TY - JOUR AB - Abstract Judges are faced with great challenges when judicial review is carried out in a complex economic environment, such as that concerning the application of competition law, as they are required to turn economic theories into clear and predictable legal criteria. Traditionally, the Court of Justice has taken a careful approach as to the scope and intensity of its own review of the Commission’s decisions in complex economic matters. As more sophisticated economic analysis has been developed to fully grasp the impact of the conduct of undertakings on the market, the EU courts have progressively felt the need to strengthen their scrutiny in competition cases. The recent judgment in Intel is an important step, albeit limited, in this regard. Notwithstanding, the Court of Justice has always been most reluctant to replace its own assessment of facts for the complex assessments of an economic nature made by the Commission, and has never withdrawn from the strict conception of its powers of review on appeal. I. Introduction It is common ground that competition law is a complex field. I approached this field of law in different capacities—as an academic, a practitioner, and a judge—and I am still trying to understand why its complexity looks so different when it is apprehended in one of those capacities as compared to the others. My own experience makes me think that the difference may be expressed in three propositions. For academics, competition law is a source of joy and inspiration—the more complex the problem, the more rewarding its resolution. For practitioners, it is an opportunity for self-fulfillment and professional achievement—ironically, both success and defeat may be a source of revenue, at least in the short term. But I think that, for judges, things might be more complex: the first task (or at least the first temptation) of a judge, confronted with the need to decide on the application of competition law in a complex economic environment, is to simplify the operation and, for that purpose, to categorize and search for precedents that every class of conduct could properly fit in. If things are more complex for judges, they may well be harder for academics and particularly nasty for practitioners. How does it work for judges? II. The traditional approach to judicial control in complex matters and its evolution Although it is true that lawyers traditionally tend to dislike mathematics, judges normally abhor a vacuum when confronted with the lack of a clear formal category in which to classify the conduct he/she has to appraise. It is therefore no surprise that, for a number of years, the Court of Justice has taken a careful approach as regards the scope and the intensity of its own review of the Commission’s decisions in complex economic matters. As early as 1966, the ECJ stated in Consten and Grundig1 that for the purpose of applying Article 85(1)(3) EC (now Article 101(1)(3) TFEU), ‘the exercise of the Commission’s powers necessarily implies complex evaluations on economic matters. A judicial review of these evaluations must take account of their nature by confining itself to an examination of the relevance of the facts and of the legal consequences, which the Commission deduces therefrom.’ This approach has, in substance, been confirmed by the Court in Remia2 and, in the field of merger control, in Kali und Salz,3 as well as by the CFI (the former Court of First Instance, now the General Court) in Cartes Bancaires4 as regards former Article 85(3) EC. It was thus clear from the outset that the Court conceived its role in competition matters as one of a mere review of legality and not (except as regards the imposition of fines) one of unlimited jurisdiction or review of the merits. In a similar vein, in Consten and Grundig, the Court, interpreting Article 101(1) TFEU, ruled that there is no need to take account of the concrete effects of an agreement once it appears that it has as its object the prevention, restriction, or distortion of competition. It must, however, be borne in mind that while Article 101(1) TFEU expressly distinguishes between the ‘object’ and the ‘effect’5 of an agreement, as a possible source of distortion of competition, Article 102 TFEU, on abuses of dominant position, ignores such a distinction. The CFI in Michelin II6 expressed this tension in a somewhat different way: ‘for the purposes of applying Article [102 TFEU], establishing the anti-competitive object and the anti-competitive effect are one and the same thing […]. If it is shown that the object pursued by the conduct of an undertaking in a dominant position is to limit competition, that conduct will also be liable to have such an effect’.7 I hesitate to consider this to be the best way to present the issue—or the tension between ‘object’ and ‘effect’—as regards Article 102 TFEU. In that regard, I would rather quote the judgment of the ECJ in AKZO,8 where the Court held that a pricing practice of a dominant undertaking9 must be regarded as abusive if it is determined as part of a plan for eliminating a competitor. A comparison may possibly be drawn between such reference to a ‘plan’ in AKZO and the statement in Tomra10 that, where the Commission undertakes an assessment of the conduct of a dominant undertaking as a prerequisite of a finding of an abuse, it must assess the ‘business strategy’ pursued by that undertaking, including, as the case may be, subjective factors, namely the motives underlying that strategy.11,12 Be as it may, the approach initially followed by the ECJ was widely criticized as being a ‘formalistic’ one. Of course, opposing ‘form’ to ‘substance’ as regards the application of Article 102 TFEU tends to entail a supplementary difficulty for those who may be entrusted with such a task. This is all the more so when you are aware that, in a modern economy, the progress of economic science shows that more sophisticated analysis techniques are required in order to fully grasp the impact that a certain conduct may have on the structure of competition in a given market.13 The boundaries of traditional thinking may therefore no longer be adapted to the complexity of the problems. The magic words are then “a more economic approach”, an “economics based approach” or even an “effects based approach”. True, the two EU courts have progressively strengthened the conditions of their review and developed a more intense scrutiny in competition cases. Examples of that are the initial case-law of the CFI regarding cartels, such as Polypropylene, PVC, LDPE, Cement, or the subsequent Article 102 cases, such as Tetra-Pak or Microsoft, where that Court went quite a bit further in reviewing the facts and the elements of proof as well as the consistency of the legal and economic analysis underlying the Commission’s decisions. And if one considers the extent of judicial review applied by the EU judicature in merger control cases, things become even more evident, in particular as regards the ‘new generation’ of judicial review implemented by EU courts after the European Commission ventured into unexplored territories in this field, by using somewhat hazardous legal or economic theories. Suffice it to recall the ‘annus horribilis’ of 2002, where the Commission saw its decisions annulled by the CFI in the Airtours/First Choice, Tetra Laval/Sidel and Schneider/Legrand cases. As the EU courts have held,14 although the Commission has a margin of discretion with regard to economic matters, such discretion is never unlimited and the courts must not refrain from reviewing the Commission’s interpretation of information of an economic nature. As Advocate General Poiares Maduro put it, when the exercise of the Commission’s powers under the rules of competition involves complex economic appraisals, the EU courts must respect this by limiting their review of such appraisals; nevertheless, that review is a complete review of legality in the sense that it extends to all the defects normally examined by those courts in the context of an action for annulment.15 This allows the courts to go far enough in verifying the legality of the Commission’s decisions in competition cases. In this regard, I agree with Advocate General Poiares Maduro that it is not the extent or the scope of the review that is limited, but its depth. Indeed, the Court has always vigorously refused to substitute its own assessment of the facts for the assessment made by the Commission or any other EU authority, whenever the latter are called upon, in the performance of their duties, to make complex assessments of an economic, scientific or technical nature.16 Much less is it appropriate for the EU judicature to substitute its own preferences for those of the Commission in establishing the goals and the means of a competition policy, insofar as the Commission, which the Treaty has, alone, entrusted with that task, complies with the objectives and the limits set by the Treaty and the EU legislature. Similarly, as regards the extent of its review on appeal of the judgments of the General Court, the Court of Justice never withdrew from the strict conception of its powers imposed by the Treaty (Article 256 TFEU) and the Statute (Article 58), with the result that it is not for the Court of Justice to substitute, on appeal, its own assessment for that of the General Court.17 Indeed, an appeal is limited to points of law; assessment of the facts does not constitute, save where there may have been distortion of the facts or evidence, a question of law submitted as such for review by the Court of Justice. III. The Judgment of the ECJ in Intel All those elements and considerations underlie the recent judgment of the Court of Justice (September 2017) in Intel.18 I believe this judgment constitutes an important—albeit limited—step made by the Court in strengthening its judicial control as regards the application of Article 102 TFEU. Let’s go back to the origins. In its well-known judgment of 1979 in Hoffman-La Roche,19 the Court held, in substance, that an undertaking in a dominant position, which, even without tying the customers by a formal obligation, applies, either under the terms of an agreement or unilaterally, a system of loyalty rebates or discounts conditional on the customer’s obtaining all or most of its requirements from that undertaking, abuses its dominant position within the meaning of Article 102 TFEU, whether the quantity of purchases be large or small. This per se or quasi per se approach was subjected to a wide array of criticisms among both scholars and practitioners for being excessively formalistic and not in-line with the teachings of economics.20 Such shortcomings led Damien Geradin21 to suggest, regarding Intel’s appeal of the General Court’s decision, that it was ‘great time for the Court of Justice to abandon the application of a quasi-per se rule of illegality approach to exclusive dealing and loyalty rebates and replace it by a structured rule of reason analysis’. Alison Jones22 also wrote that the General Court’s decision ‘has been a particular disappointment to those promoting a need for a transitional and more modernized approach to Article 102’.23 No surprise that the Court’s decision on appeal was awaited with considerable expectation! Moreover, the Court decided to refer the case to the Grand Chamber, which is quite uncommon regarding competition cases. Just consider the importance of the three issues on which the Court ruled24 and compare the ruling with Advocate General Wahl’s opinion: you will certainly easily understand why the Court took such a procedural course. IV. The modus operandi of the ECJ This warrants a brief explanation of the process by which, in practice, the EU judiciary ‘builds up’ its case-law. In fact, unlike in common law jurisdictions, EU case-law is not based on the binding character of precedent. It is true that the Court of Justice (and the General Court as regards its own case-law) rarely makes a clear break from its previous line of case-law. But, in our system, past decisions are authoritative as a model and source of inspiration that guarantees a line of continuity and coherence indispensable for legal certainty. However, the Court takes each case on its own merits and does not purport to lay down a rule to be followed inexorably by other judgment formations of the same size and level in future cases. In particular, every composition of the Grand Chamber retains its autonomy to make a decision on the basis of the legal and factual circumstances of the case and the assessment carried out by its members. The Court is a judicial body whose mission consists in interpreting EU law and dispensing justice when required by a national court or by an applicant entitled to bring an action, be it a Member State, an EU institution or a private person. The Court does not set its own agenda and, in fact, it does not have a political or ideological agenda to promote. The case-law is therefore arrived at step by step, according to the merits of each specific case. The way the Court necessarily operates helps to explain why one may sometimes feel that the Court did not always follow an unambiguous line of reasoning in judgments concerning the same field of competition law. It may simply happen that time have not yet come for certain developments. The collegiate and confidential process of decision-making contributes to ensuring the independence of the judicial body, at the same time as it guarantees that different conceptions are confronted. Therefore, do not expect to find in the Court’s case-law a monolithic body of jurisprudence obeying a single pattern of decision-making or a unique conception of the law. Admittedly, the Court is able to rely on a wealth of case-law that serves as a guide and beacon: any departure from a well-established line of case-law must be transparent, duly motivated, well-reasoned, and respectful of legitimate expectations. But in a fast moving world, judges must also permanently listen to changes in the social, economic, technical, and political environment. How could it be different in the digital age, in a time of globalization and in a knowledge and information-based society? The same holds true as regards the evolution of economics as applied to competition law and policy. Nobody can deny the progress made in the economic analysis of competition matters in the last forty years! V. Turning back to Intel In its judgment on appeal in Intel, the Court of Justice acknowledged that the Hoffman-La Roche case-law should be further clarified. This does not happen very often. Incidentally, it happened again two months later in another Grand Chamber case of constitutional importance, MAS and MB, better known as Taricco II.25 In its judgment at first instance, the General Court had distinguished three categories of rebates26: (i) quantity rebates, linked solely to the volume of purchases made from the dominant undertaking, which are deemed to reflect efficiency gains and economies of scale; (ii) exclusivity rebates, the grant of which is conditional on the customer’s obtaining all or most of its requirements from the dominant undertaking, which should be deemed incompatible with the objective of undistorted competition in the internal market;27 (iii) other rebate systems or fidelity-building or fidelity-inducing28 rebates, a third category of rebates not linked to an exclusive or quasi-exclusive supply but including, notably, rebates depending on the attainment of individual sales objectives, which should be deemed to constitute an abuse of dominant position only after examining all the circumstances surrounding them.29 In the case under review, the General Court found that the rebates30 and payments granted or made by Intel were conditional on an exclusivity or quasi-exclusivity clause as regards the purchaser’s requirements. Then, the General Court, basing its findings on Hoffmann-La Roche and on its own interpretation of Michelin, British Airways and Tomra, pointed out, at paragraphs 80 and 84 of its judgment, that, contrary to Intel’s claim, the question whether an exclusivity rebate can be categorized as abusive does not depend on an analysis of the circumstances of the case aimed at establishing a potential foreclosure effect; only in the case of rebates in the third category would it be necessary to assess all the circumstances.31 The General Court justified its approach by stating that exclusivity rebates granted by an undertaking in a dominant position are, by their very nature, capable of restricting competition and foreclosing competitors.32 In the General Courts’ view,33 the capability of tying customers to the undertaking in a dominant position was thus inherent in exclusivity rebates. In the appeal before it, the Court of Justice was strongly invited, both by the applicant Intel and by Advocate General Wahl in his Opinion, to reject the idea that some types of conduct of a dominant undertaking, such as so-called exclusivity rebates, must be deemed inherently anticompetitive or anticompetitive per se, without considering the relevant circumstances, in particular the likelihood that the rebates might restrict competition. As we know, the Court of Justice did not uphold the General Court’s approach on that point. However, in quashing the General Court’s ruling, the Court of Justice did not merely rely on a general statement; in particular, it did not explicitly blame, as a matter of principle, the findings of the first instance Court concerning the ability of exclusivity rebates to constitute an infringement per se. Actually, the Court of Justice explained34 the need for clarification of the case-law with the fact that, during the administrative procedure, the undertaking concerned had submitted, on the basis of supporting evidence, that its conduct was not capable of restricting competition and, in particular, of producing the alleged foreclosure effects. The Court notably found35 that if, in a decision finding a rebate scheme abusive, the Commission after all carries out an analysis of the capacity of the practice to foreclose competitors as efficient as the dominant undertaking, the General Court must then examine all of the applicant’s arguments seeking to call into question the validity of the Commission’s findings.36 As the Court stressed at paragraph 142 of the judgment, while the Commission emphasized, in its decision, that the rebates at issue were by their very nature capable of restricting competition with the result that, in particular, an AEC—As Efficient Competitor—test was not necessary,37 it nevertheless carried out an in-depth examination of the relevant circumstances and set out, in the decision, a detailed analysis of the AEC test.38 However, the Court of Justice did not take a position on whether the application of an AEC test was, in itself, necessary or not in the case at stake.39 Yet, since that test had played an important role in the Commission’s assessment, the Court of Justice finally held40 that the General Court was required to examine all of Intel’s arguments concerning the AEC test. As, in its examination of the circumstances of the case, carried out for the sake of completeness, the General Court attached no importance to the AEC test carried out by the Commission and, accordingly, did not address Intel’s criticisms of that test,41 the Court of Justice set aside the judgment of the General Court.42,43 VI. Drawing inferences from Intel That being said, I think it is fair to hold that it was the fundamental premise, adopted by the Commission and upheld by the General Court, that an examination of all the circumstances was not necessary to conclude that a system of exclusive rebates was capable of restricting competition in breach of Article 102 TFEU, that led the Commission and subsequently the General Court to wrongly fail to take into consideration Intel’s line of argument seeking to expose alleged errors committed by the Commission in the application of the AEC test.44 That “fundamental premise” finally tainted the assessment made by the General Court of the Commission’s handling of that case. Indeed, it is implicit in the rebuke of the contested judgment by the Court of Justice that, had the General Court made a complete assessment of the Commission’s findings as regards the AEC test, the result could have been different. I admit that it might not be entirely clear what, in the future, will be the attitude of the EU judicature in each case as regards the competitive assessment of a system of so-called exclusivity rebates. But I think the regulator would be well advised in the future not to expect any special indulgence for relying on a presumption of any kind of infringement per se of Article 102 TFEU when seeking to prove the anticompetitive character of such a system. Indeed, it would be odd to submit the European Commission to a stricter test when it carries out an analysis of all the circumstances than if it simply had relied on a per se infringement approach! VII. This is not a revolution … That said, I do not think that Intel brings about any revolution in the way the Court of Justice looks at the conduct of a dominant undertaking and at the Commission’s obligations in order to determine whether such conduct is abusive. First of all, it is interesting to note that already in Hoffmann-La Roche, the Court reached its conclusion that a system of exclusivity or quasi exclusivity rebates, such as the one in question in that case, is abusive, save in exceptional circumstances, only after carrying out a thorough analysis of the legal, contractual and economic context (‘all the circumstances’) of the practice in order to conclude that it had the ability to foreclose competitors. Secondly, in Intel, the Court reiterated settled case-law in stating that it is in no way the purpose of Article 102 TFEU to prevent an undertaking from acquiring on its own merits the dominant position on a market. It also confirmed that that provision does not seek to ensure that competitors less efficient than the dominant undertaking should remain on the market.45 Therefore, not every exclusionary effect is necessarily detrimental to competition, as a result of which less efficient and less attractive competitors may be forced to leave the market.46 I believe such statements are useful for clarifying what the Court considers to be the major goal of EU competition rules, which the Commission has articulated as being ‘to protect competition on the market as a means of enhancing consumer welfare and of ensuring an efficient allocation of resources’.47 As Professor Jones put it,48 ‘the case-law of the EU courts does not unambiguously endorse’ that view. Rather it sometimes also placed emphasis on the interests of competitors or individual undertakings.49 I do not think this a serious defect: although perhaps not always 100 per cent consistent, the case-law places in general sufficient emphasis on consumer welfare as a goal.50 The fact that the General Court in its judgment in Intel held51 that a foreclosure effect occurs not only where access to the market is made impossible for competitors, but also where that access is made more difficult, although criticized,52 does not seem to me to have led so far to serious practical shortcomings. In paragraph 31 of Post Danmark II, for instance, the Court explicitly linked the capacity to produce an exclusionary effect to making market entry very difficult or impossible for competitors of the undertaking in a dominant position. Of course, the objective (or the result) of the competition process is to make life harder for any operator on the market, forcing it to be more efficient—which in general does not happen with monopolists.53 Thirdly, the meaning of the expression ‘all the circumstances’ was not further clarified in Intel. We can thus, in my view, rely on the Post Danmark II listing of factors, in which the Court stressed the importance of taking into account not only the criteria and rules governing the grant of the rebate,54 already mentioned in Michelin (para 73) and in Tomra (para 71), but also the extent of the dominant position and the particular conditions of competition prevailing on the relevant market.55,56 This of course does not mean that the requirement to examine ‘all the circumstances’ should lead to the same investigative efforts in all cases. On the contrary, it is quite clear that so-called exclusivity or quasi-exclusivity rebates offered by a dominant undertaking are, by their very nature, capable of leading to a finding of an infringement in a larger number of cases, as the likelihood of having foreclosing effects are generally high. Some57 may be tempted to claim that, in so doing, we are in fact coming close to establishing a presumption of anticompetitive behaviour when such a rebate system is at issue. I am not sure if this is the best reading of the situation. That was not, in any case, the path explicitly taken by the Court. But, first, as regards presumptions, we should always bear in mind Professor Jones’ reminder that ‘presumptions of illegality should be applied only if empirically grounded in economics and the objectives underpinning the rules’.58 Secondly, were we indeed to regard the ECJ’s judgment in Intel as establishing a presumption or quasi-presumption, it would always be a rebuttable one. As the Court confirmed in its judgment (paragraph 140), a system of rebates, which, in principle, falls within the scope of the prohibition laid down in Article 102 TFEU, may be objectively justified and it has to be determined whether the exclusionary effect arising from such a system may be counterbalanced, or outweighed, by efficiency gains for the consumer.59 However, the Court stopped short of admitting that the absence of anticompetitive effects could contribute to justifying the practice. In any case, the Court made it clear that, contrary to the applicant’s submission before the General Court,60 it is not necessary to examine whether the practice in question did actually produce its intended exclusionary effects on the market. Indeed, it follows namely from paragraphs 140 and 143 that the Court only requires that the conduct of the dominant undertaking is capable of, or liable to, or tends to, with a sufficient degree of probability, restrict or distort competition in the market and foreclose potential competitors or force actual competitors to leave the market place.61 Thirdly, be it as it may, the ECJ also made it clear that the balancing of favourable and unfavourable effects on competition of the practice in question can be carried out only after the analysis has shown the intrinsic capacity of that practice to foreclose competitors that are at least as efficient as the dominant undertaking. I think this is nothing more than the correct apportionment of the burden of proof between the Commission and the defendant. The specificity of a system of rebates that includes an exclusivity clause is that once the Commission has discharged its duty to establish the likelihood of anticompetitive conduct, the hurdles will be particularly high for the latter when trying to rebut the Commission’s findings.62 However, the profound meaning of this appears to be that, as regards a discount system, there is no such thing as a category of rebates, which would be deemed to automatically constitute an abuse per se that would render unnecessary an examination of ‘all the circumstances’ of the case before reaching a finding of abuse. VIII. The importance of the procedural context The Court’s approach in Intel is therefore not tantamount to fundamentally reversing or departing from previous lines of case-law. This is all the more so as a number of contentious issues discussed before the General Court and debated in the legal literature did not require an answer in the Court of Justice’s judgment. I just mention63 the distinction made by the General Court, in paragraph 99 of the contested judgment, between exclusivity rebates and ‘mere’ pricing practices, which, unlike an exclusive supply incentive, could not be deemed unlawful in themselves. The Court of Justice in its judgment64 simply referred to ‘pricing practices that have an exclusionary effect’. All that is hardly surprising if we take into consideration the procedural context within which the Court of Justice fulfils its mission. In an appeal against a decision of the General Court, the Court of Justice is bound to accept the limits of the dispute as they have been set by the applicants. The Court cannot ‘invent’ new grounds of appeal that have not been raised by the applicants. It simply has to give an answer to the pleas raised and the arguments advanced in support thereof. Therefore, one should not expect the Court always to seize the opportunity to make big pronouncements on great questions of principle! In a way, this clearly distinguishes its role and position in direct actions, mainly in appeals against decisions of the General Court, from references for preliminary rulings, where the Court, albeit limited by the questions raised by the referring national Court, is considerably freer to choose the angle of approach and even to reformulate the questions put by the national court. IX. Conclusion It is now time to come to an end. Given the progress made along the years by economic science, including econometric models, the relations between law and economics have become, not only in the United States, but also in Europe, more intricate. I think that the best way forward should follow the path, if not of a marriage for love, at least of a marriage of convenience or even of necessity. In this context, the great challenge for the jurist, and in particular, for the judge, is to turn economic theories into solid legal criteria, capable of securing the clarity of the concepts and their adaptability to a complex reality, as well as to enhance legal certainty and predictability in the application of the law.65 In any case, it is crucial that the interpretation of the rules and principles in this field are based on sound economic principles, requiring the courts to be finely attuned to economic realities and to have a good command of basic economic concepts. Nevertheless, the dividing line between margin of appreciation and duty to review is sometimes very thin, which makes it more difficult to maintain the consistency of the case-law in all circumstances. Courts, however, have an arsenal of legal weapons available to them in this challenge. The most obvious are the rules on the burden of proof.66 A fine example of how to use them is given in paragraphs 66 and 67 of the judgment of the General Court in Intel. That being so, it is for the parties to convey to the Court the necessary expert evidence capable of, at least, casting a doubt on the Commission’s assumptions. This cannot be done on the basis of an ideologically biased choice. It must be convincing since it is always delicate for the Court (in the first place, the General Court) to choose between two economic approaches of similar credibility. As a great French economist put it in a debate that I listened to on the radio in Paris 40 years ago, economic science is as neutral as a machine gun: both will answer to those who know how to handle them. This might not be very different from what happens in a legal analysis. But I think that that constitutes a further reason for the courts of law, and not economists, to take the final decision. This article is an extended version of the lecture given at the King’s College, London, on 14th December 2017, at the invitation of Professor Alison Jones. The opinions expressed in this text represent the personal position of the author and in no way are attributable to the institution of which he is a member. Footnotes 1 Joined cases 56 and 58/64, Établissements Consten and Grundig-Verkaufs v Commission, EU:C:1966:41, ECR, 343, 347. 2 In Case 42/84 Remia v Commission, EU:C:1985:327, para 34, the Court gave a more complete account of its position regarding the scope of its review of the Commission’s decisions applying art 101 TFEU and stated that, ‘although as a general rule the Court undertakes a comprehensive review of the question’, when it comes ‘to apprais[ing] complex economic matters’, ‘the Court must […] limit its review of such an appraisal to verifying whether the relevant procedural rules have been complied with, whether the statement of the reasons for the decision is adequate, whether the facts have been accurately stated and whether there has been any manifest error of appraisal or a misuse of power’. Under scrutiny was the permissible duration of a non-competition clause incorporated in an agreement for the transfer of an undertaking. 3 Cases France and Others v Commission (‘Kali & Salz’), C-68/94 and C-30/95, EU:C:1968:148, paras 223–224. As the Court stated therein, since ‘the basic provisions of the Regulation […] confer on the Commission a certain discretion, especially with respect to assessments of an economic nature’, ‘review by the Community judicature of the exercise of that discretion […] must take account of the discretionary margin implicit in the provisions of an economic nature which form part of the rules on concentrations’. 4 Joint Cases T-39/92 and T-40/92, Groupement des cartes bancaires «CB» and Europay International v Commission, EU:T:1994:20, para 109. 5 On exclusivity rebates and the distinction between by object and by effect, see Luc Peeperkorn, ‘Conditional pricing: Why the General Court is wrong in Intel and what the Court of Justice can do to rebalance the assessment of rebates’, Concurrences, Nº 1-2015, 53–55. 6 Case T-203/01 Michelin v Commission, EU:T:2003:250, para 241. 7 The CFI in that point referred to para 170 of Irish Sugar (Case T-228/97 Irish Sugar v Commission, EU:T:1999:246), whose purpose was to answer (and reject) the arguments which the applicant had drawn from the confusion between the object and the effect of the practice in question. Thus, in para 241 of Michelin II, the CFI went apparently beyond the scope of paragraph 170 of Irish Sugar, where it was just stated, following an assertion by the Commission, that art 86 did not distinguish between the object and the effect and that, in the contested decision, reference was made both to the anti-competitive object and to the anti-competitive effect of the practice in question. 8 Case C-62/86 AKZO v Commission, EU:C:1991:286, paras 71–72, cited in Michelin II, para 242. 9 Except in the case of prices below average variable costs, which must be regarded as abusive in themselves because the only interest which the undertaking may have in applying such prices is that of eliminating competitors (AKZO, para 71). 10 Case C-549/10 P Tomra Systems v Commission, EU:C:2012:221, para 19. 11 However, as the Court further declared, the existence of an anti-competitive intent is only one of a number of facts that may be taken into account (Tomra, para 20). Therefore, on the one hand, the Commission is under no obligation to establish the existence of such intent in order to render art 102 TFEU applicable and, on the other hand, the existence of an intention to compete on the merits, even if it were established, could not prove the lack of abuse (Tomra, paras 21–22). Those statements correspond finally to the objective character of the concept of abuse (Tomra, paras 17, 23). In Intel (cited below, para 139), the Court simply clarified that the requirement to assess the possible existence of a strategy aiming to exclude competitors from the market, which is incumbent on the Commission, applies only to competitors that are at least as efficient as the dominant undertaking. All of the foregoing also shows, in my view, that, as regards discount systems, exclusionary conduct is more than just a question of pricing. See, in that regard and with respect to whether a given practice may be characterised as predatory pricing, AKZO, paras 71–72, and Post Danmark I (Case C-209/10 Post Danmark A/S, EU:C:2012:172, paras 27–28). 12 Subjective factors may be relevant, in particular, as regards the calculation of the amount of the fine. 13 See, in this respect, the DG Comp Discussion Paper on the application of art 82 to exclusionary abuses, of December 2005, and the Communication from the Commission – Guidance on the Commission’s enforcement priorities in applying art 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings, of February 2009. 14 See cases C-12/03 Commission v Tetra Laval, EU:C:2005:87, para 39, and T-446/05 Annan & Söhne and Cousin Filterie v Commission, EU:T:2010:165, para 131. 15 Opinion of Advocate General Poiares Maduro, in Case C-141/02 P, Commission v max.mobil, EU:C:2004:646, paras 77–78. Hence, judicial review covers, apart from any question of interpretation of law, the questions of whether the facts have been correctly stated, whether the evidence relied on is factually not only accurate, reliable, and consistent but also whether that evidence contains all the information which must be taken into account in order to assess a complex situation and whether it is capable of substantiating the conclusions drawn from it, whether the formal and procedural rules have been complied with and whether there has been any manifest error of assessment or misuse of powers. 16 See, in this regard, Order of the President of the Court of Justice in Case C-459/00 P(R) Commission v Trenker, EU:C:2001:217, paras 82–83; see also judgments in cases C-525/04 P Spain v Commission, EU:C:2007:698, para 56–58, C-326/05 P Industrias Químicas del Vallés v Commission, EU:C:2007:443, paras 75–77, C-425/08 Enviro Tech (Europe) v Belgium, EU:C:2009:635, para 47. 17 Cases C-95/04 P, British Airways v Commission, EU:C:2007:166, para 78, and C-280/08 P Deutsche Telekom v Commission, EU:C:2010:603, para 53. 18 Case C-413/14 P, Intel v Commission, EU:C:2017:632. 19 Case 85/76, Hoffman-La Roche v Commission, EU:C:1979:36. 20 It was submitted, notably, that while exclusivity rebates can be used by dominant firms to exclude rivals, such rebates are not anticompetitive in themselves and can even be procompetitive; that loyalty rebates can be used as a risk sharing mechanism; that an assessment based on form rather than effects may help dominant firms to conceal the exclusionary features of their practices; that the preference for a quasi per se rule of illegality led the General Court to overlook a number of relevant factors such as the duration of the rebates, the level of the market foreclosure and the importance of the ‘leveraging effect’; that the General Court embraced a static view of dominance; that it did not follow a coherent approach as regards the choice between an exclusionary pricing and an exclusive dealing approach, combined with the relevant test to be applied; that such an approach is not consistent with the position taken by the EU courts as regards restrictions by object under art 101 TFEU, in line with the Delimitis and Cartes Bancaires judgments. See, among others, Laurence Idot, ‘Regards sur l’arrêt Intel. Confirmations ou evolution?’, Europe, 2014, étude 7, 5–11; Damien Geradin, ‘Loyalty Rebates after Intel: Time for the European Court of Justice to Overrule Hoffman-La Roche’ (2015) 11 Journal of Competition Law & Economics 579, 615; Peeperkorn (n 5) 43–63, Nicolas Petit, ‘The Advocate General’s Opinion in Intel v Commission: Eight points of common sense for consideration by the CJEU’ (24 November 2016). Concurrences Review No 1. SSRN: accessed 12 April 2018. 21 Geradin (n 20) 4 and Abstract. 22 A Jones and BE Sufrin, ‘The European Way - Reflections on the Intel Judgment’ (2015) 1 Competition Law & Policy Debate 32–42, 40. Available at SSRN: accessed 12 April 2018. 23 For an opposite view, favouring the traditional approach, see Wouter PJ Wils, ‘The Judgment of the EU General Court in Intel and the so-Called More Economic Approach to Abuse of Dominance’ (2014) 37 World Competition 405–434. On different, more balanced register, see Pablo Ibañez Colomo, ‘Intel and Article 102 TFEU Case Law: Making Sense of a Perpetual Controversy’, LSE Law, Society and Economy Working Papers 29/2014, 1–31, and Richard Wish, ‘Intel v Commission: Keep Calm and Carry on!’ (2015) 6 Journal of European Competition Law & Practice 1–2. 24 Apart from the appellant’s substantive claim that the General Court accepted that the practices at issue could be considered an abuse of a dominant position without first examining all of the circumstances of the case and without assessing the likelihood of that conduct restricting competition, in particular without giving appropriate consideration to the AEC test carried out by the Commission, the ECJ ruled on two other issues of fundamental importance: on the one hand, on the Commission’s jurisdiction to apply art 102 TFEU to certain agreements concluded by Intel and Lenovo in 2006 and 2007, on the basis either of the ‘implementation test’ or the ‘qualified effects test’; on the other hand, on an alleged material procedural irregularity affecting the appellant’s rights of defence, for failure to record the content of an interview with a key witness. With an analysis of alleged infringements by the Commission regarding the administrative procedure, see Andrea Usai, ‘The Intel Case: Between Tomra Systems ASA, the Commission’s Guidance on Enforcement Priorities, and the Alleged Infringement of Procedural Requirements – No Fat Left on the Bone’, CompLRev, Workshop: Competition Law and Pricing Mechanisms, 1 May 2014 accessed 12 April 2018. 25 Case C-42/17 MAS and MB, EU:C:2017:936. 26 Intel, paras 74–79. 27 Because such rebates are not based, save in exceptional circumstances, on an economic transaction justifying this burden or benefit but are allegedly designed to remove or restrict the purchaser’s freedom to choose its sources of supply and to deny other producers access to the market (Intel, para 77). 28 See Advocate General’s opinion, at para 44. 29 As the Court of Justice explained in Michelin (Case 322/81 Michelin v Commission, EU:C:1983:313, para 73), Tomra, para 71 and Post Danmark II (Case C-23/14 P Post Danmark, EU:C:2015:651, paras 29 and 31), the purpose of that assessment is to investigate whether the rebate scheme is liable to have an exclusionary effect on the market contrary to art 102 TFEU, in that, in providing an advantage not based on an economic service, it tends to remove or restrict the buyer’s freedom to choose his sources of supply, making market entry very difficult or impossible for the co-contractors of the dominant undertaking and strengthening the dominant position of the latter by distorting competition. 30 Advocate General Wahl named those rebates ‘market-share-based loyalty rebates’. 31 A possible way of formalizing this idea could be that while rebates in the second category (exclusivity rebates) are, per se, presumptively unlawful, a presumption of unlawfulness cannot be established without an assessment of all the circumstances of each case for rebates in the third category (loyalty inducing rebates). Only a volume-based system of rebates would benefit from a presumption of lawfulness. See, in this respect, Wish (n 23). 32 See paras 85 and 87 of the judgment; see also paras 97 and 143. 33 See para 86. 34 See para 138 of Intel. 35 See paras 140–141. 36 In the end, this amounts to stating that any prima facie assessment of anticompetitive conduct of a dominant undertaking, which might be attached to a system of rebates, can always be rebutted as regards its ability to restrict competition or to foreclose competitors. 37 See also the General Court’s judgment, para 146. 38 I will not enter into the discussion, which still divides scholars and courts, whether loyalty rebates should be subject to the ‘as efficient competitor’ price-cost test applied to predatory pricing or to the ‘rule of reason’ analysis that is applied to exclusive dealing. On this controversy, see Geradin (n 20) 3, 12–16. 39 In Post Danmark II, the Court found that there is no legal obligation requiring a finding—to the effect that a retroactive rebate scheme operated by a dominant undertaking is abusive—to be based always on the AEC test (paras 56–57). In its judgment, the Court further held that in a situation characterised by the holding by the dominant undertaking of a very large market share (over 95 per cent), possibly making it an unavoidable trading partner, by the existence of high barriers to entry and significant economies of scale, as well as by structural advantages conferred, inter alia, by that undertaking’s statutory monopoly, which applied to 70 per cent of the relevant market, and a unique geographical coverage, applying the AEC test was of no relevance inasmuch as the structure of the market makes the emergence of an as efficient competitor practically impossible (paras 14, 59, 60). The AEC test should thus be regarded as one tool among others for the purpose of assessing whether there is an abuse of a dominant position in the context of a rebate scheme (para 61). As Peeperkorn, (n 5) 59, puts it, ‘application of the AEC test makes perfect sense if the theory of harm concerns foreclosure, like in Intel, except if the rebate scheme in combination with economies of scale deprives competitors of the possibility to produce at minimum efficient scale or if the foreclosed competitor is a potential entrant which cannot yet be expected to make a credible offer to customers.’ 40 See paras 143–144. 41 See the ECJ’s judgment, para 146. 42 See para 147 of the ECJ’s judgment. Intel had argued before the General Court (see para 140 of the General Court’s judgment) that the AEC test was the only evidence that the Commission presented in the contested decision to show that Intel’s rebates were capable of causing anti-competitive foreclosure and that the Commission made numerous errors in applying that test. However, in paras 151 and 166 of its judgment under appeal, the General Court held that it was not necessary to consider whether the Commission had carried out the AEC test in accordance with the applicable rules and without making any errors, and that it was also not necessary to examine the question whether the alternative calculations proposed by Intel had been carried out correctly (see the ECJ’s judgment, para 145). 43 Several commentaries have already been published on the Intel judgment of the Court of Justice, notably : Pablo Ibañez Colomo and Alfonso Lamadrid in their blog Chillin’Competition, 6 September 2017, accessed 12 April 2018; Laurence Idot, ‘Match nul provisoire dans l’affaire Intel: la partie continue…’, Europe nº 10, Octobre 2017, étude 9 accessed 12 April 2018; Anne-Lise Sibony, ‘Analyse économique: La Cour de justice de l’Union européenne, en Grande Chambre, ouvre le prétoire à l’analyse économique jugeant que, en matière de rabais fidélisants aussi, il faut prendre au sérieux l’analyse des effets d’éviction (Intel)’, Concurrences, Nº 84985 accessed 12 April 2018. 44 See the ECJ’s judgment, para 147. 45 See Intel, para 133; Post Danmark I, para 21. 46 See Intel, para 134; Post Danmark I, para 21. 47 See Commission Guidelines on the application of art 81(3) EC [now art 101(3) TFEU] [2004] OJ C 101 of 27.4.2004, para 13. 48 Jones and Sufrin (n 22) 35. 49 See Case C-52/09 Telia Sonera, EU:C:2011:83, para 22. 50 As the ECJ stated in Telia Sonera, para 24, Post Danmark I, para 20, and Post Danmark II, para 69, art 102 TFEU covers not only those practices that directly cause harm to consumers but also practices that cause consumers harm through their impact on competition. 51 Para 88, following Telia Sonera and Michelin. 52 See, in this regard, Peeperkorn (n 5) para 50, 51. 53 What may render a practice unlawful is, to use the Court’s expression, that a dominant undertaking may have ‘recourse to methods different from that which condition normal competition’ on ‘a market where, as a result of the very presence of the undertaking in question, the degree of competition is weakened’ (Hoffmann-La Roche, para 91). Although the form of the contentious practices may be the same as those used by an undertaking in a competitive market, it follows from a consistent line of case-law that the concept of abuse is an objective one; it cannot be detached from the idea that a dominant undertaking has a special responsibility not to impair genuine, undistorted competition (Intel, para 135). As the General Court recalled in the contested judgment (paras 89–90), citing the ECJ’s case law, exclusivity conditions may, in principle, have beneficial effects for competition, so that in a normal situation on a competitive market, it is necessary to assess their effects on the market in their specific context. However, those considerations cannot be accepted in the case of a market where, precisely because of the dominant position of one of the economic operators, competition is already restricted. 54 In this regard, the Court highlighted a number of factors including, among others, the length of the reference period, whether the rebates are conditional on the volume of purchases estimated at the beginning of each period being exceeded, whether they are retroactive in the sense that they apply to all the quantities purchased during the period concerned and not only to those exceeding the threshold(s) initially set, but also whether a customer whose volume of purchases proved to be lower than the threshold has to reimburse the dominant undertaking, whether the rebates apply not only to the contestable part of the demand but also to any part of the demand covered by any statutory monopoly or whether they are discriminatory or not. 55 In this respect, see above (n 40). The Court also found that the fact that a rebate scheme covers the majority of customers on the market may constitute a useful indication as to the extent of that practice and its impact on the market (Post Danmark II, para 46). 56 The Court also explained that it was necessary to examine those factors ‘having regard to the particularities’ of the case. I do not think that this constitutes more than the usual precautionary formula intended to avoid hastily extrapolating the same solution to other, different, circumstances. 57 See, for instance, Pablo Ibañez Colomo in his blog Chillin’ Competition (n. 43). 58 Jones and Sufrin (n 22), 36. 59 To be more precise: even if an abuse of a dominant position, within the meaning of art 102 TFEU, cannot be objectively justified, nevertheless a conduct of a dominant undertaking liable to distort or restrict competition can escape being considered an abuse. 60 See paras 102 and 177 of the judgment. 61 As regards, the degree of likelihood of an anticompetitive effect and how serious or appreciable it must be, in relation to the ‘special responsibility’ of the dominant undertaking, reference may be made to Post Danmark II, paras 63–74. See also Colomo (n 43). 62 As the ECJ stated in Post Danmark II (para 49), it is for the dominant undertaking to show that the efficiency gains likely to result from the conduct under consideration counteract any likely negative effects on competition and consumer welfare in the affected markets, that those gains have been, or are likely to be, brought about as a result of that conduct, that such conduct is necessary for the achievement of those gains in efficiency and that it does not eliminate effective competition by removing all or most existing sources of actual or potential competition. 63 I could also mention the importance of leveraging the economic power of the dominant undertaking, as an unavoidable trading partner, on the non-contestable share of the demand to secure also the contestable share (see eg para 93 of the General Court’s judgment). And it would also be possible to discuss the meaning of paras 70 and 71 of the judgment in Tomra, in relation to the scope of the obligation to examine all the circumstances of the case and whether the Court in Tomra intended, or not, to associate such an obligation with so-called exclusivity rebates, which was disputed by the Commission and contested by the General Court in paras 96 and 97 of its judgment. 64 See para 136. 65 On the application of economic analysis in the field of competition law and its relations with legal certainty, the reader may refer to Damien Geradin, Anne Layne-Farrar and Nicolas Petit, EU Competition Law and Economics (OUP 2012). See also a short note on that point in Petit (n 20) 10. 66 Another useful tool consists in the use of presumptions but, as we have seen, that is a delicate exercise that should be carried out by the courts (if not by the legislature) with all due care and always, in full respect of the rights of defense, on a rebuttable basis. © The Author(s) 2018. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/about_us/legal/notices) TI - The intensity of judicial review in complex economic matters—recent competition law judgments of the Court of Justice of the EU JF - Journal of Antitrust Enforcement DO - 10.1093/jaenfo/jny003 DA - 2018-04-19 UR - https://www.deepdyve.com/lp/oxford-university-press/the-intensity-of-judicial-review-in-complex-economic-matters-recent-0ia1Sdhu08 SP - 1 EP - 188 VL - Advance Article IS - 2 DP - DeepDyve ER -