.nl/documents-and-publications/notes/2012/06/07/dutch-telecommunications-act.html. The text of the approved bill in the original language, including information about the legislative procedure followed, can be found at http://www.eerstekamer.nl.
- 7.
On the notion of network effects, see Farrell/Klemperer, Coordination and Lock-In: Competition with Switching Costs and Network Effects, in Armstrong/Porter, Handbook of Industrial Organization, vol 3, Amsterdam: Elsevier, 2007. As the authors explain, some markets subject to network effects may “tip” in favour of the larger network to the exclusion of competing ones.
- 8.
For an overview, see Varian/Farrell/Shapiro, The Economics of Information Technology – An Introduction, Cambridge University Press, 2004.
- 9.
Microsoft I, supra note 1.
- 10.
Commission Decision of 26 January 2011, Intel/McAfee (Case COMP/M.5984) [2011] OJ C 98/1.
- 11.
Ibid., paras 128–174.
- 12.
Ibid., paras 175–221.
- 13.
Commission Decision of 7 October 2011, Microsoft/Skype (Case COMP/M.6281) [2011] OJ C 341/2.
- 14.
Ibid., paras 144–150.
- 15.
Ibid., paras 151–158.
- 16.
“Statement of VP Almunia on the Google antitrust investigation” (Speech/12/372, 21 May 2012) and “The Google antitrust case: what is at stake?” (Speech/13/768, 1 October 2013).
- 17.
See the definition of a “margin squeeze” provided in C-52/09, Konkurrensverket v TeliaSonera Sverige AB [2011] ECR I-527, para. 32: “there would be such a margin squeeze if, inter alia, the spread between the wholesale prices for ADSL input services and the retail prices for broadband connection services to end users were either negative or insufficient to cover the specific costs of the ADSL input services which TeliaSonera has to incur in order to supply its own retail services to end users, so that that spread does not allow a competitor which is as efficient as that undertaking to compete for the supply of those services to end users”. The leading cases include Commission Decision of 21 May 2003 relating to a proceeding under Article 82 EC of the Treaty (Case COMP/C-1/37.451, 37.578, 37.579 – Deutsche Telekom AG) [2003] OJ L 263/9 and Commission Decision of 4 July 2007 relating to proceedings under Article 82 of the EC Treaty (Case COMP/38.784 – Wanadoo España v Telefónica) (summary decision in [2008] OJ C 83/6).
- 18.
Commission Decision of 22 June 2011 relating to a proceeding under Article 102 of the Treaty on the Functioning of the European Union (Case COMP/39.525 – Telekomunikacja Polska) (summary decision in [2011] OJ C 324/7).
- 19.
European Commission: “Commission confirms unannounced inspections in Internet connectivity services” (Memo/13/681, 11 July 2013).
- 20.
Guidance on the Commission’s enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings, [2009] OJ C 45/7 (hereinafter, the “Guidance Paper”), paras 19–20.
- 21.
On 21 May 2012, Commissioner Almunia stated the following: “If Google comes up with an outline of remedies which are capable of addressing our concerns, I will instruct my staff to initiate the discussions in order to finalise a remedies package. This would allow to solve our concerns by means of a commitment decision – pursuant to Article 9 of the EU Antitrust Regulation – instead of having to pursue formal proceedings with a Statement of objections and to adopt a decision imposing fines and remedies”. (“Statement of VP Almunia on the Google antitrust investigation” (Speech/12/372, 21 May 2012)).
- 22.
See, by analogy, the Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of concentrations between undertakings, [2008] OJ C 265/6 (hereinafter, the “Non-Horizontal Merger Guidelines”), paras 33–39.
- 23.
Ibid., by analogy, paras 40–46.
- 24.
Ibid., para. 39: “In its assessment, the Commission will consider, on the basis of the information available, whether there are effective and timely counter-strategies that the rival firms would be likely to deploy. Such counterstrategies include the possibility of changing their production process so as to be less reliant on the input concerned or sponsoring the entry of new suppliers upstream”.
- 25.
Ibid., para. 52.
- 26.
For a discussion of this matter, see Korah, Draft block exemption for technology transfer, (2004) 25 European Competition Law Review 247.
- 27.
The Commission, however, seemed to move in that direction in the Microsoft I case, which was validated by the General Court when challenged. See Case T-201/04, Microsoft Corp. v Commission, [2007] ECR II-3601, and in particular paras 621–665.
- 28.
For a discussion of this matter, see in particular Hovenkamp, The Antitrust Enterprise – Principle and Execution, Harvard University Press, 2005, pp. 45–56.
- 29.
See in particular the following: In para. 34 of the Guidance Paper (supra note 20), the Commission explains that “[i]n order to convince customers to accept exclusive purchasing, the dominant undertaking may have to compensate them, in whole or in part, for the loss in competition resulting from the exclusivity. Where such compensation is given, it may be in the individual interest of a customer to enter into an exclusive purchasing obligation with the dominant undertaking”. Similarly, in para. 49, it states that “[t]ying and bundling are common practices intended to provide customers with better products or offerings in more cost effective ways”.
- 30.
“Google Agrees to Change Its Business Practices to Resolve FTC Competition Concerns In the Markets for Devices Like Smart Phones, Games and Tablets, and in Online Search” (3 January 2013), available at http://www.ftc.gov/opa/2013/01/google.shtm. The FTC explained “that the introduction of Universal Search, as well as additional changes made to Google’s search algohrithms – even those that may have had the effect of harming individual competitors – could be plausibly justified as innovations that improved Google’s product and the experience of its users. It therefore has chosen to close the investigation”.
- 31.
Case C-549/10 P, Tomra Systems ASA and others v Commission, judgment of 19 April 2012, not yet reported, para. 21.
- 32.
Case C-62/86, AKZO Chemie BV v Commission [1991] ECR I-3359, para. 72.
- 33.
Case 85/76, Hoffmann-La Roche & Co. AG v Commission, [1979] ECR 461, para. 91.
- 34.
Opinion of Advocate General Jacobs in Case C-7/97, Oscar Bronner GmbH & Co. KG v Mediaprint Zeitungs- und Zeitschriftenverlag GmbH & Co. KG, Mediaprint Zeitungsvertriebsgesellschaft mbH & Co. KG and Mediaprint Anzeigengesellschaft mbH & Co. KG, [1998] ECR I-7791.
- 35.
Case C-418/01, IMS Health GmbH & Co. OHG v NDC Health GmbH & Co. KG, [2004] ECR I-5039, para. 28.
- 36.
Joined Cases C-241/91 P and C-242/91 P, Radio Telefis Eireann (RTE) and Independent Television Publications Ltd (ITP) v Commission (“Magill”), [1995] ECR I-743, para. 56.
- 37.
TeliaSonera, supra note 17, para. 58: “if Bronner were to be interpreted otherwise, in the way advocated by TeliaSonera, that would, as submitted by the European Commission, amount to a requirement that before any conduct of a dominant undertaking in relation to its terms of trade could be regarded as abusive the conditions to be met to establish that there was a refusal to supply would in every case have to be satisfied, and that would unduly reduce the effectiveness of Article 102 TFEU”.
- 38.
Guidance Paper, supra note 20, paras 83–84.
- 39.
Ibid., para. 85.
- 40.
Ibid., para. 82.
- 41.
94/210/EC: Commission Decision of 29 March 1994 relating to a proceeding pursuant to Articles 85 and 86 of the EC Treaty (IV/33.941 – HOV SVZ/MCN) [1994] OJ L 104/34 and 2001/892/EC: Commission Decision of 25 July 2001 relating to a proceeding under Article 82 of the EC Treaty (COMP/C-1/36.915 – Deutsche Post AG – Interception of cross-border mail) [2001] OJ L 331/40.
- 42.
See in particular Commission Decision of 3 December 2009 relating to a proceeding under Article 102 of the Treaty on the Functioning of the European Union and Article 54 of the EEA Agreement (Case COMP/39.316 – GDF) (summary decision in [2010] OJ C 57/13); Commission Decision of 4 May 2010 relating to a proceeding under Article 102 of the Treaty on the Functioning of the European Union and Article 54 of the EEA Agreement (Case COMP/39.317 – E.ON Gas) (summary decision in [2010] OJ C 278/9); and Commission Decision of 29 September 2010 relating to a proceeding under Article 102 of the Treaty on the Functioning of the European Union and Article 54 of the EEA Agreement (Case COMP/39.315 – ENI) (summary decision in [2010] OJ C 352/8). In these cases, the Commission emphasised the fact that access to the facilities owned by the incumbents was indispensable for competition to emerge or be sustained on vertically related markets.
- 43.
Commission Decision of 2 June 2004 relating to a proceeding under Article 82 of the EC Treaty (Case COMP/38.096—Clearstream (Clearing and Settlement)) (summary decision in [2009] OJ C 165/7).
- 44.
Commission decision of 13 December 2011 relating to a proceeding under Article 102 of the Treaty on the Functioning of the European Union and Article 54 of the EEA Agreement (Case COMP/39.692 – IBM Maintenance Services) (summary decision in [2012] OJ C 18/6), para. 38.
- 45.
By the same token, and as far as price-based discrimination is concerned, one would expect the authority to endorse the “as efficient” competitor standard that is presented in para. 23 of the Guidance Paper, supra note 20 (“the Commission will normally only intervene where the conduct concerned has already been or is capable of hampering competition from competitors which are considered to be as efficient as the dominant undertaking”).
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Ibáñez Colomo, P. (2015). Discriminatory Conduct in the ICT Sector: A Legal Framework. In: Surblytė, G. (eds) Competition on the Internet. MPI Studies on Intellectual Property and Competition Law, vol 23. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-55096-6_6
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