Electronic copy available at: https://ssrn.com/abstract=3028629

Francisco Marcos

Professor IE law School

Francisco.marcos@ie.edu

THE PROHIBITION OF SINGLE-FIRM

MARKET ABUSES: U.S. MONOPOLIZATION VERSUS E.U. ABUSE OF DOMINANCE

Working Paper IE Law School AJ8-238-I 05-05-2017

Abstract: This article looks at the commonalities and disparities in the rules

against single-firm market abuses in the US and in the EU and their enforcement.

Despite they target the same type of business behaviour, the US and the EU have

always followed divergent paths. This article will examine alternative

explanations for the differences and will also look at the different forms of

conduct caught under the prohibition, underlining the most recent enforcement

discordances.

Keywords: Competition Law, Antitrust Law, US, EU, Enforcement, Abuse of

Dominance, Monopolization, Unilateral Conduct, Single-firm conduct, Market

Power, Anti-competitive Behaviour, Consumer welfare, Foreclosure, Exclusive

Dealing, Predatory Pricing, Excessive Pricing, Bundling, Tying, Rebates,

Margin-Squeeze, Refusal to deal

Electronic copy available at: https://ssrn.com/abstract=3028629

La publicación de la Serie Working Papers IE-Law School está patrocinada por la Cátedra Jean Monnet-IE. Copyright © 2017 Francisco Marcos, Profesor de derecho en IE Law School. Este working paper se distribuye con fines divulgativos y de discusión. Prohibida su reproducción sin permiso del autor, a quien debe contactar en caso de solicitar copias. Editado por el IE Law School, Madrid, España The publishing of Serie Working Papers IE-Law School is sponsored by Cátedra Jean Monnet-IE. Copyright ©2017 by Francisco Marcos, Professor at IE Law School. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Edited by IE Law School and printed at IE Publishing, Madrid, Spain

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Introduction

Together with the prohibition of multilateral anticompetitive practices, competition legal systems worldwide have a rule against unilateral anticompetitive behaviour by monopolists or dominant firms in the market.1 There is a broad consensus worldwide over the general idea of the need for competition law to police single-firm abuses whenever firms have achieved a position of strong market power.2 However, there are however very relevant disparities in the formulation and implementation of the specific rules that countries around the world have enacted to tackle abuses coming from the concentration of economic power single-handedly in the markets.3

Aside from the legal specificities in the drafting of the prohibition of single-firm abuses in different countries, which -at the end- may not vary so much, most differences are explained and justified in the concrete context (ideological and historical) and institutional reality in which the prohibition is to be implemented, and that may lead to similar cases reaching distinct outcomes.4

To analyse the variations in the treatment of unilateral conduct in competition law requires looking both at the USA and the EU experiences.5 These two legal systems have provided the source of inspiration in the adoption and enforcement of the prohibition elsewhere in the world.6

1 In different legal systems there may be other unilateral conducts prohibited by competition law even if the firm does not have dominance or monopoly power in the market, frequently this will be connected with unfair competition rules [see for example Section 5 of FTC Act (15 U.S.C. §45) and M. K. Ohlhausen, “Section 5 of the FTC Act: principles of navigation” (2014) 2 J. Antitrust Enforcement 1–24]. Abuses of economic dependence are some type of unilateral conducts that may be of concern and that are addressed through different rules (despite monopoly power or dominance may not exist in many cases) for a survey see: International Competition Network (ICN), Report on Abuse of Superior Bargaining Position (2008). The exact combination of rules in dealing with unilateral conduct varies from country to country, see E. Elhauge & D. Gerardin, Global Competition Law and Economics, 2nd Ed. (Hart 2011) 265-275. 2 In general, see “Assessment of Dominance (Chapter 3)” in ICN (ed) Unilateral Conduct Workbook (2011); ICN Recommended Practices on the Assessment of Dominance/Substantial market Power and OECD, Abuse of dominance and monopolisation (1996) 3 See ICN, Report on the Objectives of Unilateral Conduct Laws, Assessment of Dominance/Substantial Market Power, and State-Created Monopolies (2007). 4 See E. M. Fox, “Monopolization and Abuse of Dominance: Why Europe is different?” (2014) 59 Antitrust Bulletin 129-152 and “Monopolization and Dominance in the United States and the European Community-Efficiency, Opportunity, and Fairness” (1986) 61 Notre Dame L. Rev. 981-1020.

5 We will be focusing in them as supra-national/federal legal and institutional realities, each with its own competition/antitrust rules, although most part of the analysis could be extended perfectly to individual States in the US and Member States of the EU (domestic competition rules a mirror those existing at federal/supranational level). 6 See M. S. Gal, A. Tor & S. W. Waller “Introduction: Expansion and Contraction in Monopolization Law” (2010) 76 Antitrust L. J. 656. The E.U. model seems to have taking the lead in this process, see W. E. Kovacic,

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1. Origins of the prohibitions

Historically the US introduced the prohibition of monopolization in first place through section 2 of the Sherman Act (1890).7 This provision was enacted in close connection with the rule against trusts as the two main tools conceived to fight against industrial power concentration in that time. Indeed, section 2 was aimed at tackling the same types if abusive behaviours that section 1 forbade but when adopted by a single firm.8

Although there have been variations, the overall the evolution of the enforcement of section 2 in its more than hundred years of existence reflects a rather conservative interpretation by the enforcers, which has been exacerbated across time, with a clear and increasing preference not to activate the prohibition in the absence of proof of inefficient behaviour by monopolists that harmed consumers.

On the other hand, in Europe the prohibition of abuse of market dominance was introduced in article 86 of the Treaty of the European Economic Community (1954)9, together with other rules against other types of anticompetitive behaviour, including state aid and State Owned Enterprises (SOEs). Competition law was conceived as one among the tools designed by the founders of the European Communities (EC) aimed at guaranteeing businesses a common level playing field in the EC that would

“Dominance, duopoly and oligopoly: the United States and the development of global competition policy” (2010) 14 Global Competition Law Review, Dec. 2010, 39-42 [and also “The United States and its Future Influence on Global Competition Policy” (2015) 22 George Mason L. Rev. 1167]. 7 “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court” [15 U.S.C. § 2]. 8 See US Supreme Court Judgment of 15 May 1911, Standard Oil Co. of New Jersey v. U.S., 221 U.S. 1, 61 (1911). 9 “Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States. Such abuse may, in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) limiting production, markets or technical development to the prejudice of consumers; (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts” [currently Article 102 of the Consolidated version of the Treaty on the Functioning of the European Union (TFEU) (OJ C 326 of 26 October 2012)].

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help in the construction of a competitive internal market across EC Member States.10

Moreover, the historical conditions in which the prohibition of abuse of dominance was introduced in Europe (post-war), characterized by strong state owned monopolies in several economic activities in many Member States, presented a very different business and market reality in many industries from the one existing in the US.

Aside from such context, there was also a different political or ideological motivation behind the European prohibition of abuse of dominance that has steadily affected its enforcement: the prohibition of single-firm abuses was a rule to protect freedom to compete and the market structure for competitiveness.11

Additionally, in comparison with the prohibition of multilateral anticompetitive conducts (currently in article 101 of the TFEU), which provided ground for an effects-based assessment of some conducts caught by the prohibition taking into account the alleged efficiencies and the impact on consumer welfare, that feature was not present in article 102.12 In practice this has led towards a formalistic view of the rule, enforcement checking whether the legal elements required were concurring, and largely ignoring economic analysis.13

Nevertheless, although section 2 of the Sherman Act and article 102 of the TFEU have different heritages and may different goals in mind, they target the same types of business phenomena in which a firm with strong market position abuses of its power.14 In a context in which competition conditions in the market are weakened, some conducts are forbidden and punished as they are not considered to be 10 See P. Akman, The Concept of Abuse in EU Competition Law (Oxford: Hart, 2012) 50-54. 11 Allegedly “Ordo-liberalism” has been considered at the roots of article 102 TFEU, but it is far from the only influence see Akman, The Concept of Abuse in EU Competition Law 55-63 [and also P. Akman, “Searching for the Long-lost soul of article 82EC” (2009) Oxford J. of Legal Studies 267-303]. From another perspective, see also P. Larouche & M. P. Schinkel, “Continental Drift in the Treatment of Dominant Firms: Article 102 TFEU in Contrast to §2 Sherman Act” in R. D. Blair & D. D. Sokol (Eds.), The Oxford Handbook of International Antitrust Economics (Oxford U. Press) Vol. 2, 153-187. 12 See T. Eilmensberger, “How to distinguish good from bad competition under article 82 EC: In search of clearer and more coherent standards for anti-competitive abuses” (2005) 42 Common Market L. Rev. 136 and E. Szyszczak, “Controlling Dominance in European Markets” (2009) 33 Fordham International L. J. 1754. 13 See P. Ibáñez, “Beyond the ‘MoreEconomics-Based Approach’: A Legal Perspective of article 102 TFEU case law”, (2016) 53 Common Market L. Rev. 709–740.

14 Ideally, the enforcement of the prohibition should aim at reaching a trade-off between some formal criteria, that provide legal certainty to firms, and some economic assessment of their behaviour that proscribes inefficient and actions that can only be explained as aimed at eliminating competition, see G. J. Werden, “Competition Policy on Exclusionary Conduct: Toward an Effects-Based Analysis?” (2006) 2/Suppl. Eur. Competition J. 53-67. On the other hand, from the enforcement perspective, both the EU and US allow the prohibition to lead to fines being imposed by public enforcers and private claims against the monopolist or dominant firm in court, see P. Marsden & P. Whelan, “Re-examining Transatlantic Similarities and Divergences in Substantive and Procedural Competition Law” (2009) X SEDONA Conference J. 8-9.

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a normal method of competition.15

2. Elements of the prohibitions

The common structure of the prohibition in the EU and in the US consists of two elements: (a) the structural element (dominant position or monopoly power) and (b) the anticompetitive behaviour element (abusive or monopolizing conduct). There are relevant differences in the assessment of each of these two elements that explain variations in the scope and enforcement of the prohibition at both sides of the Atlantic. The anticompetitive behaviour needs to be causally connected to the market power position on the undertaking (i.e., the abuse results from the dominant position/monopoly power in the market).16

(a) Structure. A strong market position needs to exist for prohibition to be applicable. In this regard, in practice a “dominant position” (EU) is more easily found to exist than “monopoly power” (U.S).

After the common task of defining the relevant market, “dominance” in the EU exists when an undertaking enjoys a position of economic strength which enables it to prevent effective competition being maintained on such relevant market “by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of the consumers”.17 This vague and indeterminate standard means that factors distinct from market share will be taken into account in ascertaining whether “dominance” exists. In practice, it implies that it may exist even with market shares lower than 40%.18 Instead, in the US, the definition of “monopoly power” is strictly economic, consisting

15 See ¶12 and 70 of Judgment of the EU Court of Justice of 9 November 1983, NV Nederlandsche Baden-Industrie Michelin v. Commission, Case 322/81 (ECLI:EU:C:1983:313) and Standard Oil Co. of New Jersey v. U.S., 221 U.S. 1, 75 (1911). 16 Regarding the EU prohibition see Eilmensberger, (2005) 42 Common Market L. Rev. 140-146, in the US see E. Elhauge, “Defining better monopolization standards” (2003) 56 Stanford L. Rev. 330-333. 17 ¶38 Judgment of EU Court of Justice of 13 February 1979, Hoffmann La-Roche & Co. AG v. Commission, case 85/76 (ECLI:EU:C:1979:36). A rebuttable presumption of dominance is set at 50% market share in ¶60 of Judgment of the EU Court of Justice of 3 July 1991, AKZO Chemie BV v. Commission C-62/86 (ECLI:EU:C:1991:286). 18 ¶211 of Judgment of EU General Court of 17 December 2003, British Airways v. Commission T-219/99 (ECLI:EU:T:2003:343). See G. Monti “The Concept of Dominance in Article 82” (2006) 2/Suppl. Eur. Competition J. 31-52 and T. Eilmansberger “Dominance—The Lost Child? How Effects-Based Rules Could and Should Change Dominance Analysis “ (2002) 2/Supp. Eur. Competition J. 15-29.

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on the power of raising prices profitably.19 In practice, “monopoly power” will require holding two thirds of the market and it will never be found to exist below 50% market share.20

(b) Anti-competitive behaviour. More difficulties are faced in assessing this element of the prohibition. Being a monopolist or a dominant firm in the market is not forbidden, but those firms that hold that position may be barred in some of their actions because they are deemed abusive.21

In principle, section 2 of Sherman Act is broader in the text of the rule, 22 but it has always been interpreted in a restricted way, and the conservative and non-interventionist understanding of this prohibition has increased along the time, 23 providing room for the monopolist to defend itself by claiming efficiencies and giving pro-competitive explanations for its actions.

On the other hand, although the prohibition of abuse of dominance in article 102 of TFEU seems to be more nuanced, with a detailed list of conducts caught by it, both the rule and the exemplifications are fraught with ambiguity. It is true that the conducts listed in article 102 illustrate that the behaviour prohibited is either exploitative and/or exclusionary of competitors, suppliers, clients or consumers, but the text refers both to “fairness” and “commercial usage” as standards that would be considered in assessing the dominant firm behaviour and this introduces notable uncertainty.

19 See A. P. Lerner, “The Concept of Monopoly and the Measurement of Monopoly Power” (1934) 1 Rev. Econ Studies 157-175; W. M. Landes & R. A. Posner, “Market power in antitrust cases” (1981) 94 Harvard L. Rev. 937-996; T. G. Krattenmaker, R. H. Lande & S. C. Salop, “Monopoly Power and Market Power in Antitrust Law” (1987) 76 Georgetown L J. 241-269. 20 However, companies with lower market shares can still fall in the prohibition of section 2 for “attempting to monopolize” the market if their conduct is clearly anticompetitive and does not have business justification and will likely result in a monopoly if continued, see Judgment of US Supreme Court of 25 January 1993, Spectrum Sports, Inc v. McQuillan, 506 U.S. 447 (1993). See H. Hovemkamp, Federal Antitrust Policies. The Law of Competition and its practice, 3rd Ed. (Thomson-West 2005) 181-188. 21 The EU Court of Justice has said that article 102 TFEU is not targeting dominance per se (as there may still be room for competition), but what it is forbidden is the abuse of dominance. US case law is more vocal on this point, in Judge Learned Hand words “The successful competitor, having been urged to compete, must not be turned upon when he wins.” [Judgment of the 2nd Circuit Court of Appeals of 12 March 1945, U.S. v. Aluminum Co. of America, 148 F.2d 416, 430 (2d Cir. 1945)]. More recently, Justice Scalia was also clear when he affirmed: “The mere possession of monopoly power, and the concomitant charging of monopoly prices, is not only not unlawful; it is an important element of the free-market system.” [Judgment of US Supreme Court of 13 January 2004, Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 407 (2004)]. 22 It does not help much that the US Supreme Court said that it consists in “the willful acquisition or maintenance of [monopoly] power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident” in its Judgment of 13 June 1966, U.S. v. Grinnell corp. 384 U.S. 563, 570-571 (1966). See Elhauge (2003) 56 Stanford L. Rev. 263. 23 The more radical point was probably, US Department of Justice, Competition and Monopoly: Single-Firm Conduct under Section 2 of the Sherman Act (2008), later withdrawn.

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From a common starting point that can be built upon those two elements, much of the enforcement of the prohibition in the US and in the EU afterwards has been divergent. 24 The assessment of the types of conduct that are forbidden under the single-firm conduct prohibition has been strongly influenced in the EU and in the US by the economic and historical context and goals of the prohibition. Despite the EU has been a great success in terms of building an internal common market across Europe, in some aspects the European markets are still fragmented, making them more prone to experience business concentration and dominant/monopolist positions than in the US and that obviously must have an impact in the enforcement of the prohibition against single-firm anti-competitive abuses.25

There has been an evolution in the enforcement of the prohibition of single-firm market abuses in both systems, but it cannot be said that it has always been a linear and logical progression. As an example, it is worth referring that, at some point, both systems have considered the relevance of the intent which inspired the monopolist/dominant’s business actions,26 despite it does not seem to be required by the prohibition, neither it seems to help much.27

Additionally, whilst in the US enforcement actions have generally required negative effects from the conduct harming consumer welfare, in the EU enforcement actions have typically followed a rather formalistic pattern, based on presumed harm to the competitive process, without the requirement to show evidence any actual market foreclosure or harm to consumers. Occasionally, when cases involved regulated industries, other goals different from consumer welfare might have been considered in the decision.28

Overall, a general statement can be made that the scope of article 102 is broader than that of section 2. Indeed, whilst in the EU dominant firms are said to hold a “special responsibility” not to

24 See D. J. Gifford & R. T. Kurdle, The Atlantic Divide in Antitrust. An Examination of US and EU Competition Policy (U. of Chicago Press 2015) 15 (“Unilateral firm conduct presents the greatest continuing transatlantic gap in law and policy”); D. D. Sokol, “Troubled Waters Between US and European Antitrust” (2017) 115 Michigan Law Review 957 (“the area of greatest cross-Atlantic discord”). 25However, it’s not possible to affirm that the scope of this prohibition (and its enforcement) is related to the trade dependence of the country, see K. N. Hylton & H. Lin, “American and European Monopolization Law: A Doctrinal and Empirical Comparison” in G. A. Manne & J. D. Wright (eds.) Regulating Innovation: Competition Policy and Patent Law under Uncertainty (Cambridge U. Press 2010) 254 and 281-282. 26 Specific intent was required in first US cases: Standard Oil, 221 U.S. 1, 61, 58, 61, 67, 75 (1911), and Judgment of 29 May 1911, United States v. American Tobacco Co., 221 U.S. 106, 181-183 (1911). But this requirement was dropped later, see United States v. Aluminum Co. of America, 148 F.2d 416, 432 (2d Cir. 1945) (“no monopolist monopolizes unconscious of what he is doing”). In the EU the assessment of some abuses is rooted in the intent of the dominant firm, see Eilmensberger (2005) 42 Common Market L. Rev. 138, 147 and 150. 27 See B. E. Hawk, “Article 82 and Section 2: Abuse and Monopolizing Conduct” (2008) 2 Issues in Competition Law and Policy (ABA Section of Antitrust Law) 875-876. 28 See Szyszczak (2009) 33 Fordham International Law Journal 1740-1742.

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impair free competition in the market,29 a similar idea is unheard of in the US. This implies that in the EU conducts that are not forbidden for ordinary firms are forbidden for those that hold a dominant position in the market. Moreover, some affirmative duties come with dominance and, thus, that some refusals to deal by the dominant firm can be considered to be unlawful (see infra §3.G). Of course, at the end this reflects a more-interventionist philosophy of EU law that does not trust the “invisible hand” of markets will solve problems coming from strong market positions, despite the risk of mistake in over-enforcement of the prohibition of abuse of dominance.30

Nevertheless, the interpretation of section 2 of Sherman Act and Article 102 of the TFEU has not been static and it has changed in time and this evolution has partially refined the scope of the prohibition of single-firm market abuses.31 Allegedly consumer welfare is also part of the enforcement picture in the EU, although one may question whether it means the same thing than in the US.32 Moreover, in recent times economic analysis has enriched discussions about the interpretation of the prohibition; it has strongly influenced enforcement in the US, and although it also has been noticed in the EU33, it

29 See ¶ 10 of Judgment of EU Court of Justice of 9 November 1983, NV Nederlandsche Baden-Industrie Michelin v. Commission Case 322/81 (ECLI:EU:C:1983:313) and ¶¶ 85 and 114 of Judgment of EU Court of Justice of 16 March 2000, Compagnie Maritime Belge Transports, Compagnie Maritime Belge & Dafra-Lines v. Commission C-395/96P and C-396/96P ( ECLI:EU:C:2000:132). In other words “A dominant firm is in effect regarded as the proverbial bull in the china shop- it must be restrained to prevent it from further damage to its already fragile surroundings” [G. Niels & H. Jenkins, “Reform of Article 82: Where the Link between Dominance and Effects Breaks Down” (2005) 26 ECLR 605]. 30 The opposite occurs in the US, where there is faith in markets self-correction (laissez-faire) and great concern about errors in enforcement, see Verizon v. Trinko, 540 U.S. 398, 414 (2004) (“Mistaken inferences and the resulting false condemnations are especially costly, because they chill the very conduct the antitrust laws are designed to protect”). 31 See T. E. Kauper, “Influence of Conservative Economic Analysis on the Development of the Law of Antitrust” in R. Pitfosky (ed.) How the Chicago School Overshot the Mark. The Effects of Conservative Economic Analysis on U.S. Antitrust (Oxford U. Press 2008) 40-50. 32 See E. M. Fox, “Monopolization and Abuse of Dominance: Why Europe is different?” (2014) 59 Antitrust Bulletin 135 and Hawk (2008) 2 Issues in Competition Law and Policy 884, 887 and 893. 33 The initial aim was to put article 102 of TFEU in the same line of article 101.3, and that was apparently one of the driving forces behind DG Competition Discussion paper on the application of Article 82 of the Treaty to exclusionary abuses (December 2005) and later of the Guidance on the Commission’s enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings (OJ C 45 of 24 February 2009, 7–20). Nevertheless, it seems that the Commission’s initiatives have fallen short of expectations, see P. Akman, “The European Commission’s Guidance on Article 102 TFEU: From Inferno to Paradiso” (2010) 73 Modern L. Rev. 605-630; H. W. Friederiszick & L. Gratz, “Hidden Efficiencies: The Relevance of Business Justifications in Abuse of Dominance Cases” (2015) 11 J. of Competition L. & Econ. 671–700; S. Bishop & P. Marsden “The Article 82 Discussion Paper: A Missed Opportunity” (2006) 2 Eur. Competition J. 1-7 and P. Marsden & S. Bishop “Article 82 Review: ‘What is Your Theory of Harm?’” (2006) 2 Eur. Competition J. 257-262.

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largely does not seem to have changed enforcement.34

3. Forms of abuse of dominance/monopolization

Taking into account all circumstances and given the position in the market of the monopolist/dominant firm, there are different actions that may be deemed forbidden by antitrust/competition law. Although there is substantial room for disagreement in the US and in the EU (and elsewhere) concerning the legality and some of these actions, it is nevertheless possible to craft a taxonomy of the different forms of conduct that may be caught by the prohibition of abuse of dominance/monopolization.

Some abuses relate to pricing as a fundamental dimension of business behaviour in the market, and as such price charged by the monopolist/dominant firm can be considered anti-competitive, for being too low, too high or discriminatory. Other abuses refer to other features of market competition different than prices, concerning either the quantity or quality of goods/services being sold or bought, or other behaviour of the monopolist/dominant firm. Of course, in practice, there may well be conducts by the monopolist/dominant firm that combine different types of individual forms of abuse.35

From another perspective, a group of abusive practices are deemed to have exclusionary effects because expel or bar from the market firms that would be able to operate at least as efficiently as the monopolist/dominant company; other group of practices are considered to have exploitative effects, because the dominant firm/monopolist apply conditions or charge prices to their customers that would be impossible if the market was truly competitive. Still from another perspective, most of conducts forbidden are market structure abuses (where the power of the dominant/monopolist is used to distort the market to its own advantage) whilst others are market power leveraging abuses, when a company uses its strong position in the market to win business in a separate market.

Although there is some consensus about some types of conduct that would be considered to fall in the prohibition in both systems, there may be disagreement of the conditions that need to be meet for it to exist. There are also conducts that nay be forbidden in the EU but are not considered illegal in the US (excessive pricing). A cursory view at the types of practices may help in getting a better perspective of the scope of the prohibition of single-firm abuses in EU competition law and US antitrust law and of the divergences therein.

34See P. Akman, “The Reform of the Application of article 102 TFEU: Mission Accomplished?” (2016) 81 Antitrust L. J. 146-208. 35 Indeed concerning pricing, different forms of rebates and pricing (linear, non-linear, selective, predatory, etc.) may end up achieving similar outcomes, see C. Ahlborn & D. Bailey (2006) “Discounts, Rebates and Selective Pricing by Dominant Firms: A Trans-Atlantic Comparison” (2006) 2/Supp. Eur. Competition J. 101-143

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3.1. Exclusive dealing

Exclusionary claims are commonly framed as either vertical restraints or abuses of dominance (acts of monopolization) by anticompetitive foreclosing upstream or downstream markets.36 When a dominant firm/monopolist enters into an agreement to be the exclusive seller or buyer of some goods in the market, this may be considered to be anti-competitive in some instances.37 It may be harmful to competition if the dominant firm/monopolist becomes an “obligatory” trading partner, locking-up customers or suppliers, excluding its rivals from selling or buying goods in the market.

However, depending on the specific markets and context in which exclusive contracts are used (coverage, duration, etc.), the contestability of the dominant/monopolist position, and taking into account customer preferences -if entry in the market by efficient firms is not foreclosed- there may be instances in which exclusive sale or purchase agreements entered by the dominant firm/monopolist are output enhancing and should not be considered an abuse and unlawful.38

In addition to section 2 of the Sherman Act, in the US exclusivity arrangements that foreclose competition or tend to create a monopoly may be forbidden by section 3 of the Clayton Act.39 However, even within the realm of this specific rule, opportunity is always provided for monopolist to defend or justify the arrangement, by showing that it has an offsetting pro-competitive explanation and that there are efficiencies in distribution/supply coming out it. Indeed, it corresponds to the plaintiff to show that an anti-competitive effect is provoked and that there is consumer harm.40

That is not the case in the EU where, despite announcements of the European Commission to the contrary, any sort of effect-based analysis of exclusive dealing arrangements on rivals’ foreclosure and

36 See J. B. Baker, “Exclusion as a core competition concern” (2013) 78 Antitrust L. J. 533-534. 37 Exclusivity can result from contractual obligation (de iure exclusivity) or from inducements not to use alternative sources (de facto exclusivity), see ¶¶34-49 of “Exclusive Dealing (Chapter 5)” in ICN (ed) Unilateral Conduct Workbook (2013). See also ICN, Report on Single Branding/Exclusive Dealing (2008). 38 See D. Ridyard, “Exclusive Contracts and Article 82 Enforcement: An Effects-Based Perspective” (2008) 4 Eur. Competition J. 579-594. 39 15 U.S.C. § 14. 40 See Judgment of US Supreme Court of 27 February of 1961, Tampa Electric Co. v Nashville Coal Co. 365 US 320 (1961) and Judgment of 3rd Circuit Court of Appeals of 24 February 2005, U.S. v Dentsply International Inc. 399 F3d 181 (3rd Cir 2005).

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consumer welfare is in practice almost non-existent,41 and the enforcement actions tend to be rather formalistic.42

3.2. Predation

When a dominant company/monopolist adopts decisions in the market that expose itself to losses it may be accused of predation. Predation would be an act of exclusion by raising rivals costs. It forecloses existing or potential competitors from the market in which the dominant/monopolist firm operates and may end up harming consumer welfare through higher prices, bad quality or less innovation.43

The most typical cases of predation concern pricing below cost,44 regarding which there is a divergent treatment in the EU and in the US.45 In the view of the EU Court of Justice there would be no benefit from its behaviour by the dominant firm unless it is to oust or eliminate competition in order to raise prices.46 Contrary to what has been held by the US Supreme Court (which considers that “predatory pricing schemes are rarely tried, and even more rarely successful”),47 the EU Court of Justice has

41 See P. Lugard, “Eternal Sunshine on a Spotless Policy? Exclusive Dealing Under Article 82 EC” (2006) 2/Suppl. Eur. Competition J. 178-184. 42 See ¶89 Hoffmann-La Roche v Commission, case 85/76 (ECLI:EU:C:1979:36). Indeed, exclusive dealing has been held unlawful even if the customer wanted to enter into such an agreement see ¶160 of Judgment of EU General Court of 23 October 2003, Van den Bergh Foods v. Commission T–65/98 (ECLI:EU:T:2003:281). 43 See, in general, ICN, Report on Predatory Pricing (2008) and OECD, Predatory Pricing (1989). 44 See A. Edlin, “Predatory pricing” in E. Elhauge (ed.) Research Handbook on the Economics of Antitrust Law, 2012, 144-173. The typical “cost measures” used in the traditional price-cost test vary in different legal systems, see “Predatory Pricing Analysis (Chapter 4)” in ICN (ed) Unilateral Conduct Workbook, 2012, 19-29. New tests have been proposed that take into account the incumbent’s efficiency, see for example A. M. Mateus, “Predatory Pricing: A Proposed Structured Rule of Reason” (2012) 7 Eur. Competition J. 243-267. 45 See Gifford &Kurdle, The Atlantic Divide in Antitrust, 83-98. 46 ¶71 of Judgment of EU Court of Justice of 3 June 1991, AZKO Chemie BV v. Commission, C-62/86 (ECLI:EU:C:1991:286). 47 See Judgment of US Supreme Court of 21 June 1993, Brooke Group v. Brown & Williamson Tobacco, 509 U.S. 209, 226 (1993) (quoting its Judgment of 26 March 1986, Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 589 (1986)). Indeed, evidence has to be shown that the monopolist had sufficient likelihood of recouping this investment after rivals were eliminated (id., 222-225).

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repeated in many instances that predatory prices are unlawful even in the case that there was not likelihood that the dominant firm would later on recoup the losses incurred.48

Although it may be more theoretical and even less frequent in practice, aside from price predation in selling below cost, it’s possible that a monopolist/dominant firm incurs in anti-competitive and unlawful conduct in its purchasing behaviour (predatory buying/bidding)49, investments in capacity,50 product design and processes of innovation.51

3.3. Discounts and Rebates

Decisions concerning discounts or rebates that monopolists or dominant firms grant to buyers of its products is another area of potential risk of exclusion and that may be caught by the prohibition of single-firm anti-competitive abuses. Initially, discounts are a form of price competition, benefiting customers, but discount policy by the dominant/monopolist firm may occasionally be found to distort competition.52

Following the discussion above concerning exclusive dealing (see supra 3.A), discounts that are granted on the condition that the customer buys all or most of its needs from a dominant/monopolist may be anti-competitive (as the buyer is restricted from freely choosing its suppliers and competitors may be prevented from entering the market).

48 See ¶44 of Judgment of EU Court of Justice of 14 November 1996, C-333/94 Tetra Pak II (ECLI:EU:C:1996:436) and ¶¶112-113 of Judgment of EU Court of Justice of 2 April 2009, France Telecom SA v. Commission, C-202/07P (ECLI:EU:C:2009:214). 49 The same likelihood of recoupment being required by US courts in case of predatory overpaying by a monopsonist, see Judgment of US Supreme Court of 20 February 2007, Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., 549 U.S. 312 (2007) because it “purchased more logs than it needed, or paid a higher price for logs than necessary, in order to prevent [Ross-Simmons] from obtaining the logs they needed at a fair price”. On this case see R. D. Blair & J. E. Lopatka, “Predatory Buying and the Antitrust Laws” (2008) Utah L. Rev. 418-469. 50 See Judgment of U.S. Court of Appeals for the10th Circuit of 3 July 2003, U.S. v. AMR Corp. 335 F.3rd 1109, 1114 (10th Cir. 2003) (through “capacity dumping”: by expanding capacity hat would not be profitable ex ante if it was not for the prospect of foreclosing competitors).

51 See Hovemkamp, Federal Antitrust Policies, 3rd Ed, 314-319 and J. Jacobson, S. Sher & E. Holman, “Predatory Innovation: An Analysis of Allied Orthopedic v. Tyco in the context of Section 2 Jurisprudence” (2010) 23 Loyola Consumer L. Rev. 1-33.

52 In general, see ICN, Report on the Analysis of Loyalty Discounts and Rebates Under Unilateral Conduct Laws (2009) and OECD, Loyalty and fidelity discounts and rebates (2002); Fidelity and Bundled Rebates and Discounts (2008).

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Not all discounts are equal, quantity rebates that depend on the volume of purchases (and transfer the purchaser the inherent cost savings of volume acquisitions) are a formula of linear pricing that are considered different from purely exclusivity rebates. In practice, however, discount schemes may be designed in a way that induces loyalty of purchasers by combining quantity and other factors, and that may lead to market foreclosure. Their antitrust assessment should take into account the market share of firm granting them, market conditions, terms of the rebates, their retroactivity and the length of their reference period.

There is divergence in how this type of loyalty arrangements is assessed in the EU and in the US.53 Whilst in the US they would not be considered anti-competitive and forbidden if there is no evidence of exclusionary purpose and market foreclosure (generally through predation), 54 the assessment in the EU is more formalistic. Although occasionally the European Commission has looked at whether there was an economic justification behind the rebate, in most instances it foregoes so and a loyalty rebate granted by a dominant firm is considered to distort competition if it prevents competitors from entering the market or it strengthens its dominance.55

Recent litigation concerning Intel’s loyalty rebates seems to depart slightly from the traditional formalism that has prevailed in the EU,56 as the Commission’s decision combines its traditional approach

53 See Gifford & Kurdle, The Atlantic Divide in Antitrust, 117-138; V. Auricchio, “Discount Policies in US and EU Antitrust Enforcement Models: Protecting Competition, Competitors or Consumer Welfare?” (2007) 3 Eur. Competition J. 373-409 and D. Crane, “Formalism and Functionalism in the Antitrust Treatment of Loyalty Rebates: A Comparative Perspective” (2016) 81 Antitrust L. J. 210 (who refers, adequately, to the EU’s “legal formalism” versus the US “economic formalism”). 54 See Auricchio (2007) 3 Eur. Competition J. 378-384 [predation was not required in the Judgment of the Court of Appeals for the 3rd Circuit of 25 February 2003, LePage v. 3M, 324 F.3d 141 (3d Cir. 2003)]. 55 See Hoffmann-La Roche v. Commission, case 85/76 (ECLI:EU:C:1979:36) Michelin I, Case 322/81 (ECLI:EU:C:1983:313), Judgment of General Court of 30 September 2003, Michelin II T-203/01 (ECLI:EU:T:2003:250); Judgment of the EU Court of Justice of 15 September 2007, British Airways plc. v. Commission C-95/04P (ECLI:EU:C:2007:166); Judgment of EU Court of Justice of 19 April 2012, Tomra Systems ASA et al v. Commission C-549/10P (ECLI:EU:C:2012:221) and Judgment of the EU Court of Justice of 6 October 2015, Post Danmark A/S v Konkurrencerådet C-23/14 (ECLI EU:C:2015:651). See also J. Kallaugher & B. Sher, “Rebates revisited: Anti-competitive Effects and Exclusionary Abuse under Article 82” (2004) 25 ECLR 264-285 and B. Lundqvist, “Post Danmark II, now concluded by the ECJ: clarification of the rebate abuse, but how do we marry Post Danmark I with Post Danmark II?” (2015) 11 Eur. Competition J. 557-573. An answer to Lundqvist question may be found in P. Ibáñez, “The Law on Abuses of Dominance and the System of Judicial Remedies” (2013) 32 Yearbook of European Law 389-431. 56 See Judgment of EU General Court of 12 June 2014, Intel Corp. v. Commission T-286/09 (ECLI:EU:T:2014:547). See Akman (2016) 81 Antitrust L. J. 179-187; A. F. Özkan “The Intel judgment: the Commission threw the first stone but the EU courts will throw the last” (2015) 11 Eur. Competition J. 69-85 and N. Petit, “Intel, leveraging rebates and the goals of Article 102 TFEU” (2015) 11 Eur. Competition J. 26-68.

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view with some economic assessment of the effects of the rebates. However, the final word on this case is still to be heard.57

3.4. Discrimination

Discriminatory treatment may involve pricing or other features of the commercial relations entered by the dominant firm/monopolist. Price discrimination means practicing different prices for different customers without a reason (i.e., not supported by cost-based or other plausible explanation). The specific context in which the dominant firm/monopolist discriminates may be relevant, for example, frequently if it is a vertically integrated firm (i.e., it operates both upstream and downstream) and, thus, discrimination may be used to disadvantage rivals in other markets.

In the US price discrimination is governed by the Robinson Patman Act (1936), 58 and despite generally may be an efficient business strategy, courts widely enforce it.59 Otherwise, it would be difficult for a monopolization claim based on section 2 of the Sherman Act to succeed.

Instead, in the EU discriminatory behaviour by a dominant firm is expressly mentioned as a type of abuse by article 102(c) TFEU.60 Selective pricing/discounting can be considered a form of price discrimination, that however maybe justified if the dominant firm uses it as a way to accommodate its offers to competitive market pressures (“meeting the competition” argument) and it does not exclusionary effects (i.e., no predation involved).61

57 Pending before the EU Court of Justice (C-413/14P). Advocate General Wahl delivered its Opinion on 20 October 2016, proposing the Court to set aside the Judgment of the General Court of the European Union of 12 June 2014. See also D. Geradin “Loyalty rebates after Intel: Time for the European Court of Justice to Overrule Hoffman-La Roche” (2015) 11 Journal of Competition L. & Econ. 579-615 and M. Marinova “Should the rejection of the “as efficient competitor” test in the Intel and Post Danmark II judgements lead to dismissal of the effect-based approach?” (2016) 12 Eur. Competition J. 387-408. 58 See 15 U.S.C. § 13. 59 See Gifford & Kurdle, The Atlantic Divide in Antitrust, 16 and 69-74. 60 See Judgment of EU General Court of 7 October 1999, Irish Sugar v Commission, T-228/97 ECLI:EU:T:1999:246 (in order to protect its high level prices in the Irish market, Irish Sugar granted different rebates to retailers in the border area between Ireland and Norther Ireland and to customers importing sugar outside Ireland, customers supplying Ireland alone were discriminated and also imports from Norther Ireland were discouraged). See D. Gerardin & N. Petit, “Price Discrimination under EC Competition Law: Another Antitrust Doctrine in search of limiting principles” (2006) 2 J. of Competition L. & Econ. 479–531. 61 See Judgment of EU Court of Justice of 27 March 2012, Post Danmark A/S v Konkurrencerådet C-209/10 (ECLI:EU:C:2012:172). See also C. Simpson, “Dominant firms and selective discounting in the EU: When is “meeting competition” a defence?” (2016) 12 Eur. Competition J. 1-27.

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3.5. Tying

Tying and bundling refer to similar practices of a firm that produces separate products but sells them under conditions that deny customers the choice of supplier for one of them.62 Tying occurs when an undertaking sells a product (tying product) on the condition that the purchaser also buys a different product (tied product) from him.63 Tying associates products that may be naturally connected but in practice are regularly bought in different markets and, thus, are considered isolatedly from the buyer’s perspective.

Tying may be abusive when a dominant/monopolist firm does it without an objective justification based on the products’ features or commercial purpose. It leverages on its dominant/monopolists market position. In practice, it may be introduced through agreement (supplier requiring to buy tied as a condition for delivery of tying product), bundled rebates (designed in a way that makes natural that both products are bought from the same supplier) and also by simple refusal to supply the tying product if the tied product is not acquired. Although, arguably tying is a strategy that forecloses the market for the tied product from competitors of the monopolist/dominant firm, there may be objective reasons justifying it (technical or safety requirements, cost-savings through economies of scale, etc.), so it should be analyzed case-by-case.

There is some consensus in the EU64 and the US65 that tying by the monopolist/dominant firm may be a potential violation of the prohibition of single-firm anti-competitive abuses (additionally, in the US section 3 of the Clayton Act may also be applicable),66 but generally firms are given the opportunity to provide objective justifications and argue efficiencies that come out of the tying

62 See, in general, “Tying and Bundling (Chapter 6)” in ICN (ed.) Unilateral Conduct Workbook, 2015 and D. W. Carlton & M. Waldman ”Tying” (2008) 3 Issues in Competition Law and Policy (ABA Section of Antitrust Law) 1859-1879.

63 See Judgment of US Supreme Court of 10 March 1958, Northern Pacific Railway Co. v. U.S., 356 U.S. 1, 5-6 (1958): “an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product, or at least agrees that he will not purchase that product from any other supplier”. 64 See Judgment of General Court of EU of 12 December 2001, Hilti AG v. Commission T-30/89 ECLI:EU:T:1991:70 (Hilti made customers purchasing its patented nail guns also purchase their nails exclusively from it), and Judgment of 14 November 1996, Tetra Pak International S.A. v. Commission C-333/94P ECLI:EU:C:1996:436 (Tetra Pak demanded its customers of equipment used for the packaging of liquid or semi-liquid food products also purchase from it the cartons which were required for manufacturing the liquid-packages). 65 See Judgment of the US Supreme Court of 1 March 2006, Illinois Tool Works Inc. v. Independent Ink Inc. 547 U.S. 28 (2006). 66 See supra n40.

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arrangement.67 However, there was disagreement between the US and the EU concerning whether software bundling by Microsoft was unlawful.68

3.6. Price or Margin-squeezes

Vertically integrated dominant/monopolist firms may incur in an anti-competitive and abusive conduct if they overprice the intermediary products sold to competitors in a downstream product market favouring its own sales in the end-product market and eliminating competition of existing competitors or of potential new entrants. This behaviour has been found to prevail in industries where the dominant/monopolist holds control of assets or goods that are needed by other firms to operate in a downstream market. The dependence from dominant/monopolist firms in many telecommunications markets across the EU has led to several cases in which they were found to have squeezed other firms trying to access and use their networks.69

In order to find a margin-squeeze it’s necessary to look at the wholesale price charged by the dominant/monopolist and at the retail prices in the end-product markets. If the margin between them is so small that any efficient competitor could not profit, an abusive and unlawful conduct has been committed.70

67 See D. S. Evans & A. J. Padilla, “Designing Antitrust Rules for Assessing Unilateral Practices: A Neo-Chicago Approach” (2005) 72 U. Chicago L. Rev. 88-97.

68 Bundling of its operative system and other programs (media player, internet explorer) Compare Judgment of the Court of Appeals for the District of Colombia Circuit of 28 June 2001, United States v. Microsoft Corp. (253 F.3d 34 (D.C. Cir. 2001) and Judgment of the EU General Court of 17 September 2007, Microsoft Corp. v. Commission T-201/04 (ECLI:EU:T:2007:289). See also Gifford & Kurdle, The Atlantic Divide in Antitrust, 161-195; K. Kühn, R. Stillman & C. Caffarra “Economic Theories of Bundling and Their Policy Implications in Abuse Cases: An Assessment in Light of the Microsoft Case” (2005) 1 Eur. Competition J. 85-121 and J. F. Ponsoldt & C. D. David, “Comparison between U.S. and E.U. Antitrust Treatment of Tying Claims against Microsoft: When Should the Bundling of Computer Software Be Permitted” (2007) 27 Northwestern J. International L. & Business 421-451.

69 See Deutsche Telekom case (Judgment of EU Court of Justice of 14 October 2010, Deutsche Telekom AG v. Commission C-280/08P ECLI:EU:C:2010:603) and Telefónica (Judgment of EU Court of Justice of 10 July 2014, Telefónica S.A. v. Commission C-295/12P ECLI:EU:C:2014:2062). In these cases the EU Court of Justice confirmed that the abuse existed despite there was regulatory supervision and approval of prices (as the companies still could independently adopt their pricing decisions). 70 Judgment of EU Court of Justice of 17 February 2011, Konkurrensverket v TeliaSonera Sverige AB C-52/09 (ECLI:EU:C:2011:83).

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In contrast to the situation in the EU, 71 these type of claims are not generally successful in the US,72 where they are frequently considered “meritless”, 73 as there is an initial assumption that the monopolist does not have a duty to deal with its rivals (see infra §3.G).

3.7. Refusals to deal

A general rule is that businesses are free to manage their property and to choose their contracting partners, as this gives them proper incentives to invest and innovate, but on some occasions monopolist/dominant firms decisions not to share its resources (physical and also intangible like IP) or not to contract with other firms may be deemed anticompetitive and unlawful.74

The divergence between the EU and the US enforcement paths concerning this type of conduct is nowadays rather acute. Although in the past there were a few cases in which the US Supreme Court considered refusals to deal a violation of Section 2 of the Sherman Act,75 that is not the case anymore.76

Instead, in the EU refusals to supply old or new customers by a dominant firm may be considered abusive (a refusal would exist also if the price or terms offered by the dominant firm are such that it is clear that the customer cannot accept them).77 In practice this entails the imposition to dominant firms 71 For an early example of price-squeezing in the sugar industry, where British sugar was found to have used its dominant position to drive Napier Brown out of the U.K. retail market (by squeezing the margin that Napier would obtain in retailing) see Decision of European Commission of 18 July 1988 (IV/30.178 Napier Brown-British Sugar). 72 See G. G. Hay & K. McMahon, “The Diverging Approach to Price Squeezes in the United States and Europe”(2012) J. of Competition L. & Econ. 259-296; J. B. Meisel “The Law and Economics of Margin Squeezes in the US versus the EU” (2012) 8 Eur. Competition J. 383-402; G. Faella & R. Pardolesi, “Squeezing Price Squeeze Under EC Antitrust Law” (2010) 6 Eur. Competition J. 255-284 and L. Colley & S. Burnside, “Margin Squeeze Abuse” (2006) 2/Suppl. Eur. Competition J. 185-210. 73 Judgment of US Supreme Court of 25 February 2009, Pacific Bell Telephone Co. v. linkLine Communications, Inc., 555 U.S. 438, 452 (“nothing more than an amalgamation of a meritless claim at the retail level and a meritless claim at the wholesale level. If there is no duty to deal at the wholesale level and no predatory pricing at the retail level, then a firm is certainly not required to price both of these services in a manner that preserves its rivals’ profit margins”). 74 See, in general, ICN, Report on the Analysis of the Refusal to Deal with Rivals under the Unilateral Conduct Laws (2010). 75 See Judgment of the US Supreme Court of 19 June 1985, Aspen Skiing Co. v. Aspen Highlands Skiing Corp. 472 U.S. 585 (1985). 76 See Verizon v. Trinko, 540 U.S. 398, 407-411 (2004), affirming that the monopolist has no antitrust duty to share its telecommunications infrastructure with rivals. 77 See Judgment of EU Court of Justice of 6 March 1975, ICI Spa & Commercial Solvens Corp. v. Commission, joined cases 6-7/73 ECLI:EU:C:1974:18 (concerning the refusal by Commercial Solvens to supply aminobutanol

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of an affirmative duty to deal and contract with its customers. This is even clearer if the assets of the dominant firm are considered to be “essential facilities” that are needed by any undertaking that wants to compete in the market (f.e., seaports, airfields and networks). EU law has developed a doctrine under which access to these indispensable “bottleneck” resources will need to be provided by the dominant incumbent or otherwise it would be found to have abused its dominant position.78 Although there have been cases in the past that provided grounds from claiming access to essential facilities in the US, the scope of this doctrine nowadays is very narrow, if not inexistent.79

3.8. Excessive Prices

If dominant/monopolist firms charge excessive prices to their customers this is a form of exploitation that may be considered an anti-competitive abuse.80 Indeed, charging too high prices has been considered to be an abuse of dominance in the EU, but this is not the case in the US.81 In US law this is considered not to be a viable business strategy, as the high prices will attract new competitors that will lead prices down.82

In the EU, despite this is expressly listed in article 102(a) TFEU as a type of abuse (as unfair pricing), there have not been many cases of excessive pricing83 (though the situation may be different at Member State level), and it is not easy to find out and determine when the prices charged by a dominant

-an ingredient for a drug to treat tuberculosis- to the Italian firm Zoja, which competed with a subsidiary of Commercial Solvens in the downstream market). See R. Incardona, “Modernisation of Article 82 EC and Refusal to Supply: Any Real Change in Sight?” (2006) 2 Eur. Competition J. 337-369. 78 See Judgments of EU Court of Justice of 26 November 1998, Oscar Bronner GmBH & Co. KG v. Mediaprint C-7/97 (ECLI:EU:C:1998:569); of 6 April 1995, RTE & ITP v. Commission C-241/91P and C-242/91P (ECLI:EU:C:1995:98) and of 29 April 2004, IMS Health GmbH & Co. OHG v. NDC Health GmbH & Co. KG., ECLI:EU:C:2004:257 and Microsoft Corp. v. Commission T-201/04 ECLI:EU:T:2007:289. Quite paradoxically, the European “essential facilities” doctrine was imported from US law, see Szyszczak (2009) 33 Fordham International Law Journal 1760. 79 See Hovemkamp, Federal Antitrust Policies, 3rd Ed., 309-313. 80 In general, see OECD, Excessive Prices (2011). 81 See M. S. Gal, “Monopoly pricing as an antitrust offense in the U.S. and the E.C.: two systems of belief about monopoly?” (2004) 49 Antitrust Bulletin 343-384. 82 Verizon v. Trinko, 540 U.S. 398, 407 (2004) (“The opportunity to charge monopoly prices – at least for a short period – is what attracts 'business acumen' in the first place; it induces risk taking that produces innovation and economic growth”). 83 See Decision of the European Commission of 23 July 2004 (COMP/36.568, Scandlines Sverige AB v Port of Helsingborg).

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firm would be considered excessive. 84 There is controversy on the scope and requirements of the prohibition of excessive pricing by dominant firms; it will generally involve a very strong dominant position (super-dominance) and a market with high and long-lasting entry barriers. The assessment of excessive pricing looks at the prices in contrast to the costs and profits of the undertaking, the prices of competing products in the same or a comparable relevant markets and the economic value of the product in comparison with its price.85

4 . Conclusion

This article has looked at the common grounds and divergent features of the prohibition of unilateral anti-competitive conduct in EU competition law and US antitrust law. The differences in the conception of single-firm anti-competitive abuses in the two leading jurisdictions in competition/antitrust law worldwide are contrasting and its analysis illustrates well different ideas on the role and goals of legal intervention may have in the treatment of business behaviour by monopolist/dominant firms.

Looking at the different types of actions that have been caught by the prohibition of single-firm abuses shows an evolution in how US law and EU law tackle business actions by dominant/monopolist firms that may be anticompetitive, and such evolution may not always have followed a consistent path. Although slogans concerning the protection and enhancement of consumer welfare abound in both systems, beneath them lies an inherent tension concerning the role market forces and competition enforcers should play in dealing anti-competitive actions by dominant/monopolist firms.

Under the heading of protecting market competitiveness, a more interventionist approach is followed in the EU and little opportunity is provided for businesses to argue the justifications or efficiencies that may come from their actions, enforcement decisions mostly follow legal formalism (some practices being condemned abusive in themselves because they were adopted by a dominant firm). On the other hand, the US treatment of potential monopolization is inspired in the disbelief on the role and decisions by enforcers (and remedies) may play in curving potential abuses of market power and in the concern on the dangers of chilling business competition and innovation in the markets. With that background, non-intervention is the preferred solution unless there is clear evidence of market foreclosure and/or consumer harm.

84 See Judgment of EU Court of Justice of 14 February 1978, United Brands Co. v. Commission, case 27/76 (ECLI:EU:C:1978:22) (defining it when it has “no reasonable relation to the economic value of the product” ¶250). 85 See L. Hou, “Excessive Prices Within EU Competition Law” (2011) 7 Eur. Competition J. 47-70 and M. Furse, ”Excessive Prices, Unfair Prices and Economic Value: The Law of Excessive Pricing Under Article 82 EC and the Chapter II Prohibition” (2008) 4 Eur. Competition J. 59-83

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