The “Effects-Based” Approach of the Commission to the Application of Article 82 to Exclusionary Abuses: Is the New Approach Really Economics Friendly?

Abstract: The purpose of this thesis is to criticize the Commission’s approach to the application of Article 82 to the exclusionary abuses of the dominant firms. It is a very interesting and hot topic as the attitude of the Commission and the European Courts have many implications on the consumer welfare and total efficiency in common market and innovation capacity and the economic development of the European Union. The old approach of the Commission towards the Article 82 has been criticized harshly as it does not utilize the new economic theories and the analysis used by the Commission and the European Courts was based on the formalistic definition of the abuses rather than the actual effect of the conduct on efficiency and consumer welfare. The new economic theories suggest that the exclusionary conducts of the dominant firms which are defined as abuse under the formalistic approach are actually efficiency and consumer welfare enhancing. Therefore, the intervention of the Commission in this area protects the competitors while it actually hampers the consumer welfare, efficiency and competition in the EU. This has affected the economic performance of the EU and the Commission was blamed because of its significant intervention in the business activities of the dominant firms. After all these criticisms, the Commission decided to modernize the approach towards the application of Article 82 to the exclusionary conducts. Therefore, the Commission published a Discussion Paper in December 2005 which aims to bring an effects-based and economics friendly approach to the exclusionary conducts of the dominant firms. The Commission put the interests of the consumers and the efficiency consideration over the interests of the competitors. The efficiency and consumer welfare enhancing role of the exclusionary conducts and the importance of focusing on the actual effect on the market instead of the formalistic definitions of the conducts are stressed in the Discussion Paper. However, the analysis proposed by the Commission was actually in line with the formalistic approach while the focus was on the anti-competitive effects of the exclusionary conducts of the dominant firms. This thesis will show that the Commission actually failed to bring an economics-based analysis in the application of Article 82. Three years after the Discussion Paper, the Commission published a Guidance Paper for an improvement in the formalistic approach but it is mostly inline with the Discussion Paper.