Regulating Prices in the European Union

Regulating Prices in the European Union Abstract Establishing open and undistorted competition within the internal market is a primary goal of the EU legal framework. Price controls, by contrast, are among the clearest derogations from this overarching objective. Yet much price regulation continues to occur within the internal market, the legal treatment of which is recognized to raise exceptional issues in the context of both positive and negative integration. This article explores the approaches within the EU legal framework to price regulation, broadly construed. Following a theoretical inquiry of the institutional and ideological challenges posed, a range of regulatory circumstances is considered: from competition enforcement, to the free movement rules, to examples of direct regulation through EU law. A tentative explanation for the distinctive treatment of price regulation is then advanced, premised upon the axiomatic role of the price formative mechanism in motivating the entrepreneurial impulses which underpin the internal market. The aim is to contribute to a more nuanced understanding of the challenges facing pursuit of ‘open and undistorted competition’ within a modern social market economy. I. Introduction [A] measure which requires a product or service to be offered on the market at a determined price … is by its very nature contrary to the objective of achieving an open and competitive market.1 Establishing open and undistorted competition within the internal market is a primary goal of the European Union (EU) legal framework.2 In developing a ‘highly competitive social market economy’,3 interventions focus on prevention and proscription of anticompetitive practices by undertakings and Member States, alongside harmonized efforts at sector liberalization. Price controls, acknowledged as ‘one of the most intrusive forms of intervention in the market’,4 are among the most ‘extreme’5 derogations from this objective. Price is one of, if not the, foremost dimensions of competition:6 indeed, ‘competition is, by its very essence, determined by price’.7 Yet, both because the competitive process is often imperfect, and because social considerations may override competitive ones within the wider context of the internal market, price regulation is not irreconcilable, a priori, with the goals and strictures of EU law. This article considers the treatment of price regulation in this context—located at the intersection of competition policy, social policy, and market integration—and explores the implications of the balance that is struck within the EU’s so-called ‘economic constitution’.8 EU law interacts with and regulates price-setting on three distinct levels.9 First, via the competition rules, it constrains the ability of individual undertakings to set prices in certain instances. Examples range from a blanket proscription of price-fixing cartels, to more exceptional condemnation of excessive pricing by dominant firms. Second, EU law limits the ability of Member States to regulate prices, particularly under the free movement rules. It is here that the constituent elements of the ‘social market’ economy are most vulnerable to discordance.10 An example is Scotch Whisky, where national efforts to impose minimum retail pricing for alcohol, motivated by public health concerns about hazardous drinking, conflicted with Article 34 TFEU insofar as the domestic regulation hindered access to the national market.11 Third, and most unusually, there is scope for direct implementation of price controls as a matter of EU law. A prominent example is the Roaming Regulation, which capped and progressively reduced prices for mobile phone customers who use their devices abroad.12 The dilemma of price regulation within the EU is located at the confluence of two distinct yet related tensions: a regulatory friction and a sovereignty-based one. First, the task of price regulation is itself a much-disputed enterprise: price controls are criticized as costly, unnecessary, liable to abuse, and ultimately counterproductive. Yet the pragmatic recognition that unrestrained competition does not guarantee efficient or otherwise socially desirable outcomes means that the ‘second best’ solution of regulation is sometimes preferable. Effective controls require a close understanding of the relevant market, however, which links to the second friction, namely the sharing of regulatory jurisdiction between the EU and its Member States. The necessity and optimal scope of price controls may be most apparent domestically; yet differentiated regulation risks fragmentation, competitive distortions, and furtherance of national interests at the expense of integration. The approach of EU law must accommodate these tensions, alongside the inherent paradox of restricting price freedom within an ostensibly open marketplace. The topic of price regulation is of great importance in practice within the EU, yet has been largely neglected within existing academic work. We argue here that it merits greater consideration, for two principal reasons. First, although viewed as a comparatively ‘old-fashioned’ instrument of market control, price regulation retains a notable prominence within the current EU legal framework. This is undoubtedly because, reflecting an historical fondness for such interventions within many European countries,13 considerable price regulation continues to occur within the internal market today. Accordingly, the questions of whether, when, and why EU law tolerates such intervention are of direct contemporary relevance at both EU and domestic levels. Second, the treatment of price controls under EU law is recognized to raise exceptional issues in the context of both negative14 and positive15 integration efforts, yet the existing literature has again failed to explain what is so special or unusual about regulating price. This article aims to address the current scholarly gap by considering the mechanisms by which EU law interacts with, contrains, and even mandates price regulation, in order to understand its distinctive status and often apparently inconsistent treatment. To do so, it draws upon a wide range of recent jurisprudence, legislation, and administrative practice related to internal market regulation, to develop a taxonomy of perspectives under EU law. In identifying a tripartite balancing of competitive, integrationist, and social concerns that underpin the approach to price regulation within the internal market, this article adopts a transversal approach, which endeavours to identify and analyse the treatment of analogous regulatory phenomena across differing areas of the EU legal framework. The central argument advanced hinges upon an overarching tension which conditions the treatment of pricing restraints within EU law generally: namely, that price alone is a deeply imperfect signal for welfare-enhancing human behaviour, yet regulatory limitations on price freedom threaten to negate the basic entrepreneurial impetuses upon which the internal market ultimately is premised. The article is structured as follows. It first considers price regulation generally, addressing its treatment in economic terms (Section II), and its place within the institutional and ideological structure of the EU (Section III). Differing approaches under EU law are then considered: from a punitive approach under competition law (Section IV); to a sceptical prohibitive approach under the free movement rules (Section V); to a cautious yet more receptive permissive approach within certain sector liberalization regimes (Section VI); and an exceptional, essentially prescriptive approach incorporating price regulation into the fabric of the internal market (Section VII). Section VIII considers in a more rounded fashion the dilemma of price regulation under EU law, in particular its distinctive, often contradictory treatment and status. Section IX concludes briefly. II. Price regulation and its discontents We start with the ambiguous virtues of price regulation as such. Within neoclassical economics,16 the free operation of the price formation mechanism is vital to the effective and efficient functioning of competitive markets. There is a default assumption that price should be determined, principally, by interaction of levels of supply and demand. Assuming a degree of substitutability between products, price is the most immediate parameter upon which undertakings compete. The price formation process moreover generates signalling effects which facilitate efficient behaviour. High prices suggest that demand outstrips supply, indicating that a market is profitable and thus inviting entry—which, other things being equal, should lower prices due to increased competition. Concomitantly, high prices force consumers to reflect upon the extent to which they value a product, resulting, in theory, in that scarce commodity being allocated to those who value it the greatest. In this manner, the price mechanism leads to an efficient distribution of finite resources. The textbook understanding of market-clearing relies, however, upon assumptions which may not hold true. High prices cannot prompt greater competition if there are barriers to market entry, so that supra-competitive pricing and scarcity are prolonged. Equally, barriers to exit may extend over-supply and wastage. Rational consumer behaviour is, moreover, premised upon complete information—not always a given, particularly where the product or service is complex— an ability to switch or do without in response to price-gouging—again, not always possible, particularly in the context of necessary goods, like electricity—and an absence of externalities. Where private price formation delivers sub-optimal results, there is an argument for public pre-emption through regulation.17 The immediate objective of most price regulation is, self-evidently, to constrain independent price-setting, whether through a fixed price or rate of return, a maximum price ceiling or minimum price floor, or more oblique forms of regulation such as a prohibition on practices like below-cost sales.18 Price controls are most frequently imposed in markets with natural monopoly or oligopoly components without free entry, where the undertaking(s) concerned are likely, absent intervention, to set prices near monopoly level.19 Here the rationale for regulation is, typically, to prevent consumer exploitation through excessive retail prices, or to avoid market foreclosure, where high wholesale prices obstruct downstream competition. As the examples below nonetheless illustrate, price regulation has been imposed by Member States and the EU to further an even broader range of regulatory objectives, including social concerns—for example, where prices for consumer essentials are maintained at lower levels, or for harmful goods at elevated levels—or, more contentiously, to ‘stabilize’ ostensibly excessive competition. Price regulation can thus play a redistributive role, by preventing transfer of (arguably unfair levels of) wealth from consumers to producers. Moreover, price regulation is often inextricably linked to other controls, including access or quality requirements.20 Despite acknowledged weaknesses within price formation processes, price controls are the exception rather than the rule in contemporary practice.21 Hostility arises on multiple fronts. Determining optimal regulated prices is a complex task.22 Regulators must ensure that regulated entities retain incentives to operate efficiently, while ensuring that profits are neither excessive nor unviable. Regulation can have unintended negative consequences, such as rent-seeking, moral hazard, inefficient subsidies, or distortion of optimal supply and demand levels;23 or regulatory lag may arise, whereby evolving market conditions render the regulated price increasingly inappropriate.24 Indiscriminate application of controls might damage corporate incentives to invest, resulting in diminished innovation and a reduction in overall consumer welfare.25 More broadly, the provocative public choice literature launched a fundamental attack on regulation as an inherently flawed or even corrupt enterprise that benefits only the regulated at the expense of broader public interest.26 Although overstating the risk of capture,27 public choice was influential, alongside more measured critiques that considered the potential costs and inefficiency of regulation,28 in provoking efforts towards deregulation and regulatory reform. Specifically, there has been a movement from prescriptive forms of ‘command-and-control’ regulation, including price controls, to alternatives such as incentive-based regulation, market-harnessing mechanisms,29 and ‘nudge’ strategies.30 In its own practice, the EU emphasizes ‘better regulation’31 and, increasingly, ‘smart regulation’, defined as regulation ‘of the highest quality possible’.32 III. Price regulation and the EU ‘economic constitution’ Beyond such critiques, price regulation poses specific difficulties—ideological and practical—within the legal framework of the EU’s internal market. While not prohibited a priori, the application of price controls is an almost contradictory exercise within this broader context. A core focus of this article is to explore how these tensions are manifested and accommodated within EU law. As noted, EU law interacts with price-setting processes in three dimensions: by constraining private price-setting, limiting domestic regulation, and—occasionally—functioning as a vehicle for direct control.33 The task of constructing and regulating the internal market is a competence shared between the Union and Member States.34 Yet, while the core tension and trade-offs remain the same—when and to what extent should apparent market failures merit derogation from the archetype of open and undistorted competition?—the precise issues in each instance are quite distinct. Quasi-price regulation via antitrust must grapple with an inherent paradox of the competition process: although high prices are the textbook example of monopoly abuse, the conventional understanding of the market mechanism is premised upon self-maximizing yet highly efficient price-setting by private actors. Where national controls are at issue, the key questions are why and how the EU legal framework should intervene to constrain the domestic regulatory choices of Member States. Where EU-level activity is under scrutiny, the questions are when and how the EU institutions should exercise their discretion, exceptionally, to mandate or impose price controls. Across these distinct dimensions, there are nonetheless recurrent overarching complexities, which condition and inform the discrete approaches within EU law. First, price controls pose an ideological challenge, insofar as the internal market is premised upon open and undistorted competition. As the Court of Justice argued in ANODE, the free functioning of the price formation mechanism is integral to this objective.35 Although it acknowledged in Metro (II) that price competition ‘does not constitute the only effective form of competition or that to which absolute priority must in all circumstances be accorded’, it nonetheless maintained that such competition ‘is so important that it can never be eliminated’.36 Emphasis is placed upon freeing markets not merely from private anticompetitive conduct, but also unnecessary or ineffective public restraints.37 While undistorted competition does not equate to unregulated competition, it reflects an ordoliberal preference for governmental interventions that aim, primarily, to buoy underlying market forces.38 In keeping with much modern economic theory, EU law has a distinct preference for solutions that reinforce rather than overreach the market system.39 State-imposed limitations on price competition, conversely, constitute ‘a particularly strong limitation of rights to property and the freedom of economic initiative’.40 Price regulation, insofar as it ‘necessarily influences the freedom of the undertakings concerned to act in the market in question and hence the process of competition’,41 is formally at odds with the underlying philosophy of the internal market. Second, and linked to the priority granted to buttressing market forces over dictating outcomes, the EU and its institutions operate at what Dashwood termed ‘the intermediate level of policy execution’.42 Although the principles of direct effect and primacy mean that EU law creates individual rights and duties, the EU typically regulates via Member States rather than through direct intervention in domestic markets. This limitation, moreover, reflects the sharing of jurisdiction within a Union that remains much less than a federation. The great bulk of price regulation within the internal market is devised and implemented nationally, with Member States demonstrating greater or lesser enthusiasm for intervention. The perceived necessity and tenor of price regulation is, furthermore, motivated primarily by domestic considerations, which raises concerns about capture, the quality of regulatory activity, and its potential for distortive effects. Yet deference to domestic regulators can be defended insofar as the redistributive effects of price controls are legitimized by the political accountability of regulators and the link to a democratic mandate.43 These legitimating forces are weaker for interventions originating in EU law, whether through positive or negative integration.44 Although criticism of the EU’s ‘democratic deficit’ may be overstated,45 its infrastructure for democratic representation is a step further removed from citizens than in the national context. Given the extent to which price regulation represents a departure from standard laissez-faire models—but also that it may reflect societal preferences for valuable non-economic policy objectives—it seems appropriate to require sufficiently robust authority and accountability. Additionally, the nature of the regulatory process requires, typically, a detailed and nuanced understanding of the markets concerned, which may reinforce arguments for decentralization.46 Increasing criticism of the EU’s one-size-fits-all approach to liberalization,47 for instance, suggests that more intensive forms of sector reorganization may require a closer tailoring to market circumstances. (Conversely, the EU institutions are arguably better placed to understand the Union-wide implications of price controls.48) Thus, the treatment of price regulation, occurring at a further remove from regulated markets than analogous domestic processes, must be alive to potential criticisms on the bases both of democratic authority and effectiveness. A third consideration draws upon the principle of subsidiarity, which governs the threshold question of when positive action at EU level is appropriate.49 Essentially a principle of regulatory restraint, subsidiarity limits the EU’s ability to act in situations where it is best placed to implement a top-down EU-wide solution. Linked to the notion that the EU remains ‘a constitutional order of States’,50 subsidiarity reflects both the Member States’ continued existence as sovereign states,51 and sustained resistance to centralization or even federalization of Europe.52 As Öberg argues, ‘the core of subsidiarity is the right of Member States to diverge’53—an (ostensible) right of particular relevance in the context of price controls. Positive efforts at price regulation—whether alignment of domestic regulatory structures, or price controls implemented directly through EU law—have generated some of the most notable challenges under the subsidiarity principle.54 As a shared competence, subsidiarity clearly constrains the EU when regulating the internal market.55 In the context of much price regulatory activity, this threshold requirement may be difficult to satisfy. Price controls not only can and have been implemented successfully by national regulators, but the price-setting process benefits from a closer relationship between regulator and market.56 Moreover, price controls involve significant incursions into both the economic independence of market actors and the residual freedom of Member States to make redistributive choices in respect of national economies.57 Where positive integration is at issue, subsidiarity suggests that intervention at EU level is likely to be appropriate only where there are clear cross-border concerns which, moreover, pose insurmountable hurdles to national regulators—what Öberg labels ‘transnational market failures’.58 Even where this may be the case, price regulation must be a proportionate response.59 In areas of negative integration—for instance, where the Court of Justice scrutinizes domestic controls—the principle of subsidiarity is not formally binding. There is, nevertheless, an argument that the multi-layered constitutional structure of the EU means it ought to be respected in spirit. That is, mere divergence that is reflective of differing national preferences should not be viewed as inherently suspect.60 This is important when considering whether EU law ought to pre-empt domestic regulatory choices: in essence, we must consider which polity is entitled to make the sorts of policy choices, both economic and social, reflected within price regulatory activity.61 This links, moreover, to the vital question of proportionality, meaning, here, the extent to which EU law should probe the appropriateness, in substance, of domestic policy choices.62 The only area that escapes subsidiarity concerns is competition law, which comprises in effect instances of law enforcement against private firms. Nonetheless, the Commission has long insisted that it ‘is not and does not wish to act as a price regulator’ in this context,63 instead deferring to price-setting by (well-behaved) undertakings or domestic regulators. Notably, such reluctance is reconcilable with the logic of subsidiarity insofar as national competition authorities (NCAs) are more receptive to case theories and concomitant remedies premised upon unfair pricing.64 Moreover, it perhaps reflects a deeper understanding of the rationale for regulatory restraint, or at least the dangers of over-instrusive intervention. Accordingly, for a variety of ideological, constitutional, and even practical concerns, price regulation occupies an uneasy position within the legal framework of the EU’s economic constitution. Disfavoured but not proscribed, its treatment reflects a compromise between the archetype of free competition, the imperative of effective market governance, and the peremptory nature of certain non-economic concerns. The complexity of the balancing exercise is demonstrated by the range of approaches discernible within case law and practice: a punitive approach penalizing individual pricing practices, an antagonistic prohibitive approach that proscribes domestic controls, a permissive approach premised upon EU-level supervision of national regulation, and a prescriptive approach involving positive top-down regulation. Yet within each, broadly equivalent tensions can be seen, from issues of technical expertise and democratic authority, to the balance between self-determination and containment of distortive domestic preferences.65 Each approach will be examined in turn, bearing in mind these overarching considerations. IV. Price regulation via antitrust: the punitive approach We consider first EU competition law, the central concern of which is prevention or control of aggregations of market power that, ultimately, enable undertakings to raise prices to supra-competitive levels.66 Here, price regulation is an essentially reactive punitive device; reflecting a determination that an undertaking’s pricing practices exceed the permissible limits of its default freedom to engage in price competition.67 Large swathes of EU competition law are addressed directly at price-setting, whether the concern is the manner in which prices are set or the effects that pricing structures may have on the wider market. Yet competition experts, including the Commission acting as antitrust enforcer,68 typically resist conceptualizing competition law as price regulation as such. In this section we explain, first, why the competition rules might be viewed as an instrument of price regulation; second, limitations to this approach in theory and practice; and third, recent developments that suggest an increased quasi-regulatory role in future. Our focus is the antitrust rules in Articles 101 and 102 TFEU, prohibiting anticompetitive coordination and abuse of dominance respectively.69 At first glance, competition enforcement provides the most immediate and flexible legal means to exert control over pricing, facilitating intervention at source by inhibiting or limiting the ability of economic actors to set prices at anticompetitive levels. These provisions thus represent a punitive model of regulation, insofar as firms may be punished for exclusionary or exploitative prices which offend against their proscriptions. Characterizing competition law as an instrument of price regulation has both negative and positive aspects. On the one hand, Articles 101 and 102 constrain the freedom of undertakings to set and charge whatever prices they wish: a freedom that is, moreover, the nominal basis of the entire free-market system. Infringement warrants sanctions against offending firms, typically fines. On the other hand, illegitimate prices are ‘regulated’ via enforcement activity to acceptable levels, whether directly as an aspect of the remedies imposed or indirectly by consequence of condemning existing prices. The almost inevitable outcome of enforcement against anticompetitive prices is that a revised pricing structure is imposed, which is dictated—more or less closely—by the requirements of the competition rules. Moreover, EU competition law provides a versatile and wide-ranging mechanism for intervention: enforceable by the Commission;70 the various NCAs;71 and, increasingly, private litigants before national courts, whose activities ostensibly complement and reinforce public enforcement.72 Yet the reality of EU competition enforcement, particularly by the Commission, is considerably removed from the archetype of price regulation. First, the Commission favours interventions that alleviate or prevent market foreclosure, and thus buoy competitive forces, rather than interventions that second-guess the workings of the competition process. Even where price lies at the heart of an investigation, there is considerable resistance to the notion that antitrust provides an appropriate vehicle by which to identify acceptable—or unacceptable—prices as such. Second, the task of price regulation implies not only the identification of appropriate pricing levels but also the availability of some coercive mechanism by which to impose publicly-devised prices on private actors going forward. Again, however, antitrust is an area where the Commission has conventionally shied away from prescriptive remedies, although the coercive power of its considerable fines is undisputed. The one area where antitrust collides unavoidably with the territory of conventional price regulation is the control of excessive pricing by dominant undertakings, as provided by Article 102(a) TFEU. Yet it is precisely in that context that both the Commission and the Court of Justice have exercised their most notable degree of regulatory restraint. Such reticence almost certainly reflects a broader scepticism regarding the advisability of antitrust enforcement against high prices as such; critiques which challenge the quasi-regulatory deployment of antitrust more generally. Recurrent concerns include the immediate difficulty, from an antitrust perspective, of distinguishing permissible and impermissible price levels, coherently and consistently;73 alongside longer-term risks to incentives for innovation and investment.74 Moreover, the remedies required, typically equivalent to command-and-control regulation, are considered more appropriate for sector-specific regulators to impose and monitor, for reasons of both capacity and accountability.75 There is, accordingly, a consensus that, absent high barriers to entry or expansion, ‘the market should, in principle, be able to self-correct in the short to medium term: high prices should normally attract new entrants or encourage existing competitors to expand’.76 Thus, the clear focus of recent competition enforcement—at least outside the cartel context—has been against behaviour that results in anticompetitive foreclosure, with, moreover, a clear end-goal of open (and not merely re-regulated) market structures. In what follows we consider the conventional limitations to antitrust as a vehicle of price regulation, as well as recent developments that may suggest a greater role for competition law. A. Pricing as a concern of competition law First, competition enforcers in the EU, as elsewhere, are less concerned with absolute prices than with the structure and functioning of markets. While pricing is an integral element of many competition cases, it is rarely the ultimate concern; a distinction that may be illustrated by reference to recurrent theories of harm under both Articles 101 and 102 TFEU. Under Article 101 TFEU, coordinated efforts to set prices are inherently suspect: any concertation that ‘constitutes an attempt to influence free formation of prices … manifestly has as its object to restrict competition’.77 Most obviously, Article 101 prohibits price-fixing between ostensible competitors, particularly in the context of hard-core cartels. Most horizontal price-setting cases are clear-cut—albeit not quite ‘per se’78—violations of Article 101(1), although more ambiguous activities are also prohibited.79 Article 101(1) has similarly been invoked against vertical price-setting, especially resale price maintenance (RPM).80 The argument that an agreed price is ‘fair’ (or reflects the competitive level) is largely irrelevant to its permissibility, although this may serve to exempt the arrangement under the Article 101(3) exception rule. Under Article 102 TFEU, the default approach is quite different: the concept of open and undistorted competition necessarily relies upon unilateral price-setting by economic operators, and indeed many argue that it is the lure of potential monopoly profits that ultimately drives competition and innovation.81 Nonetheless, even in the context of single-firm conduct the Commission is concerned with pricing practices by dominant undertakings that foreclose markets or exclude competitors.82 Potential price-related abuses include fidelity-inducing rebates;83 low prices with predatory effect;84 margin squeezes involving a disjuncture between wholesale and retail prices charged by vertically-integrated undertakings;85 price discrimination;86 and constructive refusals to deal, whereby high access prices constitute an effective refusal to supply.87 Thus, in most cases where pricing practices are challenged, the core concern is not the price in itself, but rather its broader context or market impact. Conspiracy is the implicit evil of cartels: ostensibly independent economic operators colluding to extract greater profits. Cartels are likened to theft offences,88 a characterization reflected in increasing use of criminal sanctions.89 RPM is disfavoured, not only because it softens competition and can lead to immediate price increases, but also because it may facilitate collusion, diminish innovation, or inhibit entry by efficient suppliers.90 Foreclosure is the core concern of exclusionary pricing under Article 102,91 as reflected by the Commission’s ‘as efficient competitor’ standard to govern intervention.92 This is seen vividly in the treatment of predatory pricing, perhaps the most counterintuitive of abuses: a dominant firm with ‘deep pockets’ distorts the market by attracting customers with unrealistically low short-term prices, intending to drive competitors from the market and entrench its dominance longer term.93 In each instance, the underlying objection is not that the price charged in itself is unacceptable, but rather that it has been determined, or affects the market, in an anticompetitive manner. The principal exception is Article 102(a), which expressly cites as an example of abusive conduct, ‘directly or indirectly imposing unfair purchase or selling prices’. The Court of Justice in United Brands confirmed that this prohibition applies where dominant firms charge a price that is disproportionate, or bears no reasonable relationship, to the economic value of the product concerned.94 It applied a demanding two-part test to determine excessiveness: requiring that, first, the difference between costs incurred and price charged was excessive, and second, the price charged was unfair in itself or compared to competing products.95 Yet more recently in AKKA, the Court clarified that the so-called ‘United Brands test’ is not exhaustive.96 It accordingly accepted that excessiveness might be established, inter alia, through consistent comparison with prices in other Member States, adjusted where necessary to take account of relative purchasing power, provided that any differences were significant and persistent.97 The complexities inherent in this evaluative exercise, however, were highlighted by Advocate General Wahl: from a risk of counterproductive false positive errors, to problems of ex ante uncertainty for firms, and administrative costs associated with on-going monitoring and enforcement.98 He thus argued that excessive pricing should exist, if at all, only in markets with regulatory barriers to entry yet absent effectual supervision by sector regulators,99 given that such problems are consequently amenable to neither self-correction nor regulatory supersession. Perhaps unsurprisingly, for many years the Commission pursued excessive pricing claims only exceptionally.100 Beyond the Commission’s stated reluctance to act as ‘price regulator’,101 its own economic experts counselled against intervention,102 and exploitative abuses are a notable omission from guidance on the Commission’s enforcement priorities.103 A rejection decision from 2004 is instructive: although prices were high, the services provided were particularly valuable, and thus it could not be established that price bore no reasonable relationship to value.104 While the prices charged may have been suboptimal, this decision exemplifies Advocate General Wahl’s contention that antitrust cannot fruitfully concern itself with any claimed deviations from a perfectly competitive price, but must restrict itself to those which are unambiguously problematic.105 Yet this apparent orthodoxy is not immune from challenge. Most obviously, NCAs have proven more receptive to exploitative concerns, pursuing Article 102 cases with an exploitative element—particularly excessive pricing—at more than double the rate of the Commission over the first decade of decentralized enforcement under Regulation 1/2003.106 Such a division of labour is consistent with our observations regarding the distinctive subsidiarity concerns raised by price regulation, even though the principle has no binding effect here: NCAs are arguably better placed to identify pricing practices raising public policy concerns, and to take and implement such—effectively redistributive—decisions. Yet certain areas of the Commission’s recent enforcement practice, too, disclose a greater concern with unfair prices. A first group of cases involves commitment decisions under Article 9 of Regulation 1/2003. In effect, this procedure provides a flexible vehicle by which to tackle more complex—and often contentious—case theories, making it well-suited to address on-going pricing problems. The commitment procedure, and relevant decisions, are considered below. A second group involves horizontal price-fixing in the context of payment systems. Here, the Commission has pursued a series of enforcement actions, some as infringement decisions107 and others as commitment decisions,108 against multilateral interchange fees (MIF) agreed by financial institutions that operate payment card networks. Notably, in these cases the primary concern is not that the price-setting activity is anticompetitive, but rather that the agreed price is excessive compared with an optimal competitive price. The outcome in each instance has accordingly been, rather than abandonment of the MIF mechanism, instead a substantial lowering of existing fee levels. Such cases therefore evince greater concern with ultimate (re)distribution than with operation of the competition process, disclosing a distinctly regulatory mentality. It was not unexpected, therefore, that the EU institutions subsequently opted to overreach the market mechanism with a top-down Regulation setting maximum MIF levels across the internal market, a development considered further in Section VII below. Finally and most prominently, following several high-profile enforcement actions taken by NCAs,109 the Commission has expressed greater willingness to intervene specifically against excessive prices that result in consumer exploitation. While reiterating a default position that ‘[t]he last thing we should be doing is to set ourselves up as a regulator, deciding on the right price’, Competition Commissioner Vestager nonetheless argued that the EU has ‘a responsibility to the public’ to tackle excessive pricing in certain instances, particularly relating to vital consumer products.110 This culminated in a formal investigation into alleged ‘price-gouging’ in the pharmaceutical sector, an investigation the Commission describes as the first of its kind.111 It coincides, moreover, with greater emphasis on the extent to which competition enforcement might secure, not merely the high-level goals of efficiency and market interpenetration, but also the more tangible, though politically-loaded, objective of increased societal fairness.112 While scepticism exists as to whether such developments represent legitimate popular or more troubling populist concerns,113 a renewed focus on the symptoms of market power rather than its causes reflects implicit acknowledgement that the promise of ‘open and undistorted competition’ may be insufficient to protect consumer welfare. B. Remedial structures available in competition cases The second way in which competition enforcement conventionally diverges relates to the outcomes of regulatory action. Whilst price regulation culminates in a specified pricing structure requiring adherence by regulated firms, competition enforcers are more reluctant to ‘pick winners’. Even where antitrust imposes negative obligations proscribing particular pricing practices, on-going positive duties to charge specific prices, determined ex ante and applying to future market behaviour, are more problematic conceptually and more unusual in practice. Conventionally, the primary enforcement mechanism for EU competition law has been Commission infringement decisions. The express wording of Article 7 of Regulation 1/2003 empowers the Commission to ‘impose on [defaulting undertakings] any behavioural or structural remedies which are proportionate to the infringement committed and necessary to bring the infringement effectively to an end’. Yet the Commission has, typically, restricted itself to (increasingly high) fines, and, where ambiguity exists as to whether an infringement is continuing, a formal statement requiring it to be brought to an end; this might entail, as in Microsoft, binding obligations to resolve on-going problems.114 Accordingly, infringement decisions often proscribe existing anticompetitve price-setting arrangements or price structures, but do not prescribe the ‘competitive’ price going forward. As the Microsoft saga demonstrates, ostensibly proscriptive remedies can become prescriptive where difficulties arise in implementing the original sanction.115 Nonetheless, at least initially, Article 7 decisions adhere to the tort–crime model of antitrust.116 As such, infringement decisions are of limited use for direct price-setting: such decisions inform market participants of prices that they cannot charge, rather than those they must. The strict proportionality requirement within Article 7 has been advanced to explain the Commission’s reluctance to deploy it more robustly to include, inter alia, pricing obligations,117 insofar as the Commission has the burden of establishing that such remedies are suitable, necessary and represent the least restrictive alternative.118 Yet arguably this also reflects an ‘antitrust’ as opposed to ‘regulatory’ approach to market governance: freeing the market of barriers to competition, but not second-guessing what the competitive outcome might entail. Two recent developments suggest, however, that any rigid dichotomy between ostensible ‘antitrust’ and ‘regulatory’ remedial structures is misplaced, thus mirroring well-established critiques of US antitrust resulting from its consent-decree practice.119 The first and more speculative change, advocated by certain scholars120 and hinted at in the recent ARA Foreclosure decision,121 is a possibility that the Commission becomes more forceful in applying its little-used remedial powers under Article 7. ARA notably involved, alongside a finding of infringement and fines, an obligation on the defendant to divest certain infrastructure to avoid future abuses. While the facts are unusual—the defendant had a de facto statutory monopoly, the divesture commitment was offered by the undertaking, and it received a discounted fine in return—the decision suggests greater willingness by the Commission to use its Article 7 powers in a more muscular, multi-dimensional fashion.122 The second, more significant development lies in the commitment procedure under Article 9 of Regulation 1/2003. This enables the Commission to conclude investigations without any finding of breach, based on binding commitments by the undertaking(s) concerned to modify their behaviour or structure. Two aspects of the procedure facilitate its application to achieve quasi-regulatory outcomes such as price controls. First, given that Article 9 decisions do not entail any formal finding of breach,123 and because the consensual nature means that appeal is unlikely,124 it is unsurprising that recurrent use has been made of the procedure to conclude cases that involve more contentious or novel theories of harm, including those targeted directly at unfair pricing. Examples include S&P,125 premised explicitly upon the setting of ‘unfairly high fees’; Rambus,126 involving so-called ‘patent ambush’, in effect an excessive pricing claim coloured by a standard-setting context; and several decisions against Visa,127 alleging in essence excessive prices following coordinated price-setting. For the Commission, commitment decisions present a benign mechanism by which to conclude arguably more dubious cases, including the sorts of quasi-regulatory theories that might require on-going pricing commitments for resolution. Second, unlike the largely retributive function of infringement findings,128 Article 9 decisions aim to identify and implement prospective solutions to on-going market problems. Whilst some commitments are one-off, others involve continuing obligations to specific behaviour. Most notably, in several cases the agreed remedy has involved future pricing commitments: whether a fixed price (S&P, IBM129), a percentage value (Rambus, VISA), or both (RICS130). Moreover, Article 9 decisions, unlike the infringement procedure,131 may involve voluntary commitments to adhere to monitoring structures, an important addition, for instance, to the commitments in RICS following market-testing. The scope for Article 9 to facilitate and legitimate the use of competition law as a vehicle for price regulation should not be overstated, however. First, commitment decisions are available only in a subset of cases, excluding cartels and serious non-cartel abuses.132 Second, such decisions require the consent of defendants: commitments cannot be imposed unilaterally, so Article 9 decisions are excluded where defendants refuse to cooperate or fail to offer sufficiently persuasive commitments. At most, therefore, commitment decisions approximate to a form of co-regulation between the Commission and, crucially, willing defendants. As noted, voluntarism was similarly a key element of the hybrid procedure in ARA. Finally, concerns have been raised about the commitment procedure qua legal (rather than regulatory) instrument, particularly the extent to which it introduces uncertainty to the underlying antitrust rules, given that Article 9 decisions do not, formally, represent statements of competition law.133 Thus, the Commission has signalled an intention to make greater use of Article 7 where clear precedents would be of value.134 Yet such an approach may impede its application in precisely the sorts of quasi-regulatory pricing cases that, as discussed, lie at the boundaries of contemporary competition law. C. Competition law as a corrective to domestic price regulation Finally, consideration must be given to a further, disputed, intersection between price regulation and EU competition law, namely application of the latter to conduct already subject to domestic controls. Under the restrictive ‘State action’ doctrine, the mere fact the market behaviour is subject to ex ante sector-specific regulation does not immunize the undertaking concerned from application of competition law, unless the regulatory framework either removes any possibility for independent (anti)competitive activity or all scope for competitive forces to arise.135 The ostensible justification is that sector-specific regulation and competition law pursue discrete policy objectives, so that undertakings must ensure that their market behaviour conforms with each set of legal obligations.136 A more sceptical explanation, however, is that sector-specific regulation is almost invariably enacted and enforced domestically, although it may originate in EU-level Directives.137 Accordingly, in many antitrust cases in which State action issues arise, at the heart of the dispute lie claims regarding the distortive effects of national rules. Deutsche Telekom provides a vivid illustration of how such conflict can extend to price controls. Here, the incumbent telecommunications operator in Germany, DT, was held to have engaged in an abusive margin squeeze by maintaining an insufficient spread between wholesale and retail prices for fixed-line telephone access.138 The case theory proceeded on the basis that wholesale prices were set by the domestic regulator, while retail prices had been approved under a maximum price cap applying to a ‘bundle’ of retail products. Despite the apparent pervasiveness of regulatory influence, DT was considered to have sufficient residual freedom to avoid the squeeze, and indeed, a ‘special responsibility’ to take steps to do so.139 Yet at the core of the antitrust case lies a different clash, namely Germany’s failure to implement telecommunications tariff rebalancing, contrary to its obligations under EU law.140 Thus, a supranational public dispute between the EU and its Member State over the appropriateness of domestic price regulation was effectively repackaged as one involving private manipulation of price formation, enabling the Commission to dismantle the problematic regulatory structure de facto, without the complications of the de jure procedures available to challenge national rules.141 The approach of Deutsche Telekom and its implications foreshadow the scepticism that the Commission and Courts frequently demonstrate towards both the design and implementation of domestic price regulation. Not only does the case give little weight to the appropriateness or authority of price-setting by the national regulator; moreover, the defendant was granted only the slightest allowance to reflect the comprehensiveness of the pricing constraints it faced, namely a 10 per cent reduction in fine.142 An analogy might be drawn to the principle of legality and its limitations within EU law, pursuant to which an undertaking may not claim a legitimate expectation in or seek to rely upon an unlawful act.143 The failure to give substantial import to the domestic regime suggests, implicitly, that it could not be considered a legitimate feature of the domestic market; presenting neither a plausible defence for the defendant’s pricing practices nor a reasonable (albeit imperfect) estimation of appropriate price levels in the German telecommunications markets. We return to this sceptical perspective below. At this juncture, two principal takeaways emerge. The first is a notable regulatory restraint, apparently premised on the idea that de facto price regulation is an inappropriate task for the EU in its guise as competition regulator. (A degree of restraint perhaps more remarkable given the frequent criticism that the Commission is too willing to intervene under competition law in other contexts.144) Thus, we see a first instance of the idea that regulating prices is ‘special’—or especially disfavoured—under EU law. Influenced by Chicago School thinking, Advocate General Wahl provided a searing exposition of these concerns: public interference with the private price formation mechanism almost invariably generates suboptimal results, given both the elusiveness of any would-be competitive price and the high cost and risks of intervention.145 The oblique attack on national price regulation in Deutsche Telekom further accords with this logic. Yet greater receptiveness in recent practice, expressly premised on pursuit of a fairer society, belies the notion that open and undistorted competition is invariably the best route to enhanced consumer welfare. We shall see this tension reoccur in the scenarios examined in Sections V to VII. Second, the procedural powers available at EU level appear to make a significant difference to substantive outcomes. Specifically, antitrust enforcement moves closest to the archetype of price regulation with the commitment procedure, whereby the Commission has formal powers to make binding and enforce any regulatory bargain agreed. Yet, under Article 9, pricing remedies remain a ‘bargain’ in a literal sense, insofar as ostensibly regulated entities must agree to and indeed nominally propose their own restraints. A question thus arises as to whether there is scope for a more coercive approach to pricing remedies in antitrust cases where defendants are unprepared to make the necessary concessions, or whether the risks of erroneous and counterproductive intervention outweigh potential benefits. Moreover, marked asymmetry exists between proscribing existing pricing practices and prescribing ostensibly optimal ‘competitive’ prices going forward. Such asymmetry reoccurs in the examples discussed later in this work, and thus we might ask whether the concerns identified and solutions reached in this essentially micro (ie firm-level) context have resonance in the more macro context of the relationship between the EU and Member States. V. Indirect price regulation I: the prohibitive approach We move from price-setting by private entities to price regulatory activity by public entities, whether Member States or the EU itself. Arguably, the default approach within the internal market is, in keeping with its ideological tenor generally, one of deep scepticism and reluctance towards price regulation. We term this the prohibitive approach: as a derogation from the precept of open and undistorted competition, price controls are incompatible with the EU legal framework unless justified by a legitimate and proportionate objective. This suspicion is illustrated, implicitly albeit most convincingly, by the sheer absence of direct price controls within positive EU law. Instead, most EU legal rules addressing this question concern efforts to constrain or prohibit price controls implemented domestically, most obviously under the free movement rules. The fundamental rules guaranteeing free movement within the internal market provide its foundation, prohibiting domestically-imposed obstacles to the circulation of goods, services, establishment, workers, and capital between Member States. Price regulation poses a conceptual conundrum here. Price controls are close to the antithesis of free unencumbered competition between private market actors, and thus present a fundamental departure from the archetype of ‘open’ competition underpinning the internal market. Yet, formally, the free movement rules are unconcerned with barriers to competition as such, but instead, with barriers to trade (and, by consequence, competition) between different national markets that comprise the discrete components of the ostensible single market. While EU law pursues the clear goal of market interpenetration through the removal of barriers to trade, the internal market does not mandate that such trade is wholly unregulated domestically, provided that national regulatory frameworks do not impose implicit barriers to foreign competition. Free movement is not precisely equivalent to ‘free markets’, therefore, insofar as the latter implies unrestricted economic activity more generally.146 Famously, in Keck, the Court of Justice drew a conceptual distinction between national rules that limit the commercial freedom of all economic operators, whether originating in the home or another Member State, and those which make life more difficult for foreign manufacturers or service providers, and thus hinder market interpenetration.147 Domestic price controls clearly limit the ability of traders to determine, privately and independently, the price of goods or services. As such, price regulation has the potential to dampen and distort competition in absolute terms.148 Provided such regulation disadvantages domestic and foreign traders to an equivalent extent, however, it cannot constitute a barrier to trade between Member States, but merely a restriction on trade within the national market. Unlike other ostensible ‘selling arrangements’,149 moreover, price controls do not generate an obvious incumbency advantage for established domestic operators, by, for instance, imposing positive obstacles to entry150 or restricting the possibility of cross-border sales151—beyond, of course, making the market potentially less profitable and thus less desirable to entrants. Moreover, the mere fact that certain Member States refrain from regulating prices, or do so less restrictively, cannot imply that more exacting regulation elsewhere poses an obstacle to free movement.152 Convincing though this logic may be, the Court of Justice subsequently proved more receptive to arguments that apparently neutral controls may impose barriers to accessing national markets which constitute a particular disadvantage for traders from other Member States. While acknowledging the residual freedom of Member States to regulate absent EU-level harmonization, the Court has held that price controls might obstruct the free movement of, variously, goods,153 services,154 and establishment.155 The Court’s reasoning suggests a deep appreciation of the significance of price within the market process, in terms of both the competitive vitality and economic viability of economic actors. This, in turn, arguably links to ordoliberal thinking on the centrality of individual economic freedom within the economic constitution.156 These cases thus reflect the ideological tension that arises where domestic controls limit or distort competition within the ostensibly free internal market—a tension particularly apparent in recent decisions.157 These dual concerns may help to explain why, in evaluating the treatment of price regulation, one leading commentator suggests that, without saying so explicitly, the Court views such cases as a distinct—and arguably unique—category.158 On the one hand, price controls may hinder access to national markets by limiting the competitive vitality of traders from other Member States: as the Court of Justice held forcefully in Deutsche Parkinson, ‘price competition lays the basis for [foreign traders’] potential to access the [host] market directly and to continue to be competitive in it’.159 Cases in this vein recognize that price is the most immediate parameter of competition. Where regulation restricts, de jure, the ability of new entrants to compete on price, this may have the effect, de facto, of preventing entrants from competing at all. This might be the case where particular products can be produced more cheaply in the home Member State—echoing the classic Ricardian notion of comparative advantage—yet where fixed or minimum price controls within the host Member State prevent the foreign trader from reaping the competitive advantage of its lower costs.160 Alternatively, regulation may deprive entrants of the effective competitive strategies necessary to break into new markets and increase market share. Price controls may prevent entrants from engaging in innovative pricing practices, which might distinguish their products from those of domestic incumbents;161 from using price competition to overcome reputational or other incumbency advantages of established domestic undertakings;162 or, where foreign traders are at a disadvantage in the quality of the product they can provide, from compensating customers through lower prices.163 Finally, limitations on price competition may stifle the ability of entrants to compete via higher quality, where the effect is to prevent foreign traders from offering products which, though more costly, represent added value for consumers.164 On the other hand, price controls may hinder access by threatening the economic viability of new entrants. Achieving a positive equilibrium between income and costs is necessary to ensure that entrants can remain within the marketplace and potentially develop as effective competitors. Price regulation might function to exclude foreign traders, however, where a fixed or maximum selling price is set at an unreasonably low level in comparison to their costs.165 Such an outcome may arise where a pricing scheme is devised only by reference to the situation of undertakings established in the host Member State, which differs from that of foreign undertakings.166 Here, the domestic controls generate what is in effect a margin squeeze between costs incurred by the foreign trader upstream and the maximum price obtainable downstream. The effect is that the foreign trader cannot compete profitably—and in the longer-term, probably cannot compete at all—in the host Member State.167 Cases of this variety thus grapple with a limitation inherent within the truism that competition policy ought to protect the competitive process rather than competitors: although the latter might introduce inefficiencies in the short-term, in the longer-term the existence of rivals is indispensable to healthy competition. Finally, several recent cases hint at a more fundamental objection to price regulation, reflecting the antithetical nature of price controls within an ostensibly free market. Chief amongst these is Scotch Whisky. In holding that domestic regulation of alcohol pricing constituted a ‘measure having equivalent effect’ (MEE) contrary to Article 34 TFEU, the Court spoke broadly about the potential for price regulation to impinge upon ‘the free formation of prices’,168 which ‘constitutes the expression of the principle of free movement of goods in conditions of effective competition’.169 Such language suggests that the concern with price regulation is not merely that it may disfavour foreign traders, but that it may create an inherently uncompetitive market structure which disadvantages all traders—and, consequently, consumers—regardless of origin. Care ought to be taken against reading too much into a single judgment. First, the phrase, ‘the free formation of prices’, was introduced by the Advocate General170 specifically in relation to the CMO Regulation for agricultural products,171 although the Court adopted this wording more broadly.172 Moreover, in concluding that the impugned controls constituted an MEE, the Court endorsed the reasoning of the Advocate General,173 who emphasized the extent to which the regulation might cancel out the competitive advantage of imports,174 thus aligning with established case law.175 Yet, the apparently expansive language chimes with the earlier decision in Commission v Italy, where the Court spoke of price regulation as a potential impediment to market access—contrary, in that instance, to Articles 49 and 56 TFEU—insofar as it might deny entrants the opportunity to compete ‘under conditions of normal and effective competition’ within the host Member State.176 Again, this suggests that it is not merely the potentially discriminatory impact of such regulation, but rather its distortive effects more broadly, that conflict with the principle of open competition.177 Although the Court in Commission v Italy concluded that the regulation did not, in fact, hinder market access, it did so on the basis that, in practice, it permitted independent price-setting, thus allowing ‘proper remuneration’178—and, implicitly, allowing the market mechanism to function. A principled objection to interference with the price formation mechanism may also explain the Court’s vehemence in Deutsche Parkinson, which celebrates the virtues of price competition in the strongest terms.179 Regardless of the conceptual basis upon which price regulation constitutes a barrier to free movement, Member States retain the possibility of justifying such controls by reference to proportionate countervailing public policy considerations. It is here that the domestic impetus behind price regulation is of paramount significance: whilst EU law acknowledges the importance, and possible precedence, of certain ‘non-economic public policy aims’,180 not every domestic concern provides a legitimate reason to deviate from open competition. To exempt prima facie restrictive regulation, Member States must demonstrate that it ‘serves overriding requirements relating to the public interest, is suitable for securing the attainment of the objective which it pursues and does not go beyond what is necessary in order to attain it’.181 The burden of proof lies with Member States,182 emphasizing the presumption that national obstacles to price competition conflict with EU law. In scrutinizing any public policy objective advanced to justify price regulation, a core question is the extent to which EU law can or should presume to ‘second guess’ the policy choices of Member States. The free movement rules are not a prescription for legislative harmonization,183 and Member States retain the freedom for divergent regulation within their confines. Price regulation, alongside the domestic policy concerns that underpin it, is often an inherently political activity,184 both in its initial recognition of legitimate countervailing non-economic values and in the choice of regulatory mechanisms deployed to protect or further those values.185 To that extent, as Advocate General Spzunar recognised, ‘[i]t is obviously not for the Court to interfere in national political and democratic processes and to prejudge certain political choices’.186 Yet, as cases like Essent,187Viking,188 and Laval189 demonstrate in different contexts, the fact that fundamental domestic policy considerations are at issue neither excludes application of the free movement rules nor means the latter must yield to the former. Balancing the objective of establishing the internal market against ‘sensitive matters of a non-economic nature’190 is, therefore, ‘a delicate task’.191 Member States have relatively broad latitude in identifying public policy concerns that might, in theory, justify restrictions on price competition. Echoing our discussion in Section II above, the Court accepts that price controls might further such objectives in various ways. Upper limits can enhance consumer protection by preventing price gouging, particularly where consumers lack market power.192 Price regulation may encourage practices viewed as socially desirable—such as consumer saving193—or, conversely, discourage undesirable practices—such as alcohol abuse.194 More problematic are cases where controls play a ‘moderating role’,195 to neutralize perceived ‘excessive’196 or ‘ruinous’197 competition. Here, the regulatory concern is that price competition might unbalance the existing market equilibrium by, for instance, encouraging ‘cream-skimming’ behaviour that neglects peripheral or vulnerable consumers198 or less profitable product categories,199 or which leads to a deterioration in quality as suppliers cut costs to cut prices.200 While the Court is not unreceptive to such concerns,201 justifications of this variety may shade into purely economic arguments, which cannot provide a legitimate ground for derogating from free movement.202 The mere existence of a valid public policy concern does not automatically legitimate domestic controls, however, as Member States are furthermore bound by the principle of proportionality. Any regulation must therefore be limited to measures that are both suitable and necessary to achieve the relevant public policy objective.203 The exactingness with which the proportionality criterion is applied is, arguably, the decisive aspect of the balancing of domestic and EU-level interests. Advocate General Bot thus argued for ‘a certain degree of restraint’ in this analysis:204 both in order to grant Member States some discretion over policy choices on issues of, primarily, domestic concern,205 and because of the inherent ambiguity of the exercise, which involves a measuring and balancing of fundamentally different (and, sometimes, intangible and even unknowable) phenomena.206 In Scotch Whisky, the Court adopted a reasonableness standard to assess whether the proportionality requirement was satisfied;207 an approach that ostensibly gives Member States a certain leeway, reflecting the once-removed status of the EU institutions to the essentially domestic choices that underlie most regulation.208 Yet, the Court’s recent decisions on price regulation suggest, in practice, a more exacting approach than the language of reasonableness implies. The Court shows few qualms about questioning, and effectively second-guessing, domestic choices in an area acknowledged to be of significant importance—human health—and one which, moreover, lies primarily within the competence of Member States.209 In Scotch Whisky, a decidedly unconvinced Court indicated that, although minimum pricing might be suitable to combat alcohol misuse, it should not be considered necessary, insofar as a tax increase could achieve the same result in a less restrictive manner.210 (A viewpoint rejected, notably, when the case returned to the domestic level.211) More trenchantly, in Deutsche Parkinson, the Court rejected categorically Germany’s assertion that fixed prices were suitable to protect the supply of medicinal products by supporting a network of bricks-and-mortar pharmacies, despite the referring court’s view that regulation was the only means available (and thus, necessary) to achieve this outcome. Although the holding may be explained partly by an absence of plausible evidence,212 the case is nonetheless remarkable for the willingness of the Court to substitute its own (equally subjective) reasoning for that of the delinquent Member State. Of particular significance is its receptiveness to certain—markedly hypothetical213—arguments advanced by the Advocate General to provide a counter-narrative to that of the Member State, including suggestions in respect of the potential effects of price competition;214 and, in a manner arguably conflating ought with is, the ways in which internet-only pharmacies might serve all segments of the population.215 Thus, the Court effectively questioned the substance of the domestic policy choices.216 What remains unclear is the source of this hostility: whether the Court was concerned about poor quality national regulation, or, echoing public choice critiques, whether it suspected a disjuncture between stated and actual regulatory motives. Either antagonism brings attendant dangers: an unduly rigorous and somewhat speculative proportionality analysis risks slipping from a judicial to full-merits review standard; whereas questioning the underlying motives of Member States arguably runs contrary to the principle of mutual trust that is demanded, at least of Member States, under EU law. Ultimately, the key question is why the Court of Justice is better placed to make such essentially normative determinations, whether based on technical expertise or its pan-Union perspective.217 The apparent willingness of the Court to embrace substantive review stands in marked contrast, moreover, to its reluctance to perform a similar function under the subsidiarity principle in the context of price regulation originating at EU level.218 Where, more exceptionally, Member States involve private market actors in the public task of price regulation, the broader EU competition framework may provide an alternative avenue to scrutinize and prohibit such behaviour. As noted, where anticompetitive price-setting is carried out by undertakings themselves, it may be caught by Articles 101 or 102. To avoid situations where equivalent private interests are cloaked in public authority and escape scrutiny, those prohibitions—read with Article 5 TEU (duty of loyal cooperation)—impose obligations on Member States.219 This may be the case where Member States require or encourage abusive price-setting by dominant undertakings or the adoption of rate-fixing agreements, or where national rules lose the character of public legislation when responsibility is delegated to private operators for decisions affecting the economic sphere.220 Alternatively, where anticompetitive pricing structures are maintained by an undertaking yet are attributable to a state measure, the Member State may be accountable under Article 106(1) TFEU.221 If, however, price regulatory activity is necessary to ensure provision of so-called ‘services of general economic interest’, Article 106(2) TFEU may, in theory, exempt the behaviour from application of, inter alia, competition law.222 VI. Indirect price regulation II: the permissive approach Although an openly sceptical approach typically governs ad hoc domestic price regulation, within a narrower subset of economic conditions there is greater recognition of, if not the desirability of price controls, at least their inevitability. Reflecting a pragmatic recognition of the (sometimes) necessity of intervention, the ‘lesser evil’223 is to centralize and standardize arrangements for domestic regulation through an overlay of more permissive, essentially supervisory EU rules. Price controls are not inherently suspect, yet the discretion of Member States is constrained, with an underlying assumption that the scope for resultant distortions is similarly diminished. While the granular details of these supervisory schemes differ between sectors,224 those circumstances where default hostility is replaced by tentative tolerance share characteristics which inform and influence the tenor of supervision. First, each of the sectors concerned has been subject to some degree of EU-level liberalization or harmonization, which sought to transform tightly-controlled and segmented national markets into contestable and competitive components of the internal market. EU law was thus the catalyst for creation of the market forces which Member States might subsequently seek to restrict. Adoption of positive legislation also suggests pan-Union interests that might be imperilled through disparate domestic controls. Second, in each sector, liberalization has not, however, involved a complete realignment of market governance rules with an EU-level archetype.225 Member States retain scope to adopt divergent regulation, with possible disruptive effect. Absent deeper harmonization—which, in the areas concerned, would prove politically contentious and potentially inefficient—the more pragmatic approach may be to accept the possibility of diversity but minimize its potentially disruptive impacts. Finally, the sectors concerned are, typically, marked by structural features—economies of scale, network effects, natural or legal monopoly components—which mean that unregulated market activity is unlikely to generate ‘effective’ competition even after ostensible liberalization, so that the ordinary price formation mechanism may generate suboptimal outcomes.226 These difficulties are reflected, inter alia, in the frequency with which antitrust enforcement has been deployed against individual pricing practices.227 Moreover, in the background in most instances are societal concerns—such as public service provision, or public health—that extend beyond the purely economic. These factors explain why domestic price controls are implemented with notable frequency in such markets: ‘[l]iberalisation, if it is not to be at any cost to individuals, makes a certain amount of regulation necessary when the market does not function adequately’.228 These economic and social features provide a rationale for the acceptance of regulation as a ‘lesser evil’. The electricity sector, where the continued presence of natural monopoly segments creates persistent structural barriers to competition, provides a clear example. Here, although the ultimate objective is to secure ‘transparent market-based mechanisms for the supply and purchase of electricity’,229 the liberalization framework acknowledges the continuing necessity for price supervision. The Third Electricity Directive expressly permits Member States to impose public service obligations with respect to, inter alia, price.230 It moreover requires Member States to ensure universal service for households (and, where preferred, small enterprises), premised upon ‘reasonable, easily and clearly comparable, transparent and non-discriminatory prices’.231 The Directive also mandates regulatory approval of wholesale-level transmission and distribution tariffs,232 reflecting the potential for inefficient pricing practices upstream to create bottlenecks to retail competition. This reflects the ‘essential facility’ nature of such infrastructure, a parallel to the realm of antitrust,233 thus recognizing the extent to which unduly high input prices may have knock-on negative effects downstream. Consistent with the logic of the permissive approach, however, the liberalization framework does not determine access prices; instead, this is delegated to national regulators, albeit acting within the circumscribed EU supervisory framework. Within the telecommunications sector, where EU liberalization has had greater success,234 the treatment of domestic regulation is less generous. Here, liberalization is explicitly premised upon the progressive reduction of ex ante regulation as competition develops.235 Thus, there is an express preference for retail and wholesale arrangements negotiated ‘on a commercial basis’,236 which implies price-setting in accordance with ordinary principles of supply and demand. While the liberalization framework provides explicit authorization for domestic price controls where necessary,237 this option is only available following a finding that one or more operators hold ‘significant market power’.238 This mirrors the antitrust notion of dominance,239 premised upon an absence of competitive constraints, thus suggesting that ordinary price-setting processes cannot work well in the circumstances.240 Nonetheless, regulatory interventions must avoid ‘market distortion’241 that would prove counterproductive on balance. Market assessments are subject to periodic review,242 with an obligation to remove existing regulation where the threshold requirement is no longer met.243 Furthermore, the Commission has progressively narrowed the list of markets in which controls might be warranted.244 Accordingly, despite express recognition of the residual permissibility of price regulation even within ostensibly liberalized markets, the discretion of Member States is significantly curtailed, at least acting qua telecommunications regulators.245 The Directive on Airport Charges246 provides further variation. While the explicit aim is to establish a common regulatory framework for charges at major EU airports,247 the Directive stops far short of specifying prices. Instead, it establishes a series of ‘common principles’248 that govern ‘the essential features of airport charges and the way they are set’.249 Beyond these, the Directive is notably permissive in terms of the procedure or methodology to be followed,250 whether charges are set by airport operators or public regulators,251 and the absolute level of fees. The primary objective is to regulate the relationship between airport management authorities and users (ie airlines), and specifically, to prevent abuse of market power by the former.252 Yet, pursuit of this goal requires neither centralization nor full harmonization: it is sufficient simply to guide domestic price-setting through a series of EU law obligations that are non-negotiable, but hardly unduly onerous. Finally, a ‘peculiar’253 form of supervision is contained in the Transparency Directive,254 which regulates price-setting for medicinal products. Such controls accommodate multiple policy considerations: securing a consistent supply of necessary medicines; minimizing expenditure of finite public resources; and protecting private incentives for research and innovation. Against this background, the Directive acknowledges the prima facie legitimacy of regulation, whether imposed directly through price controls, or indirectly through purchasing activity of national health systems. It nonetheless seeks to constrain the discretion of Member States—and minimize potential obstacles to free movement—by imposing procedural requirements, including time-limits and a duty to give reasons. As Deutsche Parkinson illustrates, these comparatively high-level obligations have proven insufficient to avoid (perceived) market distortions. Yet the failure of efforts to strengthen and update the Transparency Directive,255 due to ‘no foreseeable agreement’ among legislators,256 demonstrates the national sensitivities and divergent interests at play. Together, these examples illustrate both the overarching logic of the permissive approach and the extent to which the details of each regime depend upon the specific market dynamics. By structuring national decision-making for price regulation, whether by limiting the circumstances in which controls are permissible or by mandating the procedures to be adopted, in each instance the EU-level supervisory framework limits, but does not remove completely, national discretion. Consistent with the principles of subsidiarity and proportionality, both of which prioritize the ‘least restrictive alternative’, these examples are concerned with setting ‘rules of the game’, but not prejudging actual results. Recurrent use is made of principles of good governance—including timeliness,257 transparency,258 non-discrimination,259 consultation,260 objectivity,261 and verifiability262—which bind and constrain Member States when engaging in price regulation. This structural approach, on the one hand, seeks to influence but not predetermine the substantive scope of domestic controls; on the other, it serves to pry open often opaque and perhaps murky domestic processes to greater scrutiny, at both national and EU levels.263 Each of the examples discussed above, moreover, involve duties to inform the Commission of measures to implement the required decision-making framework and/or of specific decisions taken under it.264 These obligations serve a twofold purpose: to condition and constrain domestic policy making insofar as it takes place, overtly, in the ‘shadow of hierarchy’; and to provide early warning of inadequate domestic structures or distortive controls. The underlying objective is to depoliticize price regulation, turning it into a largely technocratic enterprise. By constraining the discretion of Member States and throwing light on regulatory processes and outcomes, EU law seeks to limit the extent to which domestic regulation might favour vested private or public interests at the expense of the competition process. The permissive approach shares with the public choice movement a scepticism regarding the inherent unreliability of regulators, but not, it seems, the regulatory enterprise more generally. Implicit is a suspicion that, left to their own devices, national regulators may favour domestic over Union interests, or social over economic ones. Yet the answer is not, as public choice would have it, to abandon or prohibit price regulation entirely. Instead, EU law seeks the more constructive path of channelling domestic regulators towards better policy making, with due regard, amongst other things, for competition implications. This is illustrated by an increasing use of rigorously independent national authorities to implement and administer supervisory requirements. Both the electricity and telecommunications frameworks mandate legally distinct and functionally independent national regulators.265 Each authority must exercise its powers impartially and transparently,266 including a prohibition on seeking or taking instruction from other bodies, public or private.267 Such requirements are intended to increase the authority of domestic regulators and the predictability of their decisions, in order ‘to remove any reasonable doubt as to the neutrality of that body and its imperviousness to external factors’.268 Implicit is the assumption that exposure to such factors would diminish the effectiveness of domestic regulatory activity, coupled with a strong conviction of the relative efficiency of bureaucratic regulation in contradistinction to political decision making. The Airport Charges Directive similarly requires the establishment of ‘national independent supervisory authorities’ to mediate in the event of failure to reach agreement on charges.269 More radically, one proposed innovation within the (now failed) revisions to the Transparency Directive was the requirement for a designated independent body to impose penalties against defaulting Member States where regulators fail to comply with time limits.270 The permissive approach emphatically does not give carte blanche to Member States, however. A corollary of the constrained discretion permitted is that, where exceeded when imposing price controls, the errant Member State stands in violation of EU law. That is, the mere fact that the EU legal framework envisages the possibility of price regulation does not equal a presumption that any domestic controls are acceptable. The energy sector illustrates this tension. As discussed, EU law not only contemplates price regulation in the electricity and gas sectors, but indeed requires a degree of supervision in wholesale markets. Following its energy sector inquiry, the Commission was nonetheless strongly critical of regulated retail tariffs, which it argued could have ‘highly distortive effects and … pre-empt the creation of liberalised markets’.271 Starting in Federutility,272 and reaffirmed in ANODE,273 the Court of Justice has split the difference by confirming the continuing power of Member States to imposed retail controls, while articulating demanding requirements, procedural and substantive, to be satisfied where Member States exercise that power. The latter proved a stumbling block in Commission v Poland, where, regardless of whether market circumstances merited intervention, the price controls at issue—unlimited in time and applicable without distinction to all consumers—represented a disproportionate incursion into liberalized gas markets.274 Prices determined by the interplay of supply and demand thus remain the preferred option and final objective.275 Ultimately, even when EU law adopts a more permissive approach to price regulation, domestic controls may prove incompatible with the internal market. VII. Direct price regulation: the prescriptive approach Finally, we consider more direct or interventionist means by which EU law seeks to control pricing, namely, ‘by regulating prices at [Union] level’.276 Such regulation contrasts with more indirect approaches, in which EU law has an essentially negative function, ‘imposing limits on national regulations on prices’.277 It also contrasts with ad hoc regulation via antitrust enforcement, providing, at least in theory, systematic solutions to market failures rather than punitive responses to individual conduct. Such regulation is explicitly recognized by the Court of Justice as ‘exceptional’, justified only in ‘unique’ circumstances.278 Two examples will be considered, exploring the rationales for and broader implications of this approach. Of the indirect methods of price regulation, the prohibitive approach is an essentially polarized one: the EU prerogative of developing and protecting market competition pitched against Member State interest in restricting a competitive parameter. The more permissive approach is largely cooperative: the EU and Member States collaborate to devise and implement controls that strike an appropriate balance ‘between the free market and regulation, between competition and the implications of the general interest’.279 Cooperation breaks down only where Member States exceed the terms of the permission granted by the EU law. At their core, however, both reflect the ideological challenge of price regulation within ostensibly free markets: the former is unavoidably viewed as a deviation from the archetype of the latter. Moreover, both presuppose a dichotomy between EU law—as a centralizing, neutralizing force, on course towards ever-greater competition—and national laws—as a source of divergence and distortion. Our final approach, conversely, addresses several—highly atypical—instances in which EU law is itself a vehicle for harmonized price controls imposed directly within domestic markets. In a sense, these examples are closer to the punitive approach discussed in Ssection IV, whereby the operative dichotomy is similarly a distinction between private market action and EU-level public control. It is thus unsurprising that both were preceded by antitrust enforcement. Yet the underlying approach to market supervision is, from another perspective, wholly at odds with the philosophy behind the competition rules: rather than discrete interventions to eliminate specific anticompetitive conduct, instead these examples demonstrate a complete overreaching of the price formation mechanism. An overt commitment to open and undistorted competition pervades conventional responses to market dysfunction under EU law: namely, reinforcement of existing competitive dynamics—whether by structural reform, removing regulatory restraints that inhibit competition, or antitrust enforcement against private actors—as opposed to overstepping those forces through price controls.280 To the extent that EU law makes provision for price regulation, typically it does so through alignment of domestic processes towards a Union archetype. This ‘intermediate’281 approach arguably reflects the most appropriate allocation of ‘proper political accountability’282 between the EU and Member States, given the plurality of ‘legitimate regulatory goals’283 that might be pursued. Despite such reservations, however, EU law retains the formal capacity to embrace more prescriptive interventions through ex ante price controls: devised and imposed at EU level, taking effect within national markets, and applying directly to the activities of private actors. The two examples we consider are the Roaming and Interchange Fee Regulations. In both instances, the control mechanism comprises a price ceiling, from which domestic regulators have little or no ability to deviate. Bearing in mind the logic of subsidiarity, these examples raise questions about when and why such exceptional EU-level regulation is warranted. It is thus necessary to understand and compare the objectives behind and regulatory circumstances of both Regulations. Although the sheer dearth of such legislation limits our sample size, it is possible to discern recurring themes which may serve to explain the precedence granted to EU-level action. The Roaming Regulation sets EU-wide prices for mobile roaming services. ‘Roaming’ occurs when mobile customers use their phones abroad. To supply coverage, home providers purchase wholesale network access within host Member States. Historically, rates for wholesale access were high, reflected in equally inflated retail prices. Identified as a dysfunctional market by a Commission sector inquiry,284 the issue was initially pursued through antitrust enforcement and ‘soft’ law efforts.285 When these failed to generate reductions in rates,286 the Commission chose a more distinctly ‘regulatory’ solution: an EU-wide maximum for wholesale access, plus a limitation on the permissible retail mark-up to 130 per cent of wholesale prices.287 This sought to address the ‘core problem’ that prices for roaming stood ‘in no meaningful relationship to the underlying costs’,288 resulting in ‘unjustifiably high’ charges.289 Entering in force in 2007290 and initially covering only voice calls, it was extended to text messages291 and internet data, while costs were reduced progressively.292 Finally, from June 2017, roaming surcharges have been abolished outright within the EU.293 Our second example concerns interchange fees for payment cards. Interchange fees comprise the costs levied by card system operators to merchants that accept payment, and have long been subject to public criticism and regulatory scrutiny.294 These concerns were reflected in the Commission’s sector inquiry into retail banking, which identified, inter alia, large variations in fees across Member States alongside generally high levels.295 Initially, antitrust enforcement was considered sufficient to address these problems;296 eventually, the Commission opted for a more durable approach with a specific Regulation on fee-setting.297 The core function of the Interchange Fee Regulation is to cap maximum permissible fees for consumer credit and debit transactions involving four-party payment card schemes, such as Visa and MasterCard.298 In devising fee levels, the Commission took account of both economic theory and existing administrative practice;299 the Regulation thus sets maximum fees of 0.2 per cent for consumer debit card transactions and 0.3 per cent for consumer credit card transactions.300 The key pricing provisions took effect from December 2015. Despite factual differences, numerous elements unite these distinct examples, which may explain their regulatory priority within EU law. First, both markets were subject to considerable scrutiny within the framework of the EU’s competition policy powers prior to enactment of the relevant Regulations. This indicates the pre-existence of significant market dysfunction; circumstances that were, moreover, a source of substantial EU-level concern. Commission sector inquiries, appropriate where ‘circumstances suggest that competition may be restricted or distorted’,301 were carried out in each, illustrating the importance of these markets within the context of the internal market. Both inquiries revealed a risk of high pricing resulting from excessive market power;302 which in each instance prompted competition enforcement, pursuing such behaviour from an antitrust standpoint.303 Yet the subsequent decisions to regulate demonstrate both the intrinsic limitations of regulation through antitrust enforcement, and the value added of ex ante price controls to address persistent market power. In the case of roaming, competition law proved largely incapable of addressing the exploitative oligopolistic behaviour at issue, meaning that regulation was necessary to secure an effective outcome. Although investigations were pursued against network operators, alleging abuse of dominance through excessive wholesale pricing,304 such efforts suffered from difficulties in establishing dominance, alongside the inherent stringency and uncertainty of the United Brands test to demonstrate excessiveness.305 The Commission alluded to the ‘complexity’ of enforcement,306 and, once the Roaming Regulation was adopted, it closed on-going investigations without findings of breach.307 Interchange fees, by contrast, come readily within the ambit of Article 101 TFEU. As discussed in Section IV, antitrust enforcement has included commitment decisions involving Visa,308 and an infringement decision against MasterCard.309 Despite these successes, the piecemeal and essentially individualized nature of the remedies implemented provided an inadequate response to the systemic market failure at issue. The Commission thus determined that a top-down regulatory approach was required in lieu of ‘ad hoc’310 efforts. Second, in each instance the rationale for regulation was not merely a desire to increase efficiency: both, additionally, reflect social and integrationist concerns. Consumer protection was a key impetus for the Roaming Regulation, as high costs were perceived as exploitative of non-business travellers in particular.311 Thus, the Commission called for ‘a clear demonstration that Europe can act in the interest of citizens in a case where Member States are not equipped to act’.312 For the Interchange Fees Regulation, it was small and medium-sized merchants—who pay interchange fees in the first instance, and lack the economic clout to negotiate favourable rates individually—that shouted loudest (and lobbied hardest) for intervention. In both instances, price regulation was the means by which access to these increasingly important products could be secured, on realistic terms, primarily for the benefit of individuals and businesses without substantial market power. Significantly, in each case the ostensible social concern had a pan-Union existence or identity, thus warranting recognition at EU level. This contrasts with the divergent social concerns that prompt domestic price regulation, which, as discussed, are granted only circumscribed deference. Additionally, both sectors involve significant cross-border elements. Accordingly, their effective functioning—including affordable access—links to development of the internal market, thus providing a plausible rationale for the necessity and appropriateness of EU-level intervention. By its nature the levying of additional costs for use of mobile phones between Member States constitutes a barrier to integration and free movement: indeed, market segmentation is inherent within roaming as a service category. Although the internal market element is not intrinsic to payment cards, card systems are a central component of e-commerce infrastructure. A well-functioning integrated payment market is accordingly portrayed as vitally important, if not practically indispensable, to development of the digital internal market,313 again particularly from the perspective of ordinary consumers and smaller businesses. Notably, both roaming and the development of e-commerce are components of the Commission’s wider—and wildly ambitious—‘Digital Single Market’ strategy.314 In both instances, therefore, the Commission grounded its subsidiarity analysis in the transnational nature of the markets—and market failures315—at issue.316 Article 114 TFEU accordingly provides the legal basis for both Regulations. Although providing wide-ranging legislative powers, formally Article 114 does not grant the EU legislature any ‘general power to regulate the internal market’.317 Hence, it was necessary to establish a ‘disfavouring of cross-border economic activity’, and not merely a hindrance of economic activity as such.318 Both Regulations proceed on the assumption that, absent EU-level regulation, disparate and potentially distortive national price controls were likely to arise.319 An interesting question is whether the EU would have authority to legislate absent domestic divergence: that is, might the EU legislature intervene purely to address inefficient or otherwise socially-undesirable price-setting by private actors? Arguing tentatively in the affirmative in Vodafone, Advocate General Poaires Maduro drew parallels to Viking and Laval, which involved application of the free movement provisions to private parties due to ‘the direct impact that private acts … could have on free movement’.320 Where private economic activity involves a direct disfavouring of cross-border trade, he argued, the EU legislature should have capacity to regulate that behaviour. Where it involves wholly domestic trade, however—for instance, efforts to control the price of ‘suitcases or restaurant meals’321—the necessary link to cross-border trade is lacking. In such circumstances, the task of price regulation, if necessary, falls to Member States unless an alternative legislative basis exists.322 It is worth comparing, finally, the differing scope of the regimes. In one sense, the Roaming Regulation is more intensive and ambitious. It mandates wholesale- and retail-level controls, on the basis that wholesale regulation alone would not ensure that savings pass to consumers, while retail regulation without a reduction in costs might create a margin squeeze.323 Moreover, the Commission’s ultimate objective was the complete elimination of roaming charges, essentially rendering the service category obsolete (at least within ‘fair use’ parameters). The progressive reduction in rates might be viewed as akin to forcing the internal market, insofar as operators must price as if a single market for mobile telephony services exists; whereas, in reality, mobile markets remain segmented along national lines. The Interchange Fee Regulation is less far-reaching in this regard. The Commission rejected a complete ban on interchange fees for debit cards on the basis that the market was insufficiently mature,324 and similarly rejected retail regulation, implicitly suggesting that this might intrude too far into private economic activity.325 Yet the ultimate reach and impact of the Interchange Fee Regulation may be much greater than that of the Roaming Regulation. The latter involves a deep incursion into commercial freedom, yet confined within narrow circumstances. The Interchange Fee Regulation, conversely, addresses a broader subject-matter—payment card transactions—and governs fees for cross-border and domestic consumer card transactions. In practical terms, it represents a significant step beyond regulation in furtherance of specific EU objectives, and towards regulation of the functioning of national markets as such.326 This, in turn, suggests a further departure from the logic of subsidiarity, alongside a declining tolerance for domestic divergence or disparities. Central to both Regulations is implicit acknowledgement that the concept of effective competition within the internal market is more complex than the language of ‘free’, ‘open’, or ‘undistorted’ competition suggests.327 VIII. Dilemmas of price regulation under EU law The starting premise of this article has been that the treatment of price regulation under EU law is recognized as atypical, for reasons as-yet under-explored in existing jurisprudence and literature. In our efforts to tease out why this might be the case, we have seen that it is also complex and multi-faceted, with a wide-range of approaches—punitive, prohibitive, permissive, and proscriptive—discernible within the legal and regulatory framework. The preceding sections have nonetheless sought to demonstrate that, whether manifested in uncharacteristic restraint in antitrust enforcement, a distinctive hostility under the free movement rules, or sporadic and explicitly extraordinary instances of top-down regulation, the treatment of restrictions on pricing freedom under EU law diverges from what might be considered the ‘conventional’ approach to equivalent legal and economic issues. In this penultimate section we consider why price regulation is so problematic in the context of the internal market, and explore the circumstances in which EU law nonetheless endorses such controls as compatible with the goal of open and undistorted competition. The treatment of price regulation within EU law accommodates many contrasting regulatory impetuses, which extend beyond the bare pursuit of undistorted competition as such. Within competition policy, there is friction between the default preference for unencumbered price-setting versus the pragmatic reality of sometimes-dysfunctional markets. In the realm of integration, there are questions of whether and when price controls create distortions that ripple across the internal market, alongside tensions arising from delegation of price supervision to domestic regulators. Justifications for regulation take us into the delicate territory of social policy, raising questions of how and to what extent non-economic considerations can be addressed within the overtly competitive structure of the internal market; and whether the EU can and should challenge domestic regulatory preferences. As the examples above illustrate, there is no single or simple answer in most instances. In practice, price regulation remains an inherently domestic activity, meaning that EU law plays an essentially secondary role in constraining or directing interventions. Challenging questions of subsidiarity—when should EU law intervene?—and proportionality—to what extent should EU law pre-empt domestic regulatory choices?—accordingly abound. Two potential sources of concern with respect to domestic regulation implicitly pervade EU law. First, there is the issue of competence: whether domestic regulators have sufficient ability to design and implement effective controls to minimize distortions within the otherwise open and competitive internal market. Second, there are issues of integrity and fidelity to the Union: whether domestic regulators can be trusted to work alongside and in furtherance of integration and competition, or whether they might fall prey to capture by vested national interests, whether public or private. At its core, nonetheless, the distinctive treatment of price regulation under EU law may be explained by reference to the central, indeed axiomatic, role of the price formation mechanism in the context of the self-sustaining internal market. As we have seen, express acknowledgement of the foundational relationship between the free formation of prices and the concept of ‘open and undistorted competition’ is found throughout the jurisprudence. From an antitrust perspective, any effort by private parties ‘to influence free formation of prices’ is considered to ‘manifestly [have] as its object to restrict competition’.328 Under the free movement rules, the Court again forcefully defends the importance of ‘the free formation of prices’329 from Member State interference, emphasizing that ‘price competition lays the basis for [traders’] potential to access the market directly and to continue to be competitive in it’.330 Even where domestic regulation is anticipated by EU-level harmonization, the Court nonetheless takes the view that ‘a measure which requires a product or service to be offered on the market at a determined price … is by its very nature contrary to the objective of achieving an open and competitive market’.331 Moreover, the ‘exceptional’ and ‘unique’ nature of top-down price regulation by the EU itself is overtly acknowledged.332 Yet the conceptual and practical challenges extend beyond mere recognition that the notion of undistorted competition implies an absence of public control over price formation. Specifically, price-setting lies at the heart of the well-functioning internal market, insofar as it operates as both the facilitator of and the reward for exactly the sort of economic behaviour upon which the very existence of the internal market is premised. Price controls thus have a direct negative impact on the interior motivations of would-be economic operators, without which the internal market cannot exist in a meaningful sense. Price regulation accordingly differs from other market restrictions, be they limitations on who can provide a product,333 the form in which is delivered,334 or the circumstances surrounding promotion335 or sale.336 The latter may render market participation less attractive, but do not challenge the fundamental impetuses of entrepreneurship. Arguably, only outright prohibitions on particular product or service categories are more restrictive of economic freedom than price regulation; the outcome ultimately pursued, incidentally, in the context of the Roaming Regulation.337 Although the definition of ‘economic activity’ in EU law is sufficiently broad to encompass non-profit entities,338 the practical reality is that the vast majority of undertakings operate primarily if not solely to make profits. In the short term, a firm’s ability to decide upon and charge a commercially acceptable price, taking account of both the level of competition it faces and its desire to realize a reasonable profit margin, is likely to determine both its capacity and its incentive to enter or to continue to compete within a marketplace. Insofar as price regulation deprives individual firms of the freedom to engage in self-maximizing price-setting behaviour, it may dissuade or even entirely prevent such participation. This harms the frustrated trader, denied the opportunity to realize its individual economic freedom through involvement in the internal market, and also the competitive process and consumers more generally, who suffer the ill-effects of a less buoyant marketplace. In the longer term, the presence of price regulation reduces the prospects for market participants to earn future supra-competitive profits, pursuit of which is considered to play a vital role in motivating competition between individual firms. This concern was well-articulated by Scalia J in the US Supreme Court decision in Verizon v Trinko, who argued that, ‘[t]he 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’.339 The existence of price regulation, or a possibility of its future enactment, inevitably reduces the likelihood that an effective economic operator, who succeeds in increasing its market share through competition on the merits—a ‘pristine monopolist’,340 in US parlance—will be able subsequently to reap its otherwise legitimate reward of higher prices. Knowledge, ex ante, of its diminished prospects for greater returns ex post may, in theory, dissuade the rational firm from seeking a monopoly from the outset. This means, in practice, that it may compete less vigourously, refraining from the sorts of risky or resource-intensive activities that tend to underpin both short-term and longer-term efficiency gains. Accordingly, price controls not only restrict the immediate vitality and potentially the viability of competition within regulated segments; more generally, their recurrent use and tolerance could inhibit the essential competitive forces, between but also within Member States, that development of the internal market seeks to foster and protect. This fundamental concern, we argue, underlies each of the approaches to price regulation discussed above. In the antitrust context, EU law prioritizes market opening and access concerns. Conversely, there is a clear reluctance to ‘pick winners’, seen both in the Commission’s hesitancy when presented with allegedly unfair pricing practices, as well as its strong aversion towards (involuntary, at least) pricing controls as antitrust remedies. Advocate General Wahl’s assessment in AKKA provides the clearest explanation for the Commission’s unusual restraint: the elevated risks of false positives and counterproductive impacts in the longer-term mean that this is an area of antitrust where, in effect, the game may not be worth the candle.341 Under the free movement rules, we argued, the default approach is one of scepticism and hostility. Domestic price controls are condemned even where the link to interstate trade is tenuous to the point of non-existence; instead the objection appears to be much deeper, concerning a fundamental disconnect between regulated prices and so-called ‘conditions of normal and effective competition’.342 Although EU law does not outlaw, a priori, domestic restrictions on private price formation, departures from the norm of open and undistorted competition are unusually closely scrutinized and narrowly circumscribed, as discussed in Sections V and VI. More specifically, this understanding of the distinctiveness of price regulation may help to reconcile the apparently conflicting outcomes in Keck and Scotch Whisky.343 The logic of Keck, in the abstract, is unimpeachable: insofar as domestic rules merely regulate intrastate trade, they should fall outside the purview of free movement. Yet, arguably, the real mischief that concerned the Keck court was not the domestic price control at issue, but rather the approach within—and criticism of—earlier Sunday trading cases.344 Thus, the Keck court provides the right answer, but arguably to the wrong question. Scotch Whisky leaves intact the basic reasoning of the judgment, but clarifies that significant restrictions on pricing freedom fall outside the safety of the ‘selling arrangements’ conceit. Indeed, the restraint at issue in Keck—a blanket rule against below-cost pricing—presents serious problems from a competition policy perspective, insofar as lower prices are precisely what competition is intended to deliver. Post-Scotch Whisky, a national rule that limits trading hours one day per week might still avoid classification as a genuine hindrance to market access;345 but a rule that neuters the profit-seeking impulses of potential new entrants cannot similarly escape criticism. Finally, to conceive of price regulation as not merely at odds with, but indeed substantively inimicable to, development of the internal market—in particular, the underlying interplay of forces of supply and demand premised upon the free-functioning of the price formation mechanism—serves to demonstrate just what is so extraordinary about the examples of EU-level regulation discussed in Section VII. Although we sought to identify plausible and consistent reasons as to why, exceptionally, top-down price controls were considered suitable and necessary, the most compelling takeaway may be the extent to which both Regulations are so far from the norm of approaches to market supervision within EU law. Deferring to the so-called ‘invisible hand’ as the principal means of market regulation, facilitated by the free-functioning of the price formation mechanism, brings the additional advantage of avoiding the need for top-down regulation to supplant private decision making. This, consequently, minimizes two distinct sources of regulatory tension within the internal market. Where the task of price regulation lies with the EU itself, whether setting individual prices under competition law or mandating harmonized prices under Article 114 TFEU, we saw that concerns exist both with regards to the EU’s ability to identify and impose optimal prices, and the legitimacy, broadly construed, of decisions to do so. Conversely, divergent controls enacted by Member States raise concerns both regarding the absolute quality of regulation and a potential fragmentary impact on market integration. Given that internal market regulation is a shared competence, decisions to deviate from the default of private price formation almost unavoidably raise difficult questions about which competent regulator should have priority to determine alternative market outcomes. Accordingly, a robust defence of the importance of price freedom within EU law brings the oblique benefit of forestalling this dilemma. Of couse, although competitive markets tend to benefit consumer welfare, efficiency is far from the only socially-important value recognized within EU law. As illustrated by the preceding discussion, it is well-established that limitations on pricing freedom may be justified in the broader public interest within the social market economy.346 We argue, however, drawing upon the extended understanding of the principle of proportionality as articulated in Fedesa,347 that the approach to price regulation within EU law exhibits considerable scepticism about whether regulating prices can ever constitute the so-called ‘least onerous’ or least restrictive alternative measure available to achieve even legitimate public policy objectives. This is seen, in the realm of antitrust, in the strong default preference for interventions that reinforce existing market forces, on the assumption that well-functioning markets can self-correct and eliminate exploitative harms in the longer term. Scotch Whisky and Deutsche Parkinson illustrate the recent willingness of the Court of Justice to second-guess the substance of politically-sensitive domestic policy decisions, and in particular, to conclude that Member States ought to opt instead for specified alternatives to price regulation. As a ‘lesser evil’ approach, the permissive attitude discernible within the sector-specific directives necessarily accepts the appropriateness of domestic price controls in certain contexts. Yet comparatively tight EU-level supervision of the manner and circumstances in which pricing restraints can be implemented, alongside muscular enforcement against domestic regulation considered to exceed the limited discretion granted to Member States, suggest a more suspicious, indeed hostile approach in practice. Finally, what is exceptional about the top-down instances of EU-level price regulation considered above is precisely that, in the market circumstances at issue, the EU institutions were prepared to accept that no less onerous alternative solutions existed to remedy the identified dysfunctions. When the validity of the Roaming Regulation came before the Court of Justice in Vodafone, moreover, the Court expressly rejected a ‘best possible option’ standard of review in favour of the more deferential ‘manifest inappropriateness’ standard, justifying its approach on the basis that the EU legislature (but not, it would seem, Member States) ‘must be allowed a broad discretion in areas in which its action involves political, economic and social choices’.348 Thus, price regulation is frequently an available policy option, but is rarely viewed as optimal—unless, of course, the EU institutions decide the contrary. Another important, and largely overlooked, aspect of the treatment of price regulation is its relationship to the internal market qua single market. As argued, domestic rules that limit private price-setting are formally anathema to the philosophical bent of development of the internal market. Yet this desire to preserve the free functioning of the price formation mechanism, and specifically, to stamp out divergences in domestic practices regarding price regulation, belies the inherent difficulties of harmonizing prices. It is considerably more straightforward for EU law to prompt alignment of, for instance, domestic rules governing sales practices or qualification of providers than it is to require the elimination of price differences between Member States. As Advocate General Wahl noted in AKKA, ‘elements such as—to name but a few—domestic taxes, the particular characteristics of the national labour market and local consumers’ preferences may significantly affect the final prices of the relevant product or service’.349 Moreover, as the Court itself acknowledged, ‘there are, as a general rule, significant differences in price levels between Member States for identical services, those differences being closely linked with the differences in citizens’ purchasing power’.350 Considering the validity of the Airport Charges Directive, Advocate General Mengozzi similarly argued that different national circumstances mean that quite different fee levels may remain appropriate across the EU, even applying common principles for price-setting.351 In this regard, again, the Roaming Regulation was quite extraordinary, implying as it did that a single appropriate price (nominally, price cap) could be identified for and applied across the twenty-eight Member States. (The Interchange Fee Regulation sidesteps this problem by adopting a percentage-of-transaction-value approach.) Persistent, often significant, differences in price across the internal market—‘organic’ in the sense that they arise as a result of variances in supply and demand, rather than public or private manipulation of the price formation mechanism—arguably call into question the contention that price regulation functions as an appreciable barrier to market interpentration. Even absent domestic controls, de facto variations in the effective price across the internal market may have similar negative effects on incentives for participation and competitive behaviour. Forcing complete alignment of prices is (largely) beyond the remit and indeed the concern of EU law. Yet what the numerous cases addressing price regulation demonstrate is that differences attributable to ‘artificial’ intervention—such as price controls—are inherently suspect in a way that organic differences simply cannot be. Finally, it is instructive to note the variety of procedural postures identifiable across the jurisprudence addressing price regulation. These cases should not be read, solely or even primarily, as an EU-level institutional attack on domestic controls. In fact, many of the most prominent decisions, from Keck to Scotch Whisky, initially involved somewhat opportunistic attempts by traders to invoke EU law to attack inconvenient national rules; efforts that receive varying degrees of assistance from the Court of Justice. Others involve Member State attempts to challenge EU-level efforts to control352 or mandate price regulation,353 typically premised on subsidiarity concerns. Of course, the Commission retains jurisdiction to pursue Member States whose pricing controls might infringe EU law and thus amount to a failure to fulfil EU-level obligations.354 As cases such as Deutsche Telekom illustrate, however, what is ostensibly the most proper legal approach may not be the most strategically effective one. Most interesting going forward perhaps is the increasing decentralization of the antitrust rules, involving both NCAs and private plaintiffs in enforcement at national level. Experience with the former suggests that domestic enforcers are more ready to pursue alleged exploitative harms than their EU-level counterpart; it is hardly to be expected that private litigants will exercise greater restraint. What is remarkable about this wide-ranging catalogue is the diversity of perspectives it reveals: not only the winners and losers of the wealth redistribution that price controls frequently represent, but also broader constitutional and even restitutionary concerns. The dilemma of regulating prices within the EU thus raises legal issues that are exceptional yet transcend easy categorization; this article has sought to throw greater light upon these complex questions. IX. Conclusion That ‘money makes the world go round’ is a contemporary cliché, and the operation of the internal market is no exception. The free-functioning of the price formation mechanism is, at least in theory, pivotal to its effective operation: both to secure an efficient distribution in the short term, and to incentivize greater economic activity within the internal market in the longer term. Moreover, market regulation by means of the ‘invisible hand’ bypasses the often-controversial question of which polity, the EU or its Member States, should have jurisdiction to ‘pick winners’ and determine the optimal market outcome going forward. Yet the treatment of price regulation under EU law points to certain paradoxes that lie within the concept of a ‘highly competitive social market economy’. Pricing and the price formation mechanism are central components of any system of open competition; yet free formation of prices cannot alone guarantee effective competition, nor it is indispensable to well-functioning markets in the broader sense. The social policy concerns and market conditions that underpin most regulation are typically national in origin and nature; yet the existence of multiple discrete and discordant price control structures is inapposite in moving towards an ostensible single market. Price regulation and its discontents within EU law thus reflect the inherent tensions and compromises that arise from an inevitable sharing of regulatory jurisdiction within the internal market, alongside the complications that stem from a plurality of legitimate yet conflicting regulatory goals. This article has sought to unpick the treatment of price regulation, identifying and exploring discrete strands within EU case law and regulatory practice: considering punitive, prohibitive, permissive, and even prescriptive perspectives. The various approaches adopted provide insight into the complexity of both the underlying regulatory phenomenon and the wider task of developing the internal market within a multi-level institutional structure. The article has further advanced a tentative explanation for the acknowledged distinctive status of price regulation within EU law. Crucially, such controls restrict not only how or how vigorously undertakings can compete within the internal market, but may also impact more fundamentally upon the interior motivations and entrepreneurial impluses which determine whether economic actors are prepared to participate at all in the market process. The approach of the Court of Justice in Metro (II) thus comes more readily into focus:355 price competition is not an absolute value, yet EU law is deeply reluctant to sanction any wholesale departure from its axiomatic market model. ‘Open and undistorted competition’ is thus both slogan and archetype, although not, ultimately, an unbending prescription within EU law. Footnotes 1 C-121/15 ANODE EU:C:2016:637, para. 30. 2 Alongside the substantive competition rules in Articles 101–109 Treaty on the Functioning of the EU (TFEU), see references to avoiding distortions of competition in Articles 32(c), 113, 116, and 348 TFEU, and ‘the principle of an open market economy with free competition’ in Articles 119, 120, and 127 TFEU. 3 Article 3(3), Treaty of European Union (TEU). 4 Opinion of Advocate General Poiares Maduro in C-58/08 Vodafone EU:C:2009:596, para. 38. 5 Opinion in Vodafone, para. 42. 6 See, eg, Commission Decision of 9 November 2010 in Case AT.39258 Airfreight, para. 900: ‘Price being the main instrument of competition …’. 7 Opinion of Advocate General Szpunar in C-148/15 Deutsche Parkinson EU:C:2016:394, para. 18. 8 Opinion in Deutsche Parkinson, para. 1. 9 Opinion in Vodafone, para. 1. 10 For discussion of the inherent tensions between the ‘social’ and ‘market’ within the internal market, see de Witte, ‘The Architecture of the EU’s Social Market Economy’ in Koutrakos and Snell (eds), Research Handbook on the Law of the EU’s Internal Market (Cheltenham: Edward Elgar Publishing, 2017). 11 C-333/14 Scotch Whisky EU:C:2015:845. 12 Regulation 717/2007 of 27 June 2007 on roaming on public mobile telephone networks within the Community and amending Directive 2002/21/EC (OJ L171/32, 29 June 2007) (‘Roaming Regulation’). 13 See e.g. Gerber, Law and Competition in Twentieth Century Europe (Oxford: Oxford University Press, 1998). 14 Discussing the atypical treatment of price regulation under the free movement provisions, see eg Barnard, The Substantive Law of the EU: The Four Freedoms (Oxford: Oxford University Press, 2016), 87; Alemmano, ‘Balancing Free Movement and Public Health: The Case of Minimum Unit Pricing of Alcohol in Scotch Whisky’, (2016) 53 CML Rev 1037, 1047–51; and Opinion of Advocate General Bot in C-333/14 Scotch Whisky EU:C:2015:527, fn.53. 15 Several of the most important cases considering the principle of subsidiarity concern EU-level efforts to control price regulation: see C-58/08 Vodafone EU:C:2010:321 and C-176/09 Commission v Luxembourg EU:C:2011:290. 16 Authoritative accounts include Mankiw and Taylor, Economics (3rd edn, London: Thomson Learning, 2014), particularly ch. 3. 17 Generally, Baldwin, Cave, and Lodge, Understanding Regulation (2nd edn, Oxford: Oxford University Press, 2011), chs 22 and 25. 18 Decker, Modern Economic Regulation (Cambridge: Cambridge University Press, 2014), ch. 5. 19 Motta, Competition Policy: Theory and Practice (Cambridge: Cambridge University Press, 2004), 25. 20 Generally, Kahn, The Economics of Regulation (Cambridge, MA: The MIT Press, 1988). 21 In most economies, price controls exist only within public utility sectors: Baldwin et al. (n 17), 443. 22 Generally, Viscusi, Harrington, and Vernon, Economics of Regulation and Antitrust (4th edn, Cambridge, MA: MIT Press, 2005). 23 Viscusi et al. (n 22), 663–9. 24 Viscusi et al. (n 22), 358. 25 Baldwin et al. (n 17), 476. 26 See, eg, Stigler, ‘The Theory of Economic Regulation’ (1971) 2(1) The Bell Journal of Economics and Management Science, 3–21. 27 See, eg, Posner, ‘The Concept of Regulatory Capture: A Short, Inglorious History’ in Carpenter and Moss (eds), Preventing Regulatory Capture (Cambridge: Cambridge University Press, 2014). 28 See, eg, Breyer, Regulation and its Reform (Cambridge, MA: Harvard University Press,1982). 29 See, eg, the EU’s emissions trading scheme: Directive 2003/87/EC of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L275/32, 25 October 2003). 30 Baldwin et al. (n 17), 110–33. 31 European Commission, Updating and Simplifying the Community Acquis (COM(2003)71 final), 2 February 2003. 32 European Commission, Smart Regulation in the European Union (COM(2010)543 final), 8 October 2010, 3. 33 See n 9 above. 34 Article 4(2)(a) TFEU. 35 See n 1 above. 36 C-26/76 Metro (II) EU:C:1977:167, para. 21. 37 Recent pronouncements include C-100/05 Commission v Italy (Trailers) EU:C:2009:66, on free movement of goods, and C-554/12 Commission v DEI EU:C:2014:2085, concerning Article 106(1) TFEU. 38 Generally, Moschel, ‘The Proper Scope of Government Viewed from an Ordoliberal Perspective: The Example of Competition Policy’ (2001) 157 Journal of Institutional and Theoretical Economics 3. 39 Echoing Ogus, Regulation: Legal Form and Economic Theory (Oxford: Clarendon Press, 1994), 30. 40 Opinion in Vodafone, para. 38. 41 ANODE, para.3 0. 42 Dashwood, ‘States in the European Union,’ (1998) 23 EL Rev 201, 213. 43 Larouche, Competition and Regulation in European Telecommunications (Oxford: Hart Publishing, 2000), 124. 44 Majone, Dilemmas of European Integration: The Ambiguities and Pitfalls of Integration by Stealth (Oxford: Oxford University Press, 2005), 149–50. 45 Compare Moravcsik, ‘In Defence of the “Democratic Deficit”: Reassessing Legitimacy in the European Union’ (2002) 40 Journal of Common Market Studies 603–24, and Follesdal and Hix, ‘Why There is a Democratic Deficit in the EU: A Response to Majone and Moravcsik’ (2006) 44 Journal of Common Market Studies 533–62. 46 Barnard (n14), 17. 47 See eg Mizutani and Uranishi, ‘Does Vertical Separation Reduce Cost? An Empirical Analysis of the Rail Industry in European and East Asian OECD Countries’ (2013) 43 Journal of Regulatory Economics 31–59. 48 De Witte, ‘Sex, Drugs and EU Law: The Recognition of Moral and Ethical Diversity in EU Law’ (2013) 50 CML Rev 1545, 1553–4. 49 Article 5(3) TFEU. 50 Dashwood (1998), 216. 51 Dashwood (1998), 211. 52 Craig, ‘Subsidiarity: A Political and Legal Analysis,’ (2012) 50 Journal of Common Market Studies 72, 73. 53 Öberg, ‘Subsidiarity as a Limit to the Exercise of EU Competences’ (2017) 36 Yearbook of European Law, 391–420, 15. 54 See n 15 above. 55 Article 4(2)(a), TFEU. 56 Majone (n 44), 149–50. 57 Generally, Höpner and Schäfer, ‘A New Phase of European Integration: Organised Capitalisms in Post-Ricardian Europe’ (2010) 33 West European Politics 344. 58 Öberg (n 53), 8. 59 Article 5(4), TEU. 60 See also Andreangeli, ‘Making Markets Work in the Public Interest: Combatting Hazardous Alcohol Consumption through Minimum Pricing Rules in Scotland’ (2017) 36 Yearbook of European Law, 522–52, arguing that free movement should grant greater latitude to domestic policy making under the principle of conferral. 61 Scharpf, Governing in Europe: Effective and Democratic? (Oxford: Oxford University Press, 1999), 63. 62 See e.g. C-94/04 Cipolla EU:C:2006:758, para. 61. 63 European Commission, XXVIIth Report on Competition Policy (1997), 29. 64 See n 106 below. 65 De Witte (n 48), 1546–56. 66 See eg European Commission, Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings (OJ C45/7, 24.2.2009), para. 19, and T-472/13 Lundbeck EU:T:2016:449, para. 386. 67 C-62/86 AKZO v Commission EU:C:1991:286, para. 70. 68 See n 63 above. 69 While pricing commitments in merger proceedings may result, obliquely, in de facto regulation, such remedies are deeply disfavoured and, at least in theory, wholly exceptional: see Commission Notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004 (OJ C267/1, 22 October 2008), para. 17. 70 Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (OJ L1/1, 4.1.2003), particularly Chapter III. 71 Regulation 1/2003, particularly Articles 3 and 5. 72 C-453/99 Courage v Crehan EU:C:2001:465. 73 O’Donoghue and Padilla, The Law and Economics of Article 82 EC (Oxford: Hart Publishing, 2006), 621–2; Motta, Competition Policy: Theory and Practice (Cambridge: Cambridge University Press, 2004), 69; Evans and Padilla, ‘Excessive Prices: Using Economics to Define Administrable Legal Rules’ (2005) 1 Journal of Competition Law & Economics 97, 110–13; and Akman and Garrod, ‘When are Excessive Prices Unfair?’ (2011) 7 Journal of Competition Law & Economics 403. 74 O’Donoghue and Padilla (n 73), 622–5. 75 O’Donoghue & Padilla (n 73), 627–8. 76 Opinion of Advocate General Wahl in C-177/16 AKKA EU:C:2017:286, para. 48. 77 Opinion of Advocate General Spzunar in C-74/14 ETURAS EU:C:2015:493, para. 68. 78 In theory, any breach of Article 101(1) may be justified under Article 101(3): T-17/93 Matra Hachette EU:T:1994:89, para. 85. The Commission, however, is sceptical that hardcore restraints like price-fixing might satisfy the exemption criteria: Guidelines on the application of Article 81(3) of the Treaty (OJ C101/97, 27 April 2004), para. 46. 79 See eg C-286/13 Dole EU:C:2015:184. 80 See eg C-161/84 Pronuptia de Paris EU:C:1986:41. 81 Opinion in AKKA, para. 117. 82 Enforcement Priorities, paras 23–27. See also O’Donoghue and Padilla (n 73), 603. 83 See eg C-413/14 Intel EU:C:2017:632. 84 See eg C-202/07 France Télécom EU:C:2009:214. 85 See eg C-280/08 Deutsche Telekom EU:C:2010:603. 86 See eg T-228/97 Irish Sugar EU:T:1999:246. 87 See eg C-7/97 Oscar Bronner EU:C:1998:569. 88 See, eg, Commissioner Neelie Kroes, Taking Competition Seriously—Antitrust Reform in Europe (SPEECH/05/157), Brussels, 10 March 2005: ‘… when we break up cartels, it is to stop money being stolen from customers’ pockets’. 89 See eg Whelan, The Criminalization of European Cartel Enforcement (Oxford: Oxford University Press, 2014). 90 European Commission, Guidelines on Vertical Restraints (OJ C130/1, 19 May 2010), para. 224. 91 Enforcement Priorities, para. 19. 92 Enforcement Priorities, para. 23. 93 AKZO, paras 70–72. 94 C-27/76 United Brands EU:C:1978:22, para. 250. 95 United Brands, para. 252. 96 C-177/16 AKKA EU:C:2017:689, para. 37. 97 AKKA, paras 38 & 55. 98 Opinion in AKKA, paras 103–105. 99 Opinion in AKKA, paras 48–49. 100 Gal, ‘Monopoly Pricing as an Antitrust Offence in the US and the EC: Two Systems of Belief About Monopoly?’ (2004) 49 Antitrust Bulletin 343, 376. 101 European Commission, XXVIIth Report on Competition Policy (1997), 77. 102 Report by the EAGCP, An Economic approach to Article 82, July 2005, p. 11. 103 Enforcement Priorities, para. 7. 104 Commission Decision of 23 July 2004 in COMP/A.36.568/D3—Scandlines v Port of Helsingborg. 105 AKKA, paras 101–107 & 128. 106 European Commission, Staff Working Document on Ten Years of Antitrust Enforcement under Regulation 1/2003 (COM(2014)453), 9 July 2014, paras 65–73. 107 Commission Decision of 19 December 2007 in COMP/34.579—MasterCard, COMP/36.518—EuroCommerce and COMP/38.580—Commercial Cards (OJ C264/8, 6 November 2009); upheld on appeal in C-382/12 P MasterCard EU:C:2014:2201. 108 Commission Decisions in COMP/39.398—VISA MIF of 8 December 2010 (OJ C79/8, 12 March 2011) and 26 February 2014 (OJ C147/7, 16 May 2014). 109 See, eg Competition and Markets Authority, Unfair pricing in respect of the supply of phenytoin sodium capsules in the UK, Case CE/9742-13, 7 December 2016. 110 Speech of Commissioner Vestager, ‘Protecting Consumers from Exploitation’, Chillin’ Competition Conference, Brussels, 21 November 2016. 111 European Commission Press Release, Antitrust: Commission opens formal investigation into Aspen Pharma’s pricing practices for cancer medicines, IP/17/1323, Brussels, 15 May 2017. 112 Speech of Commissioner Vestager, ‘Competition for a Fairer Society’, 10th Annual Global Antitrust Enforcement Symposium, Georgetown, 20 September 2016. 113 Lamadrid de Pablo, ‘Competition Law as Fairness’ (2017) 8 Journal of European Competition Law and Policy 147. 114 T-201/04 Microsoft EU:T:2007:289, confirming Microsoft’s obligation to provide interoperability information to resolve a refusal to supply. 115 Microsoft was subsequently fined an additional €860 million for failure to provide the mandated information: T-167/08 Microsoft EU:T:2012:323. 116 See eg Crane ‘Antitrust Antifederalism’ (2008) 96 California Law Review 1, 14–15. 117 Wagner-Won Papp, ‘Best and even better practices in commitment procedures after Alrosa: The dangers of abandoning the “struggle for competition law”’ (2012) 49 CML Rev 929. 118 C-441/07 P Commission v Alrosa EU:C:2010:377, para. 39. 119 See, eg, First, ‘Is Antitrust Law?’ (1995) 10 Antitrust 9. 120 Wagner-Von Papp (n 117), 960. 121 Commission Decision of 20 September 2016 in AT.39759—ARA Foreclosure (OJ C432/6, 23 November 2016). 122 See eg Wollmann, ‘ARA Foreclosure: A Step Towards ‘Consent Decrees’ in EU Antitrust Proceedings’ (2017) 8 Journal of European Competition Law and Policy 167. 123 Pursuant to Recital (13), Regulation 1/2003, the Commission cannot find infringements or impose fines in Article 9 cases. 124 Appeals have been brought by third parties: see C-441/07 P Commission v Alrosa EU:C:2010:377, and T-342/11 CEEES EU:T:2014:60. 125 Commission Decision of 15 November 2011 in COMP/39.592—Standard & Poor’s (OJ C31/8, 4 February 2012). 126 Commission Decision of 9 December 2009 in COMP/38.636—Rambus (OJ C30/17, 6 February 2010). 127 See n 108 above. 128 See eg Communication from the Commission on quantifying harm in actions for damages based on breaches of Article 101 or 102 of the TFEU (OJ C167/19, 13 June 2013), para. 1. 129 Commission Decision of 13 December 2011 in COMP/39.692—IBM Maintenance Services (OJ C18/6, 21 January 2012). 130 Commission Decision of 20 December 2012 in COMP/39.654—Reuters Instrument Codes (RICs) (OJ C326/4, 12 November 2013). 131 In Microsoft, paras 1271–1278, the General Court held that the Commission cannot, in an infringement decision, impose a monitoring trustee on defendants. 132 According to Recital (13), Regulation 1/2003, excluding ‘cases where the Commission intends to impose a fine.’ 133 See n 123 above. 134 See, eg, ‘Interview with Johannes Laitenberger, Director-General for Competition, European Commission’ The Antitrust Source, June 2017. 135 Deutsche Telekom, paras 80–82; see also C-359/95 P & C-379/95 Ladbroke Racing EU:C:1997:531, paras 33–34 136 Opinion of Advocate General Mazak in C-280/08 Deutsche Telekom EU:C:2010:212, para. 21. 137 See, generally, Monti, ‘Managing the Intersection of Utilities Regulation and EC Competition Law’ (2008) 4 Competition Law Review 123. 138 Deutsche Telekom, paras 169–183. 139 Deutsche Telekom, paras 176–181. 140 Commission Directive 90/388/EEC of 28 June 1990 on competition in the markets for telecommunications services (OJ L192/10, 24 July 1990). 141 In particular, Articles 258 & 260 TFEU. Confirming the permissibility of this approach, see Deutsche Telekom, paras 44–47. 142 Deutsche Telekom, para. 279. 143 See, eg, C-188/83 Hermann Witte EU:C:1984:309, para. 15; C-162/84 Vlachou EU:C:1986:56, para. 6; and C-155/14 Evonik Degussa and AlzChem EU:C:2016:446, para. 58. 144 See eg Fox, ‘We Protect Competition, You Protect Competitors’ (2003) 26 World Competition 149. 145 See n 98 above. 146 For discussion of the market access principle, and its implicit limits, see Barnard (n 14), 19–24. 147 C-267/91 Keck and Mithouard EU:C:1993:905, paras 14–17. 148 Keck, para. 13. 149 Keck, para. 16. 150 C-34/95 De Agostini EU:C:1997:344. 151 C-108/09 Ker-Optika EU:C:2010:341. 152 C-565/08 Commission v Italy EU:C:2011:188, para. 49. 153 See eg Scotch Whisky. While Keck held that price regulation falls outside Article 34 where applied equally and without discriminatory impact, Scotch Whisky suggests that such controls are likely to be viewed as a ‘measure having equivalent effect’ hindering market access and thus, prima facie, an infringement (para. 32, following approach of Opinion, paras 59–60). 154 See eg Cipolla. 155 See eg C-465/05 Commission v Italy EU:C:2007:781, and C-442/02 CaixaBank France EU:C:2004:586. 156 See eg Lovdahl-Gormsen, A Principled Approach to Abuse of Dominance (Cambridge: Cambridge University Press, 2010), 95–104. 157 The movement away from Keck supports this view; contrast the earlier approach of Poiares Maduro, ‘Reforming the Market or the State? Article 30 and the European Constitution: Economic Freedom and Political Rights’ (1997) 3 European Law Journal 55, 65. 158 Barnard (n 14), 87, n 127. 159 Deutsche Parkinson, para. 24. 160 See eg C-82/77 van Tiggele EU:C:1978:10, paras 14 & 18. 161 Caixa-Bank France, paras 12–14. 162 Cipolla, para. 59; Case C-465/05 Commission v Italy, para. 125. 163 C-148/15 Deutsche Parkinson EU:C:2016:776, paras 24–27. 164 C-465/05 Commission v Italy, para. 119. 165 C-65/75 Tasca EU:C:1976:30, para. 13. 166 Opinion of Advocate General Poaires Maduro in C-94/04 Cipolla EU:C:2006:76, para. 69. 167 See, to this effect, Tasca, para. 10. 168 Scotch Whisky, para. 44, 169 Scotch Whisky, para. 20. 170 Opinion in Scotch Whisky, para. 37. 171 Regulation 1308/2013 of 17 December 2013 establishing a common organization of the markets in agricultural products and repealing Council Regulations 922/72, 234/79, 1037/2001, and 1234/2007 (OJ L347/671, 20 December 2013). 172 Scotch Whisky, para. 44. 173 Scotch Whisky, paras 31 & 32. 174 Opinion in Scotch Whisky, para. 59–60. 175 See eg van Tiggele, cited in the Opinion in Scotch Whisky, para. 65. 176 C-565/08 Commission v Italy EU:C:2011:188, para. 51. 177 See also Opinion of Advocate General Mazak in that case, describing the principal objection to the legislation as constituting a ‘restriction on the contractual freedom’ of service users (EU:C:2010:403, para. 32). Such language echoes the mere ‘limitation on commercial freedom’ that presumptively fell outside the purview of the free movement rules under Keck (para. 14), yet was assumed to constitute an obstacle to free movement in Commission v Italy, if mandatory in nature. 178 C-565/08 Commission v Italy, para. 53. 179 Deutsche Parkinson, para. 43. 180 Opinion in Deutsche Parkinson, para. 1. 181 Cipolla, para. 61. 182 Deutsche Parkinson, para. 35. 183 Opinion in Cipolla, para. 58. 184 Scotch Whisky, para. 38. 185 Opinion in Scotch Whisky, para. 83. 186 Opinion in Deutsche Parkinson, para. 78. 187 C-105/12 Essent EU:C:2013:242, concerning public ownership of energy infrastructure. 188 C-438/05 Viking Line EU:C:2007:772, concerning the right to strike. 189 C-341/05 Laval EU:C:2007:809, concerning the right to strike. 190 Opinion in Deutsche Parkinson, para. 38. 191 Opinion in Deutsche Parkinson, para. 1. 192 Opinion in C-565/08 Commission v Italy, para. 34. 193 Caixa-Bank France, para. 19. 194 See e.g. Scotch Whisky, para. 35. 195 Opinion in C-565/08 Commission v Italy, para. 34. 196 Cipolla, para. 62. 197 Deutsche Parkinson, para. 33. 198 Deutsche Parkinson, para. 33. 199 C-531/07 LIBRO EU:C:2009:276, para. 34. 200 Cipolla, para. 62. 201 Cipolla, paras 62–67. 202 Opinion in Deutsche Parkinson, para. 42. 203 See also discussion in Opinion in Scotch Whisky, paras 71–76. 204 Opinion in Scotch Whisky, para. 82. 205 Opinion in Scotch Whisky, para. 83. 206 Opinion in Scotch Whisky, para. 84. 207 Scotch Whisky, paras 36 & 56. 208 See also de Witte (n 48), 1570–1. 209 Article 6(a) TFEU. 210 Scotch Whisky, paras. 45–50. 211 ‘The fundamental problem with an increase in tax is simply that it does not produce a minimum price’: The Scotch Whisky Association and Others v The Lord Advocate and the Advocate General [2016] CSIH 77, para. 196. 212 See, eg, Deutsche Parkinson, para. 42. 213 In distinction to the ‘gradual empirical turn’ within the Court’s approach to proportionality: see Alemmano (n 14), 1049. 214 The Court was persuaded that price competition was as likely to generate higher quality services than the lower quality ones feared by Germany (para. 40, adopting reasoning of Opinion, para. 47): arguable, yet wholly speculative, and curiously missing any consideration of possible free-riding effects that are a central concern of contemporary antitrust discourse. 215 ‘People with reduced mobility could greatly benefit from being able to place orders online and having them delivered directly to their home. Even if they are not accustomed to the alleged intricacies of ordering online, they will often have someone at their side (a carer, a (grand)child, a neighbour, etc.) who is’: Opinion in Deutsche Parkinson, para. 52, endorsed by the Court, para. 37. 216 On the implication of a substantive principle of proportionality, see de Witte (n 48), 1566–70. 217 See concerns expressed by de Witte (n 48), 1569–70; also Andreangeli (n 60). 218 Rationalizing the reluctance of the CJEU to engage in substantive subsidiarity analysis, see Öberg (n 53), 406–7. 219 See also discussion in Opinion in Cipolla, paras 31–37. 220 Cipolla, para. 47. As Cipolla demonstrates, the threshold for finding violation is high (paras 44–54). 221 See eg Commission Decision of 10 February 1999 in Case No.IV/35.703—Portuguese airports (OJ L69/31, 16 March 1999). 222 See eg T-289/08 BUPA v Commission EU:T:2008:29, where the Court accepted that a State-imposed ‘risk equalisation scheme’, which required transfer payments between private health insurers in order to standardize consumer premiums, could be exempted on this basis. 223 Echoing language of Advocate General Szpunar in Deutsche Parkinson, para. 79. 224 In addition to the approaches considered below, further examples are seen in natural gas (Directive 2009/73/EC of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (OJ L211/94, 14 August 2009), Articles 3(2) & 41(1)(a)), rail (Directive 2012/34/EU of 21 November 2012 establishing a single European railway area (OJ L343/32, 14 December 2012), Arts 29–36), and ground-handling (Council Directive 96/67/EC of 15 October 1996 on access to the groundhandling market at Community airports (OJ L272/36, 25 October 1996), Article 16(3)). 225 In keeping with the logic of the shared competences: Article 4 TFEU. 226 See eg Lovdahl-Gormsen (n 156), 92, arguing that price regulation is a natural implication of supporting less-efficient competitors in liberalizing markets. 227 In the telecommunications sector, see e.g. C-202/07 France Télécom EU:C:2009:214, C-280/08 Deutsche Telekom EU:C:2010:603 and C-295/12 Telefónica EU:C:2014:2062. In the electricity sector, see eg Commission Decision of 26 November 2008 in COMP/39.388 German Electricity Wholesale Market and COMP/39.389 German Electricity Balancing Market (OJ C36/8, 13 February 2009). In relation to airport charges, see eg Commission Decision of 10 February 1999 in Case No IV/35.703 Portuguese airports (OJ L69/31, 16 March 1999); Commission Decision of 10 February 1999 in Case No IV/35.767 Ilmailulaitos/Luftfartsverket (OJ L 69/24, 16 March 1999); and Commission Decision of 26 July 2000 (Spanish Airports) (OJ L208/36, 18 August 2000). In relation to pharmaceutical products, the market distortions introduced by differentiated domestic price controls were explored in the (in)famous judgment in C-501/06 GlaxoSmithKline EU:C:2009:610; see also the Commission’s on-going investigation into price-gouging in the sector, n 111 above. 228 Opinion of Advocate General Ruiz-Jarabo Colomer in C-265/08 Federutility EU:C:2009:640, para. 43. 229 Recital (35), Directive 2009/72/EC of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC (OJ L211/55, 14.8.2009) (‘Electricity Directive’). 230 Article 3(2), Electricity Directive. 231 Article 3(3), Electricity Directive. 232 Articles 32(1) and 37(1)(a), Electricity Directive. 233 See n 87 above. 234 Pelkmans and Luchetta, Enjoying a Single Market for Network Industries? Notre Europea—Jacques Delors Institute, Studies & Reports 95 (February 2013), 31. 235 Recital (13), Directive 2002/19/EC of 7 March 2002 on access to, and interconnection of, electronic communications networks and associated facilities (OJ L108/7, 24.4.2002) (‘Access Directive’). 236 Recital (5), Access Directive. 237 Article 13, Access Directive. 238 Article 8, Access Directive. 239 Namely, ‘a position of economic strength affording [an undertaking] the power to behave to an appreciable extent independently of competitors, customers and ultimately consumers’: Article 14(2), Directive 2002/21/EC of 7 March 2002 on a common regulatory framework for electronic communications networks and services (OJ L108/33, 24 April 2002) (‘Framework Directive’), reflecting the definition from United Brands, para. 65. 240 Enforcement Priorities, para. 11. 241 Recital (7), Access Directive. 242 Article 7, Access Directive. 243 Article 16(3), Framework Directive. 244 In accordance with Article 7(2), Access Directive; compare the ever-diminishing approaches in the Commission Recommendations of 11 February 2003 (OJ L144/45, 8 May 2003), 17 December 2007 (OJ L344/65, 28 December 2007) and 9 October 2014 (OJ L295/75, 11 October 2014), respectively. 245 Member States retain residual ability to regulate on alternative bases, such as consumer protection powers: Vodafone, para 43. 246 Directive 2009/12/EC of 11 March 2009 on airport charges (OJ L70/11, 14 March 2009) (‘Airport Charges Directive’). 247 Recital (2), Airport Charges Directive. 248 Article 1(1), Airport Charges Directive. 249 Recital (2), Airport Charges Directive. 250 See e.g. recitals (2), (15) and (17); confirmed in Commission v Luxembourg, para. 70 251 The Directive preserves the right of Member States to apply ‘additional regulatory measures’ such as direct regulation of charges, provided these comply with EU law, but does not mandate such an approach: Article 1(5), Airport Charges Directive. 252 Confirmed in Commission v Luxembourg, para. 42. 253 Language taken from the Commission’s website describing the Directive, available at <https://ec.europa.eu/growth/sectors/healthcare/competitiveness/products-pricing-reimbursement/transparency-directive_en> accessed 8 December 2017. 254 Council Directive 89/105/EEC of 21 December 1988 relating to the transparency of measures regulating the prices of medicinal products for human use and their inclusion in the scope of national health insurance systems (OJ L40/8, 11 February 1989) (‘Transparency Directive’). 255 Proposal for a Directive of the European Parliament and of the Council relating to the transparency of measures regulating the prices of medicinal products for human use and their inclusion in the scope of public health insurance systems (COM(2012)084 final), 1 March 2012. 256 See Annex to Commission Work Programme 2015 (COM(2014)910 final), 16 December 2014, p. 10. The Proposal was formally withdrawn in OJ C80/17, 7 March 2015. 257 Article 7, Access Directive; Article 6, Airport Charges Directive; Articles 2–5 & 7, Transparency Directive. 258 Articles 13(4) & 15, Access Directive; Articles 3–5 &7, Airport Charges Directive; Article 3, Electricity Directive; Articles 2–5, Transparency Directive. 259 Article 3, Airport Charges Directive; Article 3, Electricity Directive; 260 Article 6, Framework Directive; Article 6, Airport Charges Directive; Articles 37(2), Electricity Directive. 261 Article 3, Airport Charges Directive; Article 2(2), Transparency Directive; Article 8(4), Access Directive. 262 Article 2(2), Transparency Directive. 263 Similarly, de Witte (n 48), 1573. 264 Article 3(10), Electricity Directive; Article 11(3), Airport Charges Directive; Article 8(5), Access Directive; Articles 2–3 & 6–8, Transparency Directive. 265 Article 3(2), Framework Directive and Article 35(4)(a), Electricity Directive. 266 Article 3(3), Framework Directive and Article 35(4), Electricity Directive. 267 Article 3(3)(a), Framework Directive and Article 35(4)(b)(ii), Electricity Directive. 268 C‑424/15 Ormaetxea Garai EU:C:2016:780, paras 45–46. Although addressing the recast Framework Directive, the almost identical provisions in the Electricity Directive suggest the reasoning applies equally. 269 Article 11, Airport Charges Directive. 270 See n 255, draft Article 8. 271 European Commission, DG Competition Report on Energy Sector Inquiry (SEC(2006) 1724), 10 January 2007, para. 1047. 272 C-265/08 Federutility EU:C:2009:640. 273 Specifically in the context of the Third Energy Package: ANODE, para. 35. 274 C-36/14 Commission v Poland EU:C:2015:570. 275 ANODE, para. 26. 276 Opinion in Vodafone, para. 15. 277 Opinion in Vodafone, para. 15. 278 See Vodafone, para. 67, where the Court endorsed the approach in Recital (13), Roaming Regulation. 279 Opinion in Federutility, para. 53. 280 An approach seen, for instance, in the outcomes of the Commission’s energy and pharmaceutical sector inquiries: see European Commission, Pharmaceutical Sector Inquiry. Final Report, 8 July 2008, and n 205 above. 281 See n 42 above. 282 Opinion in Vodafone, para. 1. 283 Opinion in Vodafone, para. 9. 284 European Commission, Working Document on the Initial Findings of the Sector Inquiry into Mobile Roaming Charges, 13 December 2000. 285 See European Commission Press Releases IP/05/901, ‘Commission warns consumers on cost of using mobile phone abroad and targets lack of price transparency’, 11 July 2005; IP/05/1217, ‘Commission launches consumer website on the costs of mobile roaming in Europe’, 4 October 2005; and IP/04/1458, ‘Commissioner Reding welcomes EU-wide investigation on cost of using a mobile phone abroad’, 10 December 2004. 286 Commission Staff Working Paper, Impact Assessment of Policy Options in Relation to a Commission Proposal for a Regulation of the European Parliament and of the Council on Roaming on Public Mobile Networks within the Community (COM(2006)382 final), 12 July 2006, 12–13. 287 European Commission, Proposal for a Regulation of the European Parliament and of the Council on roaming on public mobile networks within the Community and amending Directive 2002/21/EC on a common regulatory framework for electronic communications networks and services (COM(2006)382 final), 12 July 2006. 288 COM(2006)382, 17. 289 COM(2006)382, 22. 290 Roaming Regulation. 291 Regulation 544/2009 of 18 June 2009 amending Regulation 717/2007 on roaming on public mobile telephone networks within the Community and Directive 2002/21/EC on a common regulatory framework for electronic communications networks and services (OJ L167/12, 29 June 2009). 292 Regulation 531/2012 of 13 June 2012 on roaming on public mobile communications networks within the Union (OJ L172/10, 30 June 2012). 293 Regulation (EU) 2015/2120 of 25 November 2015 laying down measures concerning open internet access and amending Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services and Regulation (EU) No 531/2012 on roaming on public mobile communications networks within the Union (OJ L310/1, 26 November 2015). 294 See, eg, Malaguti and Guerrieri, Multilateral Interchange Fees: Competition and regulation in light of recent legislative developments, European Credit Research Institute Research Report No.14, January 2014, 17–18. 295 Communication from the Commission, Sector Inquiry under Article 17 of Regulation (EC) No 1/2003 on retail banking (Final Report) (COM(2007)33 final), 31 January 2007. 296 See nn 107 and 108 above. 297 European Commission, Proposal for a Regulation of the European Parliament and of the Council on interchange fees for card-based payment transactions (COM(2013)550 final), 24 July 2013. 298 Regulation (EU) 2015/751 of 29 April 2015 on interchange fees for card-based payment transactions (OJ L123/1, 19 May 2015) (‘Interchange Fee Regulation’), particularly Article 1. 299 COM(2013)550, 8. 300 Articles 3&4, Interchange Fee Regulation. 301 Article 17(1), Regulation 1/2003. 302 See nn 284 and 295 above. 303 Other activities within both sectors have similarly attracted antitrust scrutiny: see T-328/03 O2 (Germany) EU:T:2006:116, and T-461/07 Visa Europe EU:T:2011:181. 304 Commission Press Releases IP/04/994, ‘Commission challenges UK international roaming rates’, 26 July 2004, and IP/05/161, ‘Commission challenges international roaming rates for mobile phones in Germany’, 10 February 2005. 305 Klotz, ‘The Application of EC Competition Law (Articles 81 and 82) in the Telecommunications Sector’, in Koenig, Bartosch, Braun, and Romes (eds), EC Competition and Telecommunications Law (2nd edn, Alphen aan den Rijn: Kluwer Law International BV, 2009), 132–33. 306 COM(2006)382, p. 38. 307 Commission Press Release IP/07/1113, ‘Commission closes proceedings against part roaming tariffs in the UK and Germany’, 18 July 2007. 308 See n 108 above. 309 See n 107 above. 310 Speech of Commmissioner Joaquin Almunia, ‘Introductory remarks on proposal for regulation on interchange fees for cards, Internet and mobile payments’, (SPEECH/13/660), 22 July 2013. 311 COM(2006)382, 19–20. 312 COM(2006)382, 26. 313 See, eg, Interchange Fee Regulation, recitals (6) and (9). 314 Communication from the Commission, A Digital Single Market Strategy for Europe (COM(2015)192 final), 6 May 2015. 315 Echoing Oberg, see n 58 above. 316 COM(2006)382, 7 and COM(2013)550, 14. 317 C-376/98 Germany v Parliament and Council EU:C:2000:544, para. 83. 318 Opinion in Vodafone, para. 22 (emphasis added). On this point, see COM(2006)382, 6, and COM(2013)550 final, 3. 319 Accepted in the context of the Roaming Regulation in Vodafone, para. 47, and spelled out in recitals (12) and (13) of the Interchange Fee Regulation. 320 Opinion in Vodafone, para. 21. 321 Opinion in Vodafone, para. 22. 322 A possibility is the ‘flexibility provision’ under Article 352 TFEU, which provides a residual basis for legislation ‘to attain one of the objectives set out in the Treaties’ in the absence of ‘the necessary powers’, but requires Council unanimity. 323 COM(2006)382, 6. 324 COM(2006)382, 13. 325 COM(2006)382, 12. 326 The validity of the Interchange Fee Regulation was upheld, obliquely, in C-304/16 American Express Co. v The Lords Commissions of Her Majesty's Treasury EU:C:2018:67. 327 See, eg Recital (12) of the Roaming Regulation, which recognizes the regime it establishes as a ‘departure’ from the competition-focused approached of telecommunications regulation generally. The logic of the Interchange Fee Regulation, according to Recital (9), is that limiting one dimension of economic freedom is necessary to promote competition longer term. 328 See n 77 above. 329 See n 168 above. 330 See n 159 above. 331 See n 1 above. 332 See n 278 above. 333 See, eg, C-319/92 Haim EU:C:1994:47. 334 See, eg, C-133/95 Rau EU:C:1987:244. 335 See, eg, Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market (OJ L149/22, 11 June 2005). 336 See, eg, Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ L95/29, 21 April 1993). 337 See n 293 above. 338 See, eg, C-475/99 Ambulanz Glockner EU:C:2001:577, and C-113/07 SELEX EU:C:2009:191. 339 Verizon Communications v Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004). 340 Berkey Photo, Inc. v Eastman Kodak Company, 603 F.2d 263 (1979). 341 See n 98 above. 342 See n 176 above. 343 See n 153 above. For further discussion, see Alemmano (n 14), 1047–51. 344 ‘… contrary to what has previously been decided …’: Keck, para. 16. 345 A concern flagged by Spaventa, ‘Leaving Keck behind? The free movement of goods after the rulings in Commission v Italy and Mickelsson and Roos’, 34 EL Rev 914 (2009), 929. 346 See, eg, nn 180 & 228 above. 347 C-331/88 ex parte FEDESA EU:C:1990:391, para. 13. 348 Vodafone, para. 52. 349 Opinion in AKKA, para. 40. 350 AKKA, para. 46, approving of Opinion in AKKA, para. 85. 351 Opinion in Commission v Luxembourg EU:C:2010:776, para. 87. 352 See, eg Commission v Luxembourg. 353 For instance, in the litigation regarding the Interchange Fee Regulation, C-304/16 Amex (n 326), Advocate General Campos Sanchez-Bordona advised that the reference be rejected because both parties to the nominal dispute—American Express and the UK Treasury—agreed about the (minimalist) interpretation of the Regulation preferred: see Opinion at EU:C:2017:524, paras 23–48. 354 Article 258 TFEU; see, eg, Commission v Italy (n 152) and Commission v Poland (n 274). 355 See n 36 above. © 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) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Yearbook of European Law Oxford University Press

Regulating Prices in the European Union

Yearbook of European Law , Volume Advance Article – May 4, 2018

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Abstract

Abstract Establishing open and undistorted competition within the internal market is a primary goal of the EU legal framework. Price controls, by contrast, are among the clearest derogations from this overarching objective. Yet much price regulation continues to occur within the internal market, the legal treatment of which is recognized to raise exceptional issues in the context of both positive and negative integration. This article explores the approaches within the EU legal framework to price regulation, broadly construed. Following a theoretical inquiry of the institutional and ideological challenges posed, a range of regulatory circumstances is considered: from competition enforcement, to the free movement rules, to examples of direct regulation through EU law. A tentative explanation for the distinctive treatment of price regulation is then advanced, premised upon the axiomatic role of the price formative mechanism in motivating the entrepreneurial impulses which underpin the internal market. The aim is to contribute to a more nuanced understanding of the challenges facing pursuit of ‘open and undistorted competition’ within a modern social market economy. I. Introduction [A] measure which requires a product or service to be offered on the market at a determined price … is by its very nature contrary to the objective of achieving an open and competitive market.1 Establishing open and undistorted competition within the internal market is a primary goal of the European Union (EU) legal framework.2 In developing a ‘highly competitive social market economy’,3 interventions focus on prevention and proscription of anticompetitive practices by undertakings and Member States, alongside harmonized efforts at sector liberalization. Price controls, acknowledged as ‘one of the most intrusive forms of intervention in the market’,4 are among the most ‘extreme’5 derogations from this objective. Price is one of, if not the, foremost dimensions of competition:6 indeed, ‘competition is, by its very essence, determined by price’.7 Yet, both because the competitive process is often imperfect, and because social considerations may override competitive ones within the wider context of the internal market, price regulation is not irreconcilable, a priori, with the goals and strictures of EU law. This article considers the treatment of price regulation in this context—located at the intersection of competition policy, social policy, and market integration—and explores the implications of the balance that is struck within the EU’s so-called ‘economic constitution’.8 EU law interacts with and regulates price-setting on three distinct levels.9 First, via the competition rules, it constrains the ability of individual undertakings to set prices in certain instances. Examples range from a blanket proscription of price-fixing cartels, to more exceptional condemnation of excessive pricing by dominant firms. Second, EU law limits the ability of Member States to regulate prices, particularly under the free movement rules. It is here that the constituent elements of the ‘social market’ economy are most vulnerable to discordance.10 An example is Scotch Whisky, where national efforts to impose minimum retail pricing for alcohol, motivated by public health concerns about hazardous drinking, conflicted with Article 34 TFEU insofar as the domestic regulation hindered access to the national market.11 Third, and most unusually, there is scope for direct implementation of price controls as a matter of EU law. A prominent example is the Roaming Regulation, which capped and progressively reduced prices for mobile phone customers who use their devices abroad.12 The dilemma of price regulation within the EU is located at the confluence of two distinct yet related tensions: a regulatory friction and a sovereignty-based one. First, the task of price regulation is itself a much-disputed enterprise: price controls are criticized as costly, unnecessary, liable to abuse, and ultimately counterproductive. Yet the pragmatic recognition that unrestrained competition does not guarantee efficient or otherwise socially desirable outcomes means that the ‘second best’ solution of regulation is sometimes preferable. Effective controls require a close understanding of the relevant market, however, which links to the second friction, namely the sharing of regulatory jurisdiction between the EU and its Member States. The necessity and optimal scope of price controls may be most apparent domestically; yet differentiated regulation risks fragmentation, competitive distortions, and furtherance of national interests at the expense of integration. The approach of EU law must accommodate these tensions, alongside the inherent paradox of restricting price freedom within an ostensibly open marketplace. The topic of price regulation is of great importance in practice within the EU, yet has been largely neglected within existing academic work. We argue here that it merits greater consideration, for two principal reasons. First, although viewed as a comparatively ‘old-fashioned’ instrument of market control, price regulation retains a notable prominence within the current EU legal framework. This is undoubtedly because, reflecting an historical fondness for such interventions within many European countries,13 considerable price regulation continues to occur within the internal market today. Accordingly, the questions of whether, when, and why EU law tolerates such intervention are of direct contemporary relevance at both EU and domestic levels. Second, the treatment of price controls under EU law is recognized to raise exceptional issues in the context of both negative14 and positive15 integration efforts, yet the existing literature has again failed to explain what is so special or unusual about regulating price. This article aims to address the current scholarly gap by considering the mechanisms by which EU law interacts with, contrains, and even mandates price regulation, in order to understand its distinctive status and often apparently inconsistent treatment. To do so, it draws upon a wide range of recent jurisprudence, legislation, and administrative practice related to internal market regulation, to develop a taxonomy of perspectives under EU law. In identifying a tripartite balancing of competitive, integrationist, and social concerns that underpin the approach to price regulation within the internal market, this article adopts a transversal approach, which endeavours to identify and analyse the treatment of analogous regulatory phenomena across differing areas of the EU legal framework. The central argument advanced hinges upon an overarching tension which conditions the treatment of pricing restraints within EU law generally: namely, that price alone is a deeply imperfect signal for welfare-enhancing human behaviour, yet regulatory limitations on price freedom threaten to negate the basic entrepreneurial impetuses upon which the internal market ultimately is premised. The article is structured as follows. It first considers price regulation generally, addressing its treatment in economic terms (Section II), and its place within the institutional and ideological structure of the EU (Section III). Differing approaches under EU law are then considered: from a punitive approach under competition law (Section IV); to a sceptical prohibitive approach under the free movement rules (Section V); to a cautious yet more receptive permissive approach within certain sector liberalization regimes (Section VI); and an exceptional, essentially prescriptive approach incorporating price regulation into the fabric of the internal market (Section VII). Section VIII considers in a more rounded fashion the dilemma of price regulation under EU law, in particular its distinctive, often contradictory treatment and status. Section IX concludes briefly. II. Price regulation and its discontents We start with the ambiguous virtues of price regulation as such. Within neoclassical economics,16 the free operation of the price formation mechanism is vital to the effective and efficient functioning of competitive markets. There is a default assumption that price should be determined, principally, by interaction of levels of supply and demand. Assuming a degree of substitutability between products, price is the most immediate parameter upon which undertakings compete. The price formation process moreover generates signalling effects which facilitate efficient behaviour. High prices suggest that demand outstrips supply, indicating that a market is profitable and thus inviting entry—which, other things being equal, should lower prices due to increased competition. Concomitantly, high prices force consumers to reflect upon the extent to which they value a product, resulting, in theory, in that scarce commodity being allocated to those who value it the greatest. In this manner, the price mechanism leads to an efficient distribution of finite resources. The textbook understanding of market-clearing relies, however, upon assumptions which may not hold true. High prices cannot prompt greater competition if there are barriers to market entry, so that supra-competitive pricing and scarcity are prolonged. Equally, barriers to exit may extend over-supply and wastage. Rational consumer behaviour is, moreover, premised upon complete information—not always a given, particularly where the product or service is complex— an ability to switch or do without in response to price-gouging—again, not always possible, particularly in the context of necessary goods, like electricity—and an absence of externalities. Where private price formation delivers sub-optimal results, there is an argument for public pre-emption through regulation.17 The immediate objective of most price regulation is, self-evidently, to constrain independent price-setting, whether through a fixed price or rate of return, a maximum price ceiling or minimum price floor, or more oblique forms of regulation such as a prohibition on practices like below-cost sales.18 Price controls are most frequently imposed in markets with natural monopoly or oligopoly components without free entry, where the undertaking(s) concerned are likely, absent intervention, to set prices near monopoly level.19 Here the rationale for regulation is, typically, to prevent consumer exploitation through excessive retail prices, or to avoid market foreclosure, where high wholesale prices obstruct downstream competition. As the examples below nonetheless illustrate, price regulation has been imposed by Member States and the EU to further an even broader range of regulatory objectives, including social concerns—for example, where prices for consumer essentials are maintained at lower levels, or for harmful goods at elevated levels—or, more contentiously, to ‘stabilize’ ostensibly excessive competition. Price regulation can thus play a redistributive role, by preventing transfer of (arguably unfair levels of) wealth from consumers to producers. Moreover, price regulation is often inextricably linked to other controls, including access or quality requirements.20 Despite acknowledged weaknesses within price formation processes, price controls are the exception rather than the rule in contemporary practice.21 Hostility arises on multiple fronts. Determining optimal regulated prices is a complex task.22 Regulators must ensure that regulated entities retain incentives to operate efficiently, while ensuring that profits are neither excessive nor unviable. Regulation can have unintended negative consequences, such as rent-seeking, moral hazard, inefficient subsidies, or distortion of optimal supply and demand levels;23 or regulatory lag may arise, whereby evolving market conditions render the regulated price increasingly inappropriate.24 Indiscriminate application of controls might damage corporate incentives to invest, resulting in diminished innovation and a reduction in overall consumer welfare.25 More broadly, the provocative public choice literature launched a fundamental attack on regulation as an inherently flawed or even corrupt enterprise that benefits only the regulated at the expense of broader public interest.26 Although overstating the risk of capture,27 public choice was influential, alongside more measured critiques that considered the potential costs and inefficiency of regulation,28 in provoking efforts towards deregulation and regulatory reform. Specifically, there has been a movement from prescriptive forms of ‘command-and-control’ regulation, including price controls, to alternatives such as incentive-based regulation, market-harnessing mechanisms,29 and ‘nudge’ strategies.30 In its own practice, the EU emphasizes ‘better regulation’31 and, increasingly, ‘smart regulation’, defined as regulation ‘of the highest quality possible’.32 III. Price regulation and the EU ‘economic constitution’ Beyond such critiques, price regulation poses specific difficulties—ideological and practical—within the legal framework of the EU’s internal market. While not prohibited a priori, the application of price controls is an almost contradictory exercise within this broader context. A core focus of this article is to explore how these tensions are manifested and accommodated within EU law. As noted, EU law interacts with price-setting processes in three dimensions: by constraining private price-setting, limiting domestic regulation, and—occasionally—functioning as a vehicle for direct control.33 The task of constructing and regulating the internal market is a competence shared between the Union and Member States.34 Yet, while the core tension and trade-offs remain the same—when and to what extent should apparent market failures merit derogation from the archetype of open and undistorted competition?—the precise issues in each instance are quite distinct. Quasi-price regulation via antitrust must grapple with an inherent paradox of the competition process: although high prices are the textbook example of monopoly abuse, the conventional understanding of the market mechanism is premised upon self-maximizing yet highly efficient price-setting by private actors. Where national controls are at issue, the key questions are why and how the EU legal framework should intervene to constrain the domestic regulatory choices of Member States. Where EU-level activity is under scrutiny, the questions are when and how the EU institutions should exercise their discretion, exceptionally, to mandate or impose price controls. Across these distinct dimensions, there are nonetheless recurrent overarching complexities, which condition and inform the discrete approaches within EU law. First, price controls pose an ideological challenge, insofar as the internal market is premised upon open and undistorted competition. As the Court of Justice argued in ANODE, the free functioning of the price formation mechanism is integral to this objective.35 Although it acknowledged in Metro (II) that price competition ‘does not constitute the only effective form of competition or that to which absolute priority must in all circumstances be accorded’, it nonetheless maintained that such competition ‘is so important that it can never be eliminated’.36 Emphasis is placed upon freeing markets not merely from private anticompetitive conduct, but also unnecessary or ineffective public restraints.37 While undistorted competition does not equate to unregulated competition, it reflects an ordoliberal preference for governmental interventions that aim, primarily, to buoy underlying market forces.38 In keeping with much modern economic theory, EU law has a distinct preference for solutions that reinforce rather than overreach the market system.39 State-imposed limitations on price competition, conversely, constitute ‘a particularly strong limitation of rights to property and the freedom of economic initiative’.40 Price regulation, insofar as it ‘necessarily influences the freedom of the undertakings concerned to act in the market in question and hence the process of competition’,41 is formally at odds with the underlying philosophy of the internal market. Second, and linked to the priority granted to buttressing market forces over dictating outcomes, the EU and its institutions operate at what Dashwood termed ‘the intermediate level of policy execution’.42 Although the principles of direct effect and primacy mean that EU law creates individual rights and duties, the EU typically regulates via Member States rather than through direct intervention in domestic markets. This limitation, moreover, reflects the sharing of jurisdiction within a Union that remains much less than a federation. The great bulk of price regulation within the internal market is devised and implemented nationally, with Member States demonstrating greater or lesser enthusiasm for intervention. The perceived necessity and tenor of price regulation is, furthermore, motivated primarily by domestic considerations, which raises concerns about capture, the quality of regulatory activity, and its potential for distortive effects. Yet deference to domestic regulators can be defended insofar as the redistributive effects of price controls are legitimized by the political accountability of regulators and the link to a democratic mandate.43 These legitimating forces are weaker for interventions originating in EU law, whether through positive or negative integration.44 Although criticism of the EU’s ‘democratic deficit’ may be overstated,45 its infrastructure for democratic representation is a step further removed from citizens than in the national context. Given the extent to which price regulation represents a departure from standard laissez-faire models—but also that it may reflect societal preferences for valuable non-economic policy objectives—it seems appropriate to require sufficiently robust authority and accountability. Additionally, the nature of the regulatory process requires, typically, a detailed and nuanced understanding of the markets concerned, which may reinforce arguments for decentralization.46 Increasing criticism of the EU’s one-size-fits-all approach to liberalization,47 for instance, suggests that more intensive forms of sector reorganization may require a closer tailoring to market circumstances. (Conversely, the EU institutions are arguably better placed to understand the Union-wide implications of price controls.48) Thus, the treatment of price regulation, occurring at a further remove from regulated markets than analogous domestic processes, must be alive to potential criticisms on the bases both of democratic authority and effectiveness. A third consideration draws upon the principle of subsidiarity, which governs the threshold question of when positive action at EU level is appropriate.49 Essentially a principle of regulatory restraint, subsidiarity limits the EU’s ability to act in situations where it is best placed to implement a top-down EU-wide solution. Linked to the notion that the EU remains ‘a constitutional order of States’,50 subsidiarity reflects both the Member States’ continued existence as sovereign states,51 and sustained resistance to centralization or even federalization of Europe.52 As Öberg argues, ‘the core of subsidiarity is the right of Member States to diverge’53—an (ostensible) right of particular relevance in the context of price controls. Positive efforts at price regulation—whether alignment of domestic regulatory structures, or price controls implemented directly through EU law—have generated some of the most notable challenges under the subsidiarity principle.54 As a shared competence, subsidiarity clearly constrains the EU when regulating the internal market.55 In the context of much price regulatory activity, this threshold requirement may be difficult to satisfy. Price controls not only can and have been implemented successfully by national regulators, but the price-setting process benefits from a closer relationship between regulator and market.56 Moreover, price controls involve significant incursions into both the economic independence of market actors and the residual freedom of Member States to make redistributive choices in respect of national economies.57 Where positive integration is at issue, subsidiarity suggests that intervention at EU level is likely to be appropriate only where there are clear cross-border concerns which, moreover, pose insurmountable hurdles to national regulators—what Öberg labels ‘transnational market failures’.58 Even where this may be the case, price regulation must be a proportionate response.59 In areas of negative integration—for instance, where the Court of Justice scrutinizes domestic controls—the principle of subsidiarity is not formally binding. There is, nevertheless, an argument that the multi-layered constitutional structure of the EU means it ought to be respected in spirit. That is, mere divergence that is reflective of differing national preferences should not be viewed as inherently suspect.60 This is important when considering whether EU law ought to pre-empt domestic regulatory choices: in essence, we must consider which polity is entitled to make the sorts of policy choices, both economic and social, reflected within price regulatory activity.61 This links, moreover, to the vital question of proportionality, meaning, here, the extent to which EU law should probe the appropriateness, in substance, of domestic policy choices.62 The only area that escapes subsidiarity concerns is competition law, which comprises in effect instances of law enforcement against private firms. Nonetheless, the Commission has long insisted that it ‘is not and does not wish to act as a price regulator’ in this context,63 instead deferring to price-setting by (well-behaved) undertakings or domestic regulators. Notably, such reluctance is reconcilable with the logic of subsidiarity insofar as national competition authorities (NCAs) are more receptive to case theories and concomitant remedies premised upon unfair pricing.64 Moreover, it perhaps reflects a deeper understanding of the rationale for regulatory restraint, or at least the dangers of over-instrusive intervention. Accordingly, for a variety of ideological, constitutional, and even practical concerns, price regulation occupies an uneasy position within the legal framework of the EU’s economic constitution. Disfavoured but not proscribed, its treatment reflects a compromise between the archetype of free competition, the imperative of effective market governance, and the peremptory nature of certain non-economic concerns. The complexity of the balancing exercise is demonstrated by the range of approaches discernible within case law and practice: a punitive approach penalizing individual pricing practices, an antagonistic prohibitive approach that proscribes domestic controls, a permissive approach premised upon EU-level supervision of national regulation, and a prescriptive approach involving positive top-down regulation. Yet within each, broadly equivalent tensions can be seen, from issues of technical expertise and democratic authority, to the balance between self-determination and containment of distortive domestic preferences.65 Each approach will be examined in turn, bearing in mind these overarching considerations. IV. Price regulation via antitrust: the punitive approach We consider first EU competition law, the central concern of which is prevention or control of aggregations of market power that, ultimately, enable undertakings to raise prices to supra-competitive levels.66 Here, price regulation is an essentially reactive punitive device; reflecting a determination that an undertaking’s pricing practices exceed the permissible limits of its default freedom to engage in price competition.67 Large swathes of EU competition law are addressed directly at price-setting, whether the concern is the manner in which prices are set or the effects that pricing structures may have on the wider market. Yet competition experts, including the Commission acting as antitrust enforcer,68 typically resist conceptualizing competition law as price regulation as such. In this section we explain, first, why the competition rules might be viewed as an instrument of price regulation; second, limitations to this approach in theory and practice; and third, recent developments that suggest an increased quasi-regulatory role in future. Our focus is the antitrust rules in Articles 101 and 102 TFEU, prohibiting anticompetitive coordination and abuse of dominance respectively.69 At first glance, competition enforcement provides the most immediate and flexible legal means to exert control over pricing, facilitating intervention at source by inhibiting or limiting the ability of economic actors to set prices at anticompetitive levels. These provisions thus represent a punitive model of regulation, insofar as firms may be punished for exclusionary or exploitative prices which offend against their proscriptions. Characterizing competition law as an instrument of price regulation has both negative and positive aspects. On the one hand, Articles 101 and 102 constrain the freedom of undertakings to set and charge whatever prices they wish: a freedom that is, moreover, the nominal basis of the entire free-market system. Infringement warrants sanctions against offending firms, typically fines. On the other hand, illegitimate prices are ‘regulated’ via enforcement activity to acceptable levels, whether directly as an aspect of the remedies imposed or indirectly by consequence of condemning existing prices. The almost inevitable outcome of enforcement against anticompetitive prices is that a revised pricing structure is imposed, which is dictated—more or less closely—by the requirements of the competition rules. Moreover, EU competition law provides a versatile and wide-ranging mechanism for intervention: enforceable by the Commission;70 the various NCAs;71 and, increasingly, private litigants before national courts, whose activities ostensibly complement and reinforce public enforcement.72 Yet the reality of EU competition enforcement, particularly by the Commission, is considerably removed from the archetype of price regulation. First, the Commission favours interventions that alleviate or prevent market foreclosure, and thus buoy competitive forces, rather than interventions that second-guess the workings of the competition process. Even where price lies at the heart of an investigation, there is considerable resistance to the notion that antitrust provides an appropriate vehicle by which to identify acceptable—or unacceptable—prices as such. Second, the task of price regulation implies not only the identification of appropriate pricing levels but also the availability of some coercive mechanism by which to impose publicly-devised prices on private actors going forward. Again, however, antitrust is an area where the Commission has conventionally shied away from prescriptive remedies, although the coercive power of its considerable fines is undisputed. The one area where antitrust collides unavoidably with the territory of conventional price regulation is the control of excessive pricing by dominant undertakings, as provided by Article 102(a) TFEU. Yet it is precisely in that context that both the Commission and the Court of Justice have exercised their most notable degree of regulatory restraint. Such reticence almost certainly reflects a broader scepticism regarding the advisability of antitrust enforcement against high prices as such; critiques which challenge the quasi-regulatory deployment of antitrust more generally. Recurrent concerns include the immediate difficulty, from an antitrust perspective, of distinguishing permissible and impermissible price levels, coherently and consistently;73 alongside longer-term risks to incentives for innovation and investment.74 Moreover, the remedies required, typically equivalent to command-and-control regulation, are considered more appropriate for sector-specific regulators to impose and monitor, for reasons of both capacity and accountability.75 There is, accordingly, a consensus that, absent high barriers to entry or expansion, ‘the market should, in principle, be able to self-correct in the short to medium term: high prices should normally attract new entrants or encourage existing competitors to expand’.76 Thus, the clear focus of recent competition enforcement—at least outside the cartel context—has been against behaviour that results in anticompetitive foreclosure, with, moreover, a clear end-goal of open (and not merely re-regulated) market structures. In what follows we consider the conventional limitations to antitrust as a vehicle of price regulation, as well as recent developments that may suggest a greater role for competition law. A. Pricing as a concern of competition law First, competition enforcers in the EU, as elsewhere, are less concerned with absolute prices than with the structure and functioning of markets. While pricing is an integral element of many competition cases, it is rarely the ultimate concern; a distinction that may be illustrated by reference to recurrent theories of harm under both Articles 101 and 102 TFEU. Under Article 101 TFEU, coordinated efforts to set prices are inherently suspect: any concertation that ‘constitutes an attempt to influence free formation of prices … manifestly has as its object to restrict competition’.77 Most obviously, Article 101 prohibits price-fixing between ostensible competitors, particularly in the context of hard-core cartels. Most horizontal price-setting cases are clear-cut—albeit not quite ‘per se’78—violations of Article 101(1), although more ambiguous activities are also prohibited.79 Article 101(1) has similarly been invoked against vertical price-setting, especially resale price maintenance (RPM).80 The argument that an agreed price is ‘fair’ (or reflects the competitive level) is largely irrelevant to its permissibility, although this may serve to exempt the arrangement under the Article 101(3) exception rule. Under Article 102 TFEU, the default approach is quite different: the concept of open and undistorted competition necessarily relies upon unilateral price-setting by economic operators, and indeed many argue that it is the lure of potential monopoly profits that ultimately drives competition and innovation.81 Nonetheless, even in the context of single-firm conduct the Commission is concerned with pricing practices by dominant undertakings that foreclose markets or exclude competitors.82 Potential price-related abuses include fidelity-inducing rebates;83 low prices with predatory effect;84 margin squeezes involving a disjuncture between wholesale and retail prices charged by vertically-integrated undertakings;85 price discrimination;86 and constructive refusals to deal, whereby high access prices constitute an effective refusal to supply.87 Thus, in most cases where pricing practices are challenged, the core concern is not the price in itself, but rather its broader context or market impact. Conspiracy is the implicit evil of cartels: ostensibly independent economic operators colluding to extract greater profits. Cartels are likened to theft offences,88 a characterization reflected in increasing use of criminal sanctions.89 RPM is disfavoured, not only because it softens competition and can lead to immediate price increases, but also because it may facilitate collusion, diminish innovation, or inhibit entry by efficient suppliers.90 Foreclosure is the core concern of exclusionary pricing under Article 102,91 as reflected by the Commission’s ‘as efficient competitor’ standard to govern intervention.92 This is seen vividly in the treatment of predatory pricing, perhaps the most counterintuitive of abuses: a dominant firm with ‘deep pockets’ distorts the market by attracting customers with unrealistically low short-term prices, intending to drive competitors from the market and entrench its dominance longer term.93 In each instance, the underlying objection is not that the price charged in itself is unacceptable, but rather that it has been determined, or affects the market, in an anticompetitive manner. The principal exception is Article 102(a), which expressly cites as an example of abusive conduct, ‘directly or indirectly imposing unfair purchase or selling prices’. The Court of Justice in United Brands confirmed that this prohibition applies where dominant firms charge a price that is disproportionate, or bears no reasonable relationship, to the economic value of the product concerned.94 It applied a demanding two-part test to determine excessiveness: requiring that, first, the difference between costs incurred and price charged was excessive, and second, the price charged was unfair in itself or compared to competing products.95 Yet more recently in AKKA, the Court clarified that the so-called ‘United Brands test’ is not exhaustive.96 It accordingly accepted that excessiveness might be established, inter alia, through consistent comparison with prices in other Member States, adjusted where necessary to take account of relative purchasing power, provided that any differences were significant and persistent.97 The complexities inherent in this evaluative exercise, however, were highlighted by Advocate General Wahl: from a risk of counterproductive false positive errors, to problems of ex ante uncertainty for firms, and administrative costs associated with on-going monitoring and enforcement.98 He thus argued that excessive pricing should exist, if at all, only in markets with regulatory barriers to entry yet absent effectual supervision by sector regulators,99 given that such problems are consequently amenable to neither self-correction nor regulatory supersession. Perhaps unsurprisingly, for many years the Commission pursued excessive pricing claims only exceptionally.100 Beyond the Commission’s stated reluctance to act as ‘price regulator’,101 its own economic experts counselled against intervention,102 and exploitative abuses are a notable omission from guidance on the Commission’s enforcement priorities.103 A rejection decision from 2004 is instructive: although prices were high, the services provided were particularly valuable, and thus it could not be established that price bore no reasonable relationship to value.104 While the prices charged may have been suboptimal, this decision exemplifies Advocate General Wahl’s contention that antitrust cannot fruitfully concern itself with any claimed deviations from a perfectly competitive price, but must restrict itself to those which are unambiguously problematic.105 Yet this apparent orthodoxy is not immune from challenge. Most obviously, NCAs have proven more receptive to exploitative concerns, pursuing Article 102 cases with an exploitative element—particularly excessive pricing—at more than double the rate of the Commission over the first decade of decentralized enforcement under Regulation 1/2003.106 Such a division of labour is consistent with our observations regarding the distinctive subsidiarity concerns raised by price regulation, even though the principle has no binding effect here: NCAs are arguably better placed to identify pricing practices raising public policy concerns, and to take and implement such—effectively redistributive—decisions. Yet certain areas of the Commission’s recent enforcement practice, too, disclose a greater concern with unfair prices. A first group of cases involves commitment decisions under Article 9 of Regulation 1/2003. In effect, this procedure provides a flexible vehicle by which to tackle more complex—and often contentious—case theories, making it well-suited to address on-going pricing problems. The commitment procedure, and relevant decisions, are considered below. A second group involves horizontal price-fixing in the context of payment systems. Here, the Commission has pursued a series of enforcement actions, some as infringement decisions107 and others as commitment decisions,108 against multilateral interchange fees (MIF) agreed by financial institutions that operate payment card networks. Notably, in these cases the primary concern is not that the price-setting activity is anticompetitive, but rather that the agreed price is excessive compared with an optimal competitive price. The outcome in each instance has accordingly been, rather than abandonment of the MIF mechanism, instead a substantial lowering of existing fee levels. Such cases therefore evince greater concern with ultimate (re)distribution than with operation of the competition process, disclosing a distinctly regulatory mentality. It was not unexpected, therefore, that the EU institutions subsequently opted to overreach the market mechanism with a top-down Regulation setting maximum MIF levels across the internal market, a development considered further in Section VII below. Finally and most prominently, following several high-profile enforcement actions taken by NCAs,109 the Commission has expressed greater willingness to intervene specifically against excessive prices that result in consumer exploitation. While reiterating a default position that ‘[t]he last thing we should be doing is to set ourselves up as a regulator, deciding on the right price’, Competition Commissioner Vestager nonetheless argued that the EU has ‘a responsibility to the public’ to tackle excessive pricing in certain instances, particularly relating to vital consumer products.110 This culminated in a formal investigation into alleged ‘price-gouging’ in the pharmaceutical sector, an investigation the Commission describes as the first of its kind.111 It coincides, moreover, with greater emphasis on the extent to which competition enforcement might secure, not merely the high-level goals of efficiency and market interpenetration, but also the more tangible, though politically-loaded, objective of increased societal fairness.112 While scepticism exists as to whether such developments represent legitimate popular or more troubling populist concerns,113 a renewed focus on the symptoms of market power rather than its causes reflects implicit acknowledgement that the promise of ‘open and undistorted competition’ may be insufficient to protect consumer welfare. B. Remedial structures available in competition cases The second way in which competition enforcement conventionally diverges relates to the outcomes of regulatory action. Whilst price regulation culminates in a specified pricing structure requiring adherence by regulated firms, competition enforcers are more reluctant to ‘pick winners’. Even where antitrust imposes negative obligations proscribing particular pricing practices, on-going positive duties to charge specific prices, determined ex ante and applying to future market behaviour, are more problematic conceptually and more unusual in practice. Conventionally, the primary enforcement mechanism for EU competition law has been Commission infringement decisions. The express wording of Article 7 of Regulation 1/2003 empowers the Commission to ‘impose on [defaulting undertakings] any behavioural or structural remedies which are proportionate to the infringement committed and necessary to bring the infringement effectively to an end’. Yet the Commission has, typically, restricted itself to (increasingly high) fines, and, where ambiguity exists as to whether an infringement is continuing, a formal statement requiring it to be brought to an end; this might entail, as in Microsoft, binding obligations to resolve on-going problems.114 Accordingly, infringement decisions often proscribe existing anticompetitve price-setting arrangements or price structures, but do not prescribe the ‘competitive’ price going forward. As the Microsoft saga demonstrates, ostensibly proscriptive remedies can become prescriptive where difficulties arise in implementing the original sanction.115 Nonetheless, at least initially, Article 7 decisions adhere to the tort–crime model of antitrust.116 As such, infringement decisions are of limited use for direct price-setting: such decisions inform market participants of prices that they cannot charge, rather than those they must. The strict proportionality requirement within Article 7 has been advanced to explain the Commission’s reluctance to deploy it more robustly to include, inter alia, pricing obligations,117 insofar as the Commission has the burden of establishing that such remedies are suitable, necessary and represent the least restrictive alternative.118 Yet arguably this also reflects an ‘antitrust’ as opposed to ‘regulatory’ approach to market governance: freeing the market of barriers to competition, but not second-guessing what the competitive outcome might entail. Two recent developments suggest, however, that any rigid dichotomy between ostensible ‘antitrust’ and ‘regulatory’ remedial structures is misplaced, thus mirroring well-established critiques of US antitrust resulting from its consent-decree practice.119 The first and more speculative change, advocated by certain scholars120 and hinted at in the recent ARA Foreclosure decision,121 is a possibility that the Commission becomes more forceful in applying its little-used remedial powers under Article 7. ARA notably involved, alongside a finding of infringement and fines, an obligation on the defendant to divest certain infrastructure to avoid future abuses. While the facts are unusual—the defendant had a de facto statutory monopoly, the divesture commitment was offered by the undertaking, and it received a discounted fine in return—the decision suggests greater willingness by the Commission to use its Article 7 powers in a more muscular, multi-dimensional fashion.122 The second, more significant development lies in the commitment procedure under Article 9 of Regulation 1/2003. This enables the Commission to conclude investigations without any finding of breach, based on binding commitments by the undertaking(s) concerned to modify their behaviour or structure. Two aspects of the procedure facilitate its application to achieve quasi-regulatory outcomes such as price controls. First, given that Article 9 decisions do not entail any formal finding of breach,123 and because the consensual nature means that appeal is unlikely,124 it is unsurprising that recurrent use has been made of the procedure to conclude cases that involve more contentious or novel theories of harm, including those targeted directly at unfair pricing. Examples include S&P,125 premised explicitly upon the setting of ‘unfairly high fees’; Rambus,126 involving so-called ‘patent ambush’, in effect an excessive pricing claim coloured by a standard-setting context; and several decisions against Visa,127 alleging in essence excessive prices following coordinated price-setting. For the Commission, commitment decisions present a benign mechanism by which to conclude arguably more dubious cases, including the sorts of quasi-regulatory theories that might require on-going pricing commitments for resolution. Second, unlike the largely retributive function of infringement findings,128 Article 9 decisions aim to identify and implement prospective solutions to on-going market problems. Whilst some commitments are one-off, others involve continuing obligations to specific behaviour. Most notably, in several cases the agreed remedy has involved future pricing commitments: whether a fixed price (S&P, IBM129), a percentage value (Rambus, VISA), or both (RICS130). Moreover, Article 9 decisions, unlike the infringement procedure,131 may involve voluntary commitments to adhere to monitoring structures, an important addition, for instance, to the commitments in RICS following market-testing. The scope for Article 9 to facilitate and legitimate the use of competition law as a vehicle for price regulation should not be overstated, however. First, commitment decisions are available only in a subset of cases, excluding cartels and serious non-cartel abuses.132 Second, such decisions require the consent of defendants: commitments cannot be imposed unilaterally, so Article 9 decisions are excluded where defendants refuse to cooperate or fail to offer sufficiently persuasive commitments. At most, therefore, commitment decisions approximate to a form of co-regulation between the Commission and, crucially, willing defendants. As noted, voluntarism was similarly a key element of the hybrid procedure in ARA. Finally, concerns have been raised about the commitment procedure qua legal (rather than regulatory) instrument, particularly the extent to which it introduces uncertainty to the underlying antitrust rules, given that Article 9 decisions do not, formally, represent statements of competition law.133 Thus, the Commission has signalled an intention to make greater use of Article 7 where clear precedents would be of value.134 Yet such an approach may impede its application in precisely the sorts of quasi-regulatory pricing cases that, as discussed, lie at the boundaries of contemporary competition law. C. Competition law as a corrective to domestic price regulation Finally, consideration must be given to a further, disputed, intersection between price regulation and EU competition law, namely application of the latter to conduct already subject to domestic controls. Under the restrictive ‘State action’ doctrine, the mere fact the market behaviour is subject to ex ante sector-specific regulation does not immunize the undertaking concerned from application of competition law, unless the regulatory framework either removes any possibility for independent (anti)competitive activity or all scope for competitive forces to arise.135 The ostensible justification is that sector-specific regulation and competition law pursue discrete policy objectives, so that undertakings must ensure that their market behaviour conforms with each set of legal obligations.136 A more sceptical explanation, however, is that sector-specific regulation is almost invariably enacted and enforced domestically, although it may originate in EU-level Directives.137 Accordingly, in many antitrust cases in which State action issues arise, at the heart of the dispute lie claims regarding the distortive effects of national rules. Deutsche Telekom provides a vivid illustration of how such conflict can extend to price controls. Here, the incumbent telecommunications operator in Germany, DT, was held to have engaged in an abusive margin squeeze by maintaining an insufficient spread between wholesale and retail prices for fixed-line telephone access.138 The case theory proceeded on the basis that wholesale prices were set by the domestic regulator, while retail prices had been approved under a maximum price cap applying to a ‘bundle’ of retail products. Despite the apparent pervasiveness of regulatory influence, DT was considered to have sufficient residual freedom to avoid the squeeze, and indeed, a ‘special responsibility’ to take steps to do so.139 Yet at the core of the antitrust case lies a different clash, namely Germany’s failure to implement telecommunications tariff rebalancing, contrary to its obligations under EU law.140 Thus, a supranational public dispute between the EU and its Member State over the appropriateness of domestic price regulation was effectively repackaged as one involving private manipulation of price formation, enabling the Commission to dismantle the problematic regulatory structure de facto, without the complications of the de jure procedures available to challenge national rules.141 The approach of Deutsche Telekom and its implications foreshadow the scepticism that the Commission and Courts frequently demonstrate towards both the design and implementation of domestic price regulation. Not only does the case give little weight to the appropriateness or authority of price-setting by the national regulator; moreover, the defendant was granted only the slightest allowance to reflect the comprehensiveness of the pricing constraints it faced, namely a 10 per cent reduction in fine.142 An analogy might be drawn to the principle of legality and its limitations within EU law, pursuant to which an undertaking may not claim a legitimate expectation in or seek to rely upon an unlawful act.143 The failure to give substantial import to the domestic regime suggests, implicitly, that it could not be considered a legitimate feature of the domestic market; presenting neither a plausible defence for the defendant’s pricing practices nor a reasonable (albeit imperfect) estimation of appropriate price levels in the German telecommunications markets. We return to this sceptical perspective below. At this juncture, two principal takeaways emerge. The first is a notable regulatory restraint, apparently premised on the idea that de facto price regulation is an inappropriate task for the EU in its guise as competition regulator. (A degree of restraint perhaps more remarkable given the frequent criticism that the Commission is too willing to intervene under competition law in other contexts.144) Thus, we see a first instance of the idea that regulating prices is ‘special’—or especially disfavoured—under EU law. Influenced by Chicago School thinking, Advocate General Wahl provided a searing exposition of these concerns: public interference with the private price formation mechanism almost invariably generates suboptimal results, given both the elusiveness of any would-be competitive price and the high cost and risks of intervention.145 The oblique attack on national price regulation in Deutsche Telekom further accords with this logic. Yet greater receptiveness in recent practice, expressly premised on pursuit of a fairer society, belies the notion that open and undistorted competition is invariably the best route to enhanced consumer welfare. We shall see this tension reoccur in the scenarios examined in Sections V to VII. Second, the procedural powers available at EU level appear to make a significant difference to substantive outcomes. Specifically, antitrust enforcement moves closest to the archetype of price regulation with the commitment procedure, whereby the Commission has formal powers to make binding and enforce any regulatory bargain agreed. Yet, under Article 9, pricing remedies remain a ‘bargain’ in a literal sense, insofar as ostensibly regulated entities must agree to and indeed nominally propose their own restraints. A question thus arises as to whether there is scope for a more coercive approach to pricing remedies in antitrust cases where defendants are unprepared to make the necessary concessions, or whether the risks of erroneous and counterproductive intervention outweigh potential benefits. Moreover, marked asymmetry exists between proscribing existing pricing practices and prescribing ostensibly optimal ‘competitive’ prices going forward. Such asymmetry reoccurs in the examples discussed later in this work, and thus we might ask whether the concerns identified and solutions reached in this essentially micro (ie firm-level) context have resonance in the more macro context of the relationship between the EU and Member States. V. Indirect price regulation I: the prohibitive approach We move from price-setting by private entities to price regulatory activity by public entities, whether Member States or the EU itself. Arguably, the default approach within the internal market is, in keeping with its ideological tenor generally, one of deep scepticism and reluctance towards price regulation. We term this the prohibitive approach: as a derogation from the precept of open and undistorted competition, price controls are incompatible with the EU legal framework unless justified by a legitimate and proportionate objective. This suspicion is illustrated, implicitly albeit most convincingly, by the sheer absence of direct price controls within positive EU law. Instead, most EU legal rules addressing this question concern efforts to constrain or prohibit price controls implemented domestically, most obviously under the free movement rules. The fundamental rules guaranteeing free movement within the internal market provide its foundation, prohibiting domestically-imposed obstacles to the circulation of goods, services, establishment, workers, and capital between Member States. Price regulation poses a conceptual conundrum here. Price controls are close to the antithesis of free unencumbered competition between private market actors, and thus present a fundamental departure from the archetype of ‘open’ competition underpinning the internal market. Yet, formally, the free movement rules are unconcerned with barriers to competition as such, but instead, with barriers to trade (and, by consequence, competition) between different national markets that comprise the discrete components of the ostensible single market. While EU law pursues the clear goal of market interpenetration through the removal of barriers to trade, the internal market does not mandate that such trade is wholly unregulated domestically, provided that national regulatory frameworks do not impose implicit barriers to foreign competition. Free movement is not precisely equivalent to ‘free markets’, therefore, insofar as the latter implies unrestricted economic activity more generally.146 Famously, in Keck, the Court of Justice drew a conceptual distinction between national rules that limit the commercial freedom of all economic operators, whether originating in the home or another Member State, and those which make life more difficult for foreign manufacturers or service providers, and thus hinder market interpenetration.147 Domestic price controls clearly limit the ability of traders to determine, privately and independently, the price of goods or services. As such, price regulation has the potential to dampen and distort competition in absolute terms.148 Provided such regulation disadvantages domestic and foreign traders to an equivalent extent, however, it cannot constitute a barrier to trade between Member States, but merely a restriction on trade within the national market. Unlike other ostensible ‘selling arrangements’,149 moreover, price controls do not generate an obvious incumbency advantage for established domestic operators, by, for instance, imposing positive obstacles to entry150 or restricting the possibility of cross-border sales151—beyond, of course, making the market potentially less profitable and thus less desirable to entrants. Moreover, the mere fact that certain Member States refrain from regulating prices, or do so less restrictively, cannot imply that more exacting regulation elsewhere poses an obstacle to free movement.152 Convincing though this logic may be, the Court of Justice subsequently proved more receptive to arguments that apparently neutral controls may impose barriers to accessing national markets which constitute a particular disadvantage for traders from other Member States. While acknowledging the residual freedom of Member States to regulate absent EU-level harmonization, the Court has held that price controls might obstruct the free movement of, variously, goods,153 services,154 and establishment.155 The Court’s reasoning suggests a deep appreciation of the significance of price within the market process, in terms of both the competitive vitality and economic viability of economic actors. This, in turn, arguably links to ordoliberal thinking on the centrality of individual economic freedom within the economic constitution.156 These cases thus reflect the ideological tension that arises where domestic controls limit or distort competition within the ostensibly free internal market—a tension particularly apparent in recent decisions.157 These dual concerns may help to explain why, in evaluating the treatment of price regulation, one leading commentator suggests that, without saying so explicitly, the Court views such cases as a distinct—and arguably unique—category.158 On the one hand, price controls may hinder access to national markets by limiting the competitive vitality of traders from other Member States: as the Court of Justice held forcefully in Deutsche Parkinson, ‘price competition lays the basis for [foreign traders’] potential to access the [host] market directly and to continue to be competitive in it’.159 Cases in this vein recognize that price is the most immediate parameter of competition. Where regulation restricts, de jure, the ability of new entrants to compete on price, this may have the effect, de facto, of preventing entrants from competing at all. This might be the case where particular products can be produced more cheaply in the home Member State—echoing the classic Ricardian notion of comparative advantage—yet where fixed or minimum price controls within the host Member State prevent the foreign trader from reaping the competitive advantage of its lower costs.160 Alternatively, regulation may deprive entrants of the effective competitive strategies necessary to break into new markets and increase market share. Price controls may prevent entrants from engaging in innovative pricing practices, which might distinguish their products from those of domestic incumbents;161 from using price competition to overcome reputational or other incumbency advantages of established domestic undertakings;162 or, where foreign traders are at a disadvantage in the quality of the product they can provide, from compensating customers through lower prices.163 Finally, limitations on price competition may stifle the ability of entrants to compete via higher quality, where the effect is to prevent foreign traders from offering products which, though more costly, represent added value for consumers.164 On the other hand, price controls may hinder access by threatening the economic viability of new entrants. Achieving a positive equilibrium between income and costs is necessary to ensure that entrants can remain within the marketplace and potentially develop as effective competitors. Price regulation might function to exclude foreign traders, however, where a fixed or maximum selling price is set at an unreasonably low level in comparison to their costs.165 Such an outcome may arise where a pricing scheme is devised only by reference to the situation of undertakings established in the host Member State, which differs from that of foreign undertakings.166 Here, the domestic controls generate what is in effect a margin squeeze between costs incurred by the foreign trader upstream and the maximum price obtainable downstream. The effect is that the foreign trader cannot compete profitably—and in the longer-term, probably cannot compete at all—in the host Member State.167 Cases of this variety thus grapple with a limitation inherent within the truism that competition policy ought to protect the competitive process rather than competitors: although the latter might introduce inefficiencies in the short-term, in the longer-term the existence of rivals is indispensable to healthy competition. Finally, several recent cases hint at a more fundamental objection to price regulation, reflecting the antithetical nature of price controls within an ostensibly free market. Chief amongst these is Scotch Whisky. In holding that domestic regulation of alcohol pricing constituted a ‘measure having equivalent effect’ (MEE) contrary to Article 34 TFEU, the Court spoke broadly about the potential for price regulation to impinge upon ‘the free formation of prices’,168 which ‘constitutes the expression of the principle of free movement of goods in conditions of effective competition’.169 Such language suggests that the concern with price regulation is not merely that it may disfavour foreign traders, but that it may create an inherently uncompetitive market structure which disadvantages all traders—and, consequently, consumers—regardless of origin. Care ought to be taken against reading too much into a single judgment. First, the phrase, ‘the free formation of prices’, was introduced by the Advocate General170 specifically in relation to the CMO Regulation for agricultural products,171 although the Court adopted this wording more broadly.172 Moreover, in concluding that the impugned controls constituted an MEE, the Court endorsed the reasoning of the Advocate General,173 who emphasized the extent to which the regulation might cancel out the competitive advantage of imports,174 thus aligning with established case law.175 Yet, the apparently expansive language chimes with the earlier decision in Commission v Italy, where the Court spoke of price regulation as a potential impediment to market access—contrary, in that instance, to Articles 49 and 56 TFEU—insofar as it might deny entrants the opportunity to compete ‘under conditions of normal and effective competition’ within the host Member State.176 Again, this suggests that it is not merely the potentially discriminatory impact of such regulation, but rather its distortive effects more broadly, that conflict with the principle of open competition.177 Although the Court in Commission v Italy concluded that the regulation did not, in fact, hinder market access, it did so on the basis that, in practice, it permitted independent price-setting, thus allowing ‘proper remuneration’178—and, implicitly, allowing the market mechanism to function. A principled objection to interference with the price formation mechanism may also explain the Court’s vehemence in Deutsche Parkinson, which celebrates the virtues of price competition in the strongest terms.179 Regardless of the conceptual basis upon which price regulation constitutes a barrier to free movement, Member States retain the possibility of justifying such controls by reference to proportionate countervailing public policy considerations. It is here that the domestic impetus behind price regulation is of paramount significance: whilst EU law acknowledges the importance, and possible precedence, of certain ‘non-economic public policy aims’,180 not every domestic concern provides a legitimate reason to deviate from open competition. To exempt prima facie restrictive regulation, Member States must demonstrate that it ‘serves overriding requirements relating to the public interest, is suitable for securing the attainment of the objective which it pursues and does not go beyond what is necessary in order to attain it’.181 The burden of proof lies with Member States,182 emphasizing the presumption that national obstacles to price competition conflict with EU law. In scrutinizing any public policy objective advanced to justify price regulation, a core question is the extent to which EU law can or should presume to ‘second guess’ the policy choices of Member States. The free movement rules are not a prescription for legislative harmonization,183 and Member States retain the freedom for divergent regulation within their confines. Price regulation, alongside the domestic policy concerns that underpin it, is often an inherently political activity,184 both in its initial recognition of legitimate countervailing non-economic values and in the choice of regulatory mechanisms deployed to protect or further those values.185 To that extent, as Advocate General Spzunar recognised, ‘[i]t is obviously not for the Court to interfere in national political and democratic processes and to prejudge certain political choices’.186 Yet, as cases like Essent,187Viking,188 and Laval189 demonstrate in different contexts, the fact that fundamental domestic policy considerations are at issue neither excludes application of the free movement rules nor means the latter must yield to the former. Balancing the objective of establishing the internal market against ‘sensitive matters of a non-economic nature’190 is, therefore, ‘a delicate task’.191 Member States have relatively broad latitude in identifying public policy concerns that might, in theory, justify restrictions on price competition. Echoing our discussion in Section II above, the Court accepts that price controls might further such objectives in various ways. Upper limits can enhance consumer protection by preventing price gouging, particularly where consumers lack market power.192 Price regulation may encourage practices viewed as socially desirable—such as consumer saving193—or, conversely, discourage undesirable practices—such as alcohol abuse.194 More problematic are cases where controls play a ‘moderating role’,195 to neutralize perceived ‘excessive’196 or ‘ruinous’197 competition. Here, the regulatory concern is that price competition might unbalance the existing market equilibrium by, for instance, encouraging ‘cream-skimming’ behaviour that neglects peripheral or vulnerable consumers198 or less profitable product categories,199 or which leads to a deterioration in quality as suppliers cut costs to cut prices.200 While the Court is not unreceptive to such concerns,201 justifications of this variety may shade into purely economic arguments, which cannot provide a legitimate ground for derogating from free movement.202 The mere existence of a valid public policy concern does not automatically legitimate domestic controls, however, as Member States are furthermore bound by the principle of proportionality. Any regulation must therefore be limited to measures that are both suitable and necessary to achieve the relevant public policy objective.203 The exactingness with which the proportionality criterion is applied is, arguably, the decisive aspect of the balancing of domestic and EU-level interests. Advocate General Bot thus argued for ‘a certain degree of restraint’ in this analysis:204 both in order to grant Member States some discretion over policy choices on issues of, primarily, domestic concern,205 and because of the inherent ambiguity of the exercise, which involves a measuring and balancing of fundamentally different (and, sometimes, intangible and even unknowable) phenomena.206 In Scotch Whisky, the Court adopted a reasonableness standard to assess whether the proportionality requirement was satisfied;207 an approach that ostensibly gives Member States a certain leeway, reflecting the once-removed status of the EU institutions to the essentially domestic choices that underlie most regulation.208 Yet, the Court’s recent decisions on price regulation suggest, in practice, a more exacting approach than the language of reasonableness implies. The Court shows few qualms about questioning, and effectively second-guessing, domestic choices in an area acknowledged to be of significant importance—human health—and one which, moreover, lies primarily within the competence of Member States.209 In Scotch Whisky, a decidedly unconvinced Court indicated that, although minimum pricing might be suitable to combat alcohol misuse, it should not be considered necessary, insofar as a tax increase could achieve the same result in a less restrictive manner.210 (A viewpoint rejected, notably, when the case returned to the domestic level.211) More trenchantly, in Deutsche Parkinson, the Court rejected categorically Germany’s assertion that fixed prices were suitable to protect the supply of medicinal products by supporting a network of bricks-and-mortar pharmacies, despite the referring court’s view that regulation was the only means available (and thus, necessary) to achieve this outcome. Although the holding may be explained partly by an absence of plausible evidence,212 the case is nonetheless remarkable for the willingness of the Court to substitute its own (equally subjective) reasoning for that of the delinquent Member State. Of particular significance is its receptiveness to certain—markedly hypothetical213—arguments advanced by the Advocate General to provide a counter-narrative to that of the Member State, including suggestions in respect of the potential effects of price competition;214 and, in a manner arguably conflating ought with is, the ways in which internet-only pharmacies might serve all segments of the population.215 Thus, the Court effectively questioned the substance of the domestic policy choices.216 What remains unclear is the source of this hostility: whether the Court was concerned about poor quality national regulation, or, echoing public choice critiques, whether it suspected a disjuncture between stated and actual regulatory motives. Either antagonism brings attendant dangers: an unduly rigorous and somewhat speculative proportionality analysis risks slipping from a judicial to full-merits review standard; whereas questioning the underlying motives of Member States arguably runs contrary to the principle of mutual trust that is demanded, at least of Member States, under EU law. Ultimately, the key question is why the Court of Justice is better placed to make such essentially normative determinations, whether based on technical expertise or its pan-Union perspective.217 The apparent willingness of the Court to embrace substantive review stands in marked contrast, moreover, to its reluctance to perform a similar function under the subsidiarity principle in the context of price regulation originating at EU level.218 Where, more exceptionally, Member States involve private market actors in the public task of price regulation, the broader EU competition framework may provide an alternative avenue to scrutinize and prohibit such behaviour. As noted, where anticompetitive price-setting is carried out by undertakings themselves, it may be caught by Articles 101 or 102. To avoid situations where equivalent private interests are cloaked in public authority and escape scrutiny, those prohibitions—read with Article 5 TEU (duty of loyal cooperation)—impose obligations on Member States.219 This may be the case where Member States require or encourage abusive price-setting by dominant undertakings or the adoption of rate-fixing agreements, or where national rules lose the character of public legislation when responsibility is delegated to private operators for decisions affecting the economic sphere.220 Alternatively, where anticompetitive pricing structures are maintained by an undertaking yet are attributable to a state measure, the Member State may be accountable under Article 106(1) TFEU.221 If, however, price regulatory activity is necessary to ensure provision of so-called ‘services of general economic interest’, Article 106(2) TFEU may, in theory, exempt the behaviour from application of, inter alia, competition law.222 VI. Indirect price regulation II: the permissive approach Although an openly sceptical approach typically governs ad hoc domestic price regulation, within a narrower subset of economic conditions there is greater recognition of, if not the desirability of price controls, at least their inevitability. Reflecting a pragmatic recognition of the (sometimes) necessity of intervention, the ‘lesser evil’223 is to centralize and standardize arrangements for domestic regulation through an overlay of more permissive, essentially supervisory EU rules. Price controls are not inherently suspect, yet the discretion of Member States is constrained, with an underlying assumption that the scope for resultant distortions is similarly diminished. While the granular details of these supervisory schemes differ between sectors,224 those circumstances where default hostility is replaced by tentative tolerance share characteristics which inform and influence the tenor of supervision. First, each of the sectors concerned has been subject to some degree of EU-level liberalization or harmonization, which sought to transform tightly-controlled and segmented national markets into contestable and competitive components of the internal market. EU law was thus the catalyst for creation of the market forces which Member States might subsequently seek to restrict. Adoption of positive legislation also suggests pan-Union interests that might be imperilled through disparate domestic controls. Second, in each sector, liberalization has not, however, involved a complete realignment of market governance rules with an EU-level archetype.225 Member States retain scope to adopt divergent regulation, with possible disruptive effect. Absent deeper harmonization—which, in the areas concerned, would prove politically contentious and potentially inefficient—the more pragmatic approach may be to accept the possibility of diversity but minimize its potentially disruptive impacts. Finally, the sectors concerned are, typically, marked by structural features—economies of scale, network effects, natural or legal monopoly components—which mean that unregulated market activity is unlikely to generate ‘effective’ competition even after ostensible liberalization, so that the ordinary price formation mechanism may generate suboptimal outcomes.226 These difficulties are reflected, inter alia, in the frequency with which antitrust enforcement has been deployed against individual pricing practices.227 Moreover, in the background in most instances are societal concerns—such as public service provision, or public health—that extend beyond the purely economic. These factors explain why domestic price controls are implemented with notable frequency in such markets: ‘[l]iberalisation, if it is not to be at any cost to individuals, makes a certain amount of regulation necessary when the market does not function adequately’.228 These economic and social features provide a rationale for the acceptance of regulation as a ‘lesser evil’. The electricity sector, where the continued presence of natural monopoly segments creates persistent structural barriers to competition, provides a clear example. Here, although the ultimate objective is to secure ‘transparent market-based mechanisms for the supply and purchase of electricity’,229 the liberalization framework acknowledges the continuing necessity for price supervision. The Third Electricity Directive expressly permits Member States to impose public service obligations with respect to, inter alia, price.230 It moreover requires Member States to ensure universal service for households (and, where preferred, small enterprises), premised upon ‘reasonable, easily and clearly comparable, transparent and non-discriminatory prices’.231 The Directive also mandates regulatory approval of wholesale-level transmission and distribution tariffs,232 reflecting the potential for inefficient pricing practices upstream to create bottlenecks to retail competition. This reflects the ‘essential facility’ nature of such infrastructure, a parallel to the realm of antitrust,233 thus recognizing the extent to which unduly high input prices may have knock-on negative effects downstream. Consistent with the logic of the permissive approach, however, the liberalization framework does not determine access prices; instead, this is delegated to national regulators, albeit acting within the circumscribed EU supervisory framework. Within the telecommunications sector, where EU liberalization has had greater success,234 the treatment of domestic regulation is less generous. Here, liberalization is explicitly premised upon the progressive reduction of ex ante regulation as competition develops.235 Thus, there is an express preference for retail and wholesale arrangements negotiated ‘on a commercial basis’,236 which implies price-setting in accordance with ordinary principles of supply and demand. While the liberalization framework provides explicit authorization for domestic price controls where necessary,237 this option is only available following a finding that one or more operators hold ‘significant market power’.238 This mirrors the antitrust notion of dominance,239 premised upon an absence of competitive constraints, thus suggesting that ordinary price-setting processes cannot work well in the circumstances.240 Nonetheless, regulatory interventions must avoid ‘market distortion’241 that would prove counterproductive on balance. Market assessments are subject to periodic review,242 with an obligation to remove existing regulation where the threshold requirement is no longer met.243 Furthermore, the Commission has progressively narrowed the list of markets in which controls might be warranted.244 Accordingly, despite express recognition of the residual permissibility of price regulation even within ostensibly liberalized markets, the discretion of Member States is significantly curtailed, at least acting qua telecommunications regulators.245 The Directive on Airport Charges246 provides further variation. While the explicit aim is to establish a common regulatory framework for charges at major EU airports,247 the Directive stops far short of specifying prices. Instead, it establishes a series of ‘common principles’248 that govern ‘the essential features of airport charges and the way they are set’.249 Beyond these, the Directive is notably permissive in terms of the procedure or methodology to be followed,250 whether charges are set by airport operators or public regulators,251 and the absolute level of fees. The primary objective is to regulate the relationship between airport management authorities and users (ie airlines), and specifically, to prevent abuse of market power by the former.252 Yet, pursuit of this goal requires neither centralization nor full harmonization: it is sufficient simply to guide domestic price-setting through a series of EU law obligations that are non-negotiable, but hardly unduly onerous. Finally, a ‘peculiar’253 form of supervision is contained in the Transparency Directive,254 which regulates price-setting for medicinal products. Such controls accommodate multiple policy considerations: securing a consistent supply of necessary medicines; minimizing expenditure of finite public resources; and protecting private incentives for research and innovation. Against this background, the Directive acknowledges the prima facie legitimacy of regulation, whether imposed directly through price controls, or indirectly through purchasing activity of national health systems. It nonetheless seeks to constrain the discretion of Member States—and minimize potential obstacles to free movement—by imposing procedural requirements, including time-limits and a duty to give reasons. As Deutsche Parkinson illustrates, these comparatively high-level obligations have proven insufficient to avoid (perceived) market distortions. Yet the failure of efforts to strengthen and update the Transparency Directive,255 due to ‘no foreseeable agreement’ among legislators,256 demonstrates the national sensitivities and divergent interests at play. Together, these examples illustrate both the overarching logic of the permissive approach and the extent to which the details of each regime depend upon the specific market dynamics. By structuring national decision-making for price regulation, whether by limiting the circumstances in which controls are permissible or by mandating the procedures to be adopted, in each instance the EU-level supervisory framework limits, but does not remove completely, national discretion. Consistent with the principles of subsidiarity and proportionality, both of which prioritize the ‘least restrictive alternative’, these examples are concerned with setting ‘rules of the game’, but not prejudging actual results. Recurrent use is made of principles of good governance—including timeliness,257 transparency,258 non-discrimination,259 consultation,260 objectivity,261 and verifiability262—which bind and constrain Member States when engaging in price regulation. This structural approach, on the one hand, seeks to influence but not predetermine the substantive scope of domestic controls; on the other, it serves to pry open often opaque and perhaps murky domestic processes to greater scrutiny, at both national and EU levels.263 Each of the examples discussed above, moreover, involve duties to inform the Commission of measures to implement the required decision-making framework and/or of specific decisions taken under it.264 These obligations serve a twofold purpose: to condition and constrain domestic policy making insofar as it takes place, overtly, in the ‘shadow of hierarchy’; and to provide early warning of inadequate domestic structures or distortive controls. The underlying objective is to depoliticize price regulation, turning it into a largely technocratic enterprise. By constraining the discretion of Member States and throwing light on regulatory processes and outcomes, EU law seeks to limit the extent to which domestic regulation might favour vested private or public interests at the expense of the competition process. The permissive approach shares with the public choice movement a scepticism regarding the inherent unreliability of regulators, but not, it seems, the regulatory enterprise more generally. Implicit is a suspicion that, left to their own devices, national regulators may favour domestic over Union interests, or social over economic ones. Yet the answer is not, as public choice would have it, to abandon or prohibit price regulation entirely. Instead, EU law seeks the more constructive path of channelling domestic regulators towards better policy making, with due regard, amongst other things, for competition implications. This is illustrated by an increasing use of rigorously independent national authorities to implement and administer supervisory requirements. Both the electricity and telecommunications frameworks mandate legally distinct and functionally independent national regulators.265 Each authority must exercise its powers impartially and transparently,266 including a prohibition on seeking or taking instruction from other bodies, public or private.267 Such requirements are intended to increase the authority of domestic regulators and the predictability of their decisions, in order ‘to remove any reasonable doubt as to the neutrality of that body and its imperviousness to external factors’.268 Implicit is the assumption that exposure to such factors would diminish the effectiveness of domestic regulatory activity, coupled with a strong conviction of the relative efficiency of bureaucratic regulation in contradistinction to political decision making. The Airport Charges Directive similarly requires the establishment of ‘national independent supervisory authorities’ to mediate in the event of failure to reach agreement on charges.269 More radically, one proposed innovation within the (now failed) revisions to the Transparency Directive was the requirement for a designated independent body to impose penalties against defaulting Member States where regulators fail to comply with time limits.270 The permissive approach emphatically does not give carte blanche to Member States, however. A corollary of the constrained discretion permitted is that, where exceeded when imposing price controls, the errant Member State stands in violation of EU law. That is, the mere fact that the EU legal framework envisages the possibility of price regulation does not equal a presumption that any domestic controls are acceptable. The energy sector illustrates this tension. As discussed, EU law not only contemplates price regulation in the electricity and gas sectors, but indeed requires a degree of supervision in wholesale markets. Following its energy sector inquiry, the Commission was nonetheless strongly critical of regulated retail tariffs, which it argued could have ‘highly distortive effects and … pre-empt the creation of liberalised markets’.271 Starting in Federutility,272 and reaffirmed in ANODE,273 the Court of Justice has split the difference by confirming the continuing power of Member States to imposed retail controls, while articulating demanding requirements, procedural and substantive, to be satisfied where Member States exercise that power. The latter proved a stumbling block in Commission v Poland, where, regardless of whether market circumstances merited intervention, the price controls at issue—unlimited in time and applicable without distinction to all consumers—represented a disproportionate incursion into liberalized gas markets.274 Prices determined by the interplay of supply and demand thus remain the preferred option and final objective.275 Ultimately, even when EU law adopts a more permissive approach to price regulation, domestic controls may prove incompatible with the internal market. VII. Direct price regulation: the prescriptive approach Finally, we consider more direct or interventionist means by which EU law seeks to control pricing, namely, ‘by regulating prices at [Union] level’.276 Such regulation contrasts with more indirect approaches, in which EU law has an essentially negative function, ‘imposing limits on national regulations on prices’.277 It also contrasts with ad hoc regulation via antitrust enforcement, providing, at least in theory, systematic solutions to market failures rather than punitive responses to individual conduct. Such regulation is explicitly recognized by the Court of Justice as ‘exceptional’, justified only in ‘unique’ circumstances.278 Two examples will be considered, exploring the rationales for and broader implications of this approach. Of the indirect methods of price regulation, the prohibitive approach is an essentially polarized one: the EU prerogative of developing and protecting market competition pitched against Member State interest in restricting a competitive parameter. The more permissive approach is largely cooperative: the EU and Member States collaborate to devise and implement controls that strike an appropriate balance ‘between the free market and regulation, between competition and the implications of the general interest’.279 Cooperation breaks down only where Member States exceed the terms of the permission granted by the EU law. At their core, however, both reflect the ideological challenge of price regulation within ostensibly free markets: the former is unavoidably viewed as a deviation from the archetype of the latter. Moreover, both presuppose a dichotomy between EU law—as a centralizing, neutralizing force, on course towards ever-greater competition—and national laws—as a source of divergence and distortion. Our final approach, conversely, addresses several—highly atypical—instances in which EU law is itself a vehicle for harmonized price controls imposed directly within domestic markets. In a sense, these examples are closer to the punitive approach discussed in Ssection IV, whereby the operative dichotomy is similarly a distinction between private market action and EU-level public control. It is thus unsurprising that both were preceded by antitrust enforcement. Yet the underlying approach to market supervision is, from another perspective, wholly at odds with the philosophy behind the competition rules: rather than discrete interventions to eliminate specific anticompetitive conduct, instead these examples demonstrate a complete overreaching of the price formation mechanism. An overt commitment to open and undistorted competition pervades conventional responses to market dysfunction under EU law: namely, reinforcement of existing competitive dynamics—whether by structural reform, removing regulatory restraints that inhibit competition, or antitrust enforcement against private actors—as opposed to overstepping those forces through price controls.280 To the extent that EU law makes provision for price regulation, typically it does so through alignment of domestic processes towards a Union archetype. This ‘intermediate’281 approach arguably reflects the most appropriate allocation of ‘proper political accountability’282 between the EU and Member States, given the plurality of ‘legitimate regulatory goals’283 that might be pursued. Despite such reservations, however, EU law retains the formal capacity to embrace more prescriptive interventions through ex ante price controls: devised and imposed at EU level, taking effect within national markets, and applying directly to the activities of private actors. The two examples we consider are the Roaming and Interchange Fee Regulations. In both instances, the control mechanism comprises a price ceiling, from which domestic regulators have little or no ability to deviate. Bearing in mind the logic of subsidiarity, these examples raise questions about when and why such exceptional EU-level regulation is warranted. It is thus necessary to understand and compare the objectives behind and regulatory circumstances of both Regulations. Although the sheer dearth of such legislation limits our sample size, it is possible to discern recurring themes which may serve to explain the precedence granted to EU-level action. The Roaming Regulation sets EU-wide prices for mobile roaming services. ‘Roaming’ occurs when mobile customers use their phones abroad. To supply coverage, home providers purchase wholesale network access within host Member States. Historically, rates for wholesale access were high, reflected in equally inflated retail prices. Identified as a dysfunctional market by a Commission sector inquiry,284 the issue was initially pursued through antitrust enforcement and ‘soft’ law efforts.285 When these failed to generate reductions in rates,286 the Commission chose a more distinctly ‘regulatory’ solution: an EU-wide maximum for wholesale access, plus a limitation on the permissible retail mark-up to 130 per cent of wholesale prices.287 This sought to address the ‘core problem’ that prices for roaming stood ‘in no meaningful relationship to the underlying costs’,288 resulting in ‘unjustifiably high’ charges.289 Entering in force in 2007290 and initially covering only voice calls, it was extended to text messages291 and internet data, while costs were reduced progressively.292 Finally, from June 2017, roaming surcharges have been abolished outright within the EU.293 Our second example concerns interchange fees for payment cards. Interchange fees comprise the costs levied by card system operators to merchants that accept payment, and have long been subject to public criticism and regulatory scrutiny.294 These concerns were reflected in the Commission’s sector inquiry into retail banking, which identified, inter alia, large variations in fees across Member States alongside generally high levels.295 Initially, antitrust enforcement was considered sufficient to address these problems;296 eventually, the Commission opted for a more durable approach with a specific Regulation on fee-setting.297 The core function of the Interchange Fee Regulation is to cap maximum permissible fees for consumer credit and debit transactions involving four-party payment card schemes, such as Visa and MasterCard.298 In devising fee levels, the Commission took account of both economic theory and existing administrative practice;299 the Regulation thus sets maximum fees of 0.2 per cent for consumer debit card transactions and 0.3 per cent for consumer credit card transactions.300 The key pricing provisions took effect from December 2015. Despite factual differences, numerous elements unite these distinct examples, which may explain their regulatory priority within EU law. First, both markets were subject to considerable scrutiny within the framework of the EU’s competition policy powers prior to enactment of the relevant Regulations. This indicates the pre-existence of significant market dysfunction; circumstances that were, moreover, a source of substantial EU-level concern. Commission sector inquiries, appropriate where ‘circumstances suggest that competition may be restricted or distorted’,301 were carried out in each, illustrating the importance of these markets within the context of the internal market. Both inquiries revealed a risk of high pricing resulting from excessive market power;302 which in each instance prompted competition enforcement, pursuing such behaviour from an antitrust standpoint.303 Yet the subsequent decisions to regulate demonstrate both the intrinsic limitations of regulation through antitrust enforcement, and the value added of ex ante price controls to address persistent market power. In the case of roaming, competition law proved largely incapable of addressing the exploitative oligopolistic behaviour at issue, meaning that regulation was necessary to secure an effective outcome. Although investigations were pursued against network operators, alleging abuse of dominance through excessive wholesale pricing,304 such efforts suffered from difficulties in establishing dominance, alongside the inherent stringency and uncertainty of the United Brands test to demonstrate excessiveness.305 The Commission alluded to the ‘complexity’ of enforcement,306 and, once the Roaming Regulation was adopted, it closed on-going investigations without findings of breach.307 Interchange fees, by contrast, come readily within the ambit of Article 101 TFEU. As discussed in Section IV, antitrust enforcement has included commitment decisions involving Visa,308 and an infringement decision against MasterCard.309 Despite these successes, the piecemeal and essentially individualized nature of the remedies implemented provided an inadequate response to the systemic market failure at issue. The Commission thus determined that a top-down regulatory approach was required in lieu of ‘ad hoc’310 efforts. Second, in each instance the rationale for regulation was not merely a desire to increase efficiency: both, additionally, reflect social and integrationist concerns. Consumer protection was a key impetus for the Roaming Regulation, as high costs were perceived as exploitative of non-business travellers in particular.311 Thus, the Commission called for ‘a clear demonstration that Europe can act in the interest of citizens in a case where Member States are not equipped to act’.312 For the Interchange Fees Regulation, it was small and medium-sized merchants—who pay interchange fees in the first instance, and lack the economic clout to negotiate favourable rates individually—that shouted loudest (and lobbied hardest) for intervention. In both instances, price regulation was the means by which access to these increasingly important products could be secured, on realistic terms, primarily for the benefit of individuals and businesses without substantial market power. Significantly, in each case the ostensible social concern had a pan-Union existence or identity, thus warranting recognition at EU level. This contrasts with the divergent social concerns that prompt domestic price regulation, which, as discussed, are granted only circumscribed deference. Additionally, both sectors involve significant cross-border elements. Accordingly, their effective functioning—including affordable access—links to development of the internal market, thus providing a plausible rationale for the necessity and appropriateness of EU-level intervention. By its nature the levying of additional costs for use of mobile phones between Member States constitutes a barrier to integration and free movement: indeed, market segmentation is inherent within roaming as a service category. Although the internal market element is not intrinsic to payment cards, card systems are a central component of e-commerce infrastructure. A well-functioning integrated payment market is accordingly portrayed as vitally important, if not practically indispensable, to development of the digital internal market,313 again particularly from the perspective of ordinary consumers and smaller businesses. Notably, both roaming and the development of e-commerce are components of the Commission’s wider—and wildly ambitious—‘Digital Single Market’ strategy.314 In both instances, therefore, the Commission grounded its subsidiarity analysis in the transnational nature of the markets—and market failures315—at issue.316 Article 114 TFEU accordingly provides the legal basis for both Regulations. Although providing wide-ranging legislative powers, formally Article 114 does not grant the EU legislature any ‘general power to regulate the internal market’.317 Hence, it was necessary to establish a ‘disfavouring of cross-border economic activity’, and not merely a hindrance of economic activity as such.318 Both Regulations proceed on the assumption that, absent EU-level regulation, disparate and potentially distortive national price controls were likely to arise.319 An interesting question is whether the EU would have authority to legislate absent domestic divergence: that is, might the EU legislature intervene purely to address inefficient or otherwise socially-undesirable price-setting by private actors? Arguing tentatively in the affirmative in Vodafone, Advocate General Poaires Maduro drew parallels to Viking and Laval, which involved application of the free movement provisions to private parties due to ‘the direct impact that private acts … could have on free movement’.320 Where private economic activity involves a direct disfavouring of cross-border trade, he argued, the EU legislature should have capacity to regulate that behaviour. Where it involves wholly domestic trade, however—for instance, efforts to control the price of ‘suitcases or restaurant meals’321—the necessary link to cross-border trade is lacking. In such circumstances, the task of price regulation, if necessary, falls to Member States unless an alternative legislative basis exists.322 It is worth comparing, finally, the differing scope of the regimes. In one sense, the Roaming Regulation is more intensive and ambitious. It mandates wholesale- and retail-level controls, on the basis that wholesale regulation alone would not ensure that savings pass to consumers, while retail regulation without a reduction in costs might create a margin squeeze.323 Moreover, the Commission’s ultimate objective was the complete elimination of roaming charges, essentially rendering the service category obsolete (at least within ‘fair use’ parameters). The progressive reduction in rates might be viewed as akin to forcing the internal market, insofar as operators must price as if a single market for mobile telephony services exists; whereas, in reality, mobile markets remain segmented along national lines. The Interchange Fee Regulation is less far-reaching in this regard. The Commission rejected a complete ban on interchange fees for debit cards on the basis that the market was insufficiently mature,324 and similarly rejected retail regulation, implicitly suggesting that this might intrude too far into private economic activity.325 Yet the ultimate reach and impact of the Interchange Fee Regulation may be much greater than that of the Roaming Regulation. The latter involves a deep incursion into commercial freedom, yet confined within narrow circumstances. The Interchange Fee Regulation, conversely, addresses a broader subject-matter—payment card transactions—and governs fees for cross-border and domestic consumer card transactions. In practical terms, it represents a significant step beyond regulation in furtherance of specific EU objectives, and towards regulation of the functioning of national markets as such.326 This, in turn, suggests a further departure from the logic of subsidiarity, alongside a declining tolerance for domestic divergence or disparities. Central to both Regulations is implicit acknowledgement that the concept of effective competition within the internal market is more complex than the language of ‘free’, ‘open’, or ‘undistorted’ competition suggests.327 VIII. Dilemmas of price regulation under EU law The starting premise of this article has been that the treatment of price regulation under EU law is recognized as atypical, for reasons as-yet under-explored in existing jurisprudence and literature. In our efforts to tease out why this might be the case, we have seen that it is also complex and multi-faceted, with a wide-range of approaches—punitive, prohibitive, permissive, and proscriptive—discernible within the legal and regulatory framework. The preceding sections have nonetheless sought to demonstrate that, whether manifested in uncharacteristic restraint in antitrust enforcement, a distinctive hostility under the free movement rules, or sporadic and explicitly extraordinary instances of top-down regulation, the treatment of restrictions on pricing freedom under EU law diverges from what might be considered the ‘conventional’ approach to equivalent legal and economic issues. In this penultimate section we consider why price regulation is so problematic in the context of the internal market, and explore the circumstances in which EU law nonetheless endorses such controls as compatible with the goal of open and undistorted competition. The treatment of price regulation within EU law accommodates many contrasting regulatory impetuses, which extend beyond the bare pursuit of undistorted competition as such. Within competition policy, there is friction between the default preference for unencumbered price-setting versus the pragmatic reality of sometimes-dysfunctional markets. In the realm of integration, there are questions of whether and when price controls create distortions that ripple across the internal market, alongside tensions arising from delegation of price supervision to domestic regulators. Justifications for regulation take us into the delicate territory of social policy, raising questions of how and to what extent non-economic considerations can be addressed within the overtly competitive structure of the internal market; and whether the EU can and should challenge domestic regulatory preferences. As the examples above illustrate, there is no single or simple answer in most instances. In practice, price regulation remains an inherently domestic activity, meaning that EU law plays an essentially secondary role in constraining or directing interventions. Challenging questions of subsidiarity—when should EU law intervene?—and proportionality—to what extent should EU law pre-empt domestic regulatory choices?—accordingly abound. Two potential sources of concern with respect to domestic regulation implicitly pervade EU law. First, there is the issue of competence: whether domestic regulators have sufficient ability to design and implement effective controls to minimize distortions within the otherwise open and competitive internal market. Second, there are issues of integrity and fidelity to the Union: whether domestic regulators can be trusted to work alongside and in furtherance of integration and competition, or whether they might fall prey to capture by vested national interests, whether public or private. At its core, nonetheless, the distinctive treatment of price regulation under EU law may be explained by reference to the central, indeed axiomatic, role of the price formation mechanism in the context of the self-sustaining internal market. As we have seen, express acknowledgement of the foundational relationship between the free formation of prices and the concept of ‘open and undistorted competition’ is found throughout the jurisprudence. From an antitrust perspective, any effort by private parties ‘to influence free formation of prices’ is considered to ‘manifestly [have] as its object to restrict competition’.328 Under the free movement rules, the Court again forcefully defends the importance of ‘the free formation of prices’329 from Member State interference, emphasizing that ‘price competition lays the basis for [traders’] potential to access the market directly and to continue to be competitive in it’.330 Even where domestic regulation is anticipated by EU-level harmonization, the Court nonetheless takes the view that ‘a measure which requires a product or service to be offered on the market at a determined price … is by its very nature contrary to the objective of achieving an open and competitive market’.331 Moreover, the ‘exceptional’ and ‘unique’ nature of top-down price regulation by the EU itself is overtly acknowledged.332 Yet the conceptual and practical challenges extend beyond mere recognition that the notion of undistorted competition implies an absence of public control over price formation. Specifically, price-setting lies at the heart of the well-functioning internal market, insofar as it operates as both the facilitator of and the reward for exactly the sort of economic behaviour upon which the very existence of the internal market is premised. Price controls thus have a direct negative impact on the interior motivations of would-be economic operators, without which the internal market cannot exist in a meaningful sense. Price regulation accordingly differs from other market restrictions, be they limitations on who can provide a product,333 the form in which is delivered,334 or the circumstances surrounding promotion335 or sale.336 The latter may render market participation less attractive, but do not challenge the fundamental impetuses of entrepreneurship. Arguably, only outright prohibitions on particular product or service categories are more restrictive of economic freedom than price regulation; the outcome ultimately pursued, incidentally, in the context of the Roaming Regulation.337 Although the definition of ‘economic activity’ in EU law is sufficiently broad to encompass non-profit entities,338 the practical reality is that the vast majority of undertakings operate primarily if not solely to make profits. In the short term, a firm’s ability to decide upon and charge a commercially acceptable price, taking account of both the level of competition it faces and its desire to realize a reasonable profit margin, is likely to determine both its capacity and its incentive to enter or to continue to compete within a marketplace. Insofar as price regulation deprives individual firms of the freedom to engage in self-maximizing price-setting behaviour, it may dissuade or even entirely prevent such participation. This harms the frustrated trader, denied the opportunity to realize its individual economic freedom through involvement in the internal market, and also the competitive process and consumers more generally, who suffer the ill-effects of a less buoyant marketplace. In the longer term, the presence of price regulation reduces the prospects for market participants to earn future supra-competitive profits, pursuit of which is considered to play a vital role in motivating competition between individual firms. This concern was well-articulated by Scalia J in the US Supreme Court decision in Verizon v Trinko, who argued that, ‘[t]he 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’.339 The existence of price regulation, or a possibility of its future enactment, inevitably reduces the likelihood that an effective economic operator, who succeeds in increasing its market share through competition on the merits—a ‘pristine monopolist’,340 in US parlance—will be able subsequently to reap its otherwise legitimate reward of higher prices. Knowledge, ex ante, of its diminished prospects for greater returns ex post may, in theory, dissuade the rational firm from seeking a monopoly from the outset. This means, in practice, that it may compete less vigourously, refraining from the sorts of risky or resource-intensive activities that tend to underpin both short-term and longer-term efficiency gains. Accordingly, price controls not only restrict the immediate vitality and potentially the viability of competition within regulated segments; more generally, their recurrent use and tolerance could inhibit the essential competitive forces, between but also within Member States, that development of the internal market seeks to foster and protect. This fundamental concern, we argue, underlies each of the approaches to price regulation discussed above. In the antitrust context, EU law prioritizes market opening and access concerns. Conversely, there is a clear reluctance to ‘pick winners’, seen both in the Commission’s hesitancy when presented with allegedly unfair pricing practices, as well as its strong aversion towards (involuntary, at least) pricing controls as antitrust remedies. Advocate General Wahl’s assessment in AKKA provides the clearest explanation for the Commission’s unusual restraint: the elevated risks of false positives and counterproductive impacts in the longer-term mean that this is an area of antitrust where, in effect, the game may not be worth the candle.341 Under the free movement rules, we argued, the default approach is one of scepticism and hostility. Domestic price controls are condemned even where the link to interstate trade is tenuous to the point of non-existence; instead the objection appears to be much deeper, concerning a fundamental disconnect between regulated prices and so-called ‘conditions of normal and effective competition’.342 Although EU law does not outlaw, a priori, domestic restrictions on private price formation, departures from the norm of open and undistorted competition are unusually closely scrutinized and narrowly circumscribed, as discussed in Sections V and VI. More specifically, this understanding of the distinctiveness of price regulation may help to reconcile the apparently conflicting outcomes in Keck and Scotch Whisky.343 The logic of Keck, in the abstract, is unimpeachable: insofar as domestic rules merely regulate intrastate trade, they should fall outside the purview of free movement. Yet, arguably, the real mischief that concerned the Keck court was not the domestic price control at issue, but rather the approach within—and criticism of—earlier Sunday trading cases.344 Thus, the Keck court provides the right answer, but arguably to the wrong question. Scotch Whisky leaves intact the basic reasoning of the judgment, but clarifies that significant restrictions on pricing freedom fall outside the safety of the ‘selling arrangements’ conceit. Indeed, the restraint at issue in Keck—a blanket rule against below-cost pricing—presents serious problems from a competition policy perspective, insofar as lower prices are precisely what competition is intended to deliver. Post-Scotch Whisky, a national rule that limits trading hours one day per week might still avoid classification as a genuine hindrance to market access;345 but a rule that neuters the profit-seeking impulses of potential new entrants cannot similarly escape criticism. Finally, to conceive of price regulation as not merely at odds with, but indeed substantively inimicable to, development of the internal market—in particular, the underlying interplay of forces of supply and demand premised upon the free-functioning of the price formation mechanism—serves to demonstrate just what is so extraordinary about the examples of EU-level regulation discussed in Section VII. Although we sought to identify plausible and consistent reasons as to why, exceptionally, top-down price controls were considered suitable and necessary, the most compelling takeaway may be the extent to which both Regulations are so far from the norm of approaches to market supervision within EU law. Deferring to the so-called ‘invisible hand’ as the principal means of market regulation, facilitated by the free-functioning of the price formation mechanism, brings the additional advantage of avoiding the need for top-down regulation to supplant private decision making. This, consequently, minimizes two distinct sources of regulatory tension within the internal market. Where the task of price regulation lies with the EU itself, whether setting individual prices under competition law or mandating harmonized prices under Article 114 TFEU, we saw that concerns exist both with regards to the EU’s ability to identify and impose optimal prices, and the legitimacy, broadly construed, of decisions to do so. Conversely, divergent controls enacted by Member States raise concerns both regarding the absolute quality of regulation and a potential fragmentary impact on market integration. Given that internal market regulation is a shared competence, decisions to deviate from the default of private price formation almost unavoidably raise difficult questions about which competent regulator should have priority to determine alternative market outcomes. Accordingly, a robust defence of the importance of price freedom within EU law brings the oblique benefit of forestalling this dilemma. Of couse, although competitive markets tend to benefit consumer welfare, efficiency is far from the only socially-important value recognized within EU law. As illustrated by the preceding discussion, it is well-established that limitations on pricing freedom may be justified in the broader public interest within the social market economy.346 We argue, however, drawing upon the extended understanding of the principle of proportionality as articulated in Fedesa,347 that the approach to price regulation within EU law exhibits considerable scepticism about whether regulating prices can ever constitute the so-called ‘least onerous’ or least restrictive alternative measure available to achieve even legitimate public policy objectives. This is seen, in the realm of antitrust, in the strong default preference for interventions that reinforce existing market forces, on the assumption that well-functioning markets can self-correct and eliminate exploitative harms in the longer term. Scotch Whisky and Deutsche Parkinson illustrate the recent willingness of the Court of Justice to second-guess the substance of politically-sensitive domestic policy decisions, and in particular, to conclude that Member States ought to opt instead for specified alternatives to price regulation. As a ‘lesser evil’ approach, the permissive attitude discernible within the sector-specific directives necessarily accepts the appropriateness of domestic price controls in certain contexts. Yet comparatively tight EU-level supervision of the manner and circumstances in which pricing restraints can be implemented, alongside muscular enforcement against domestic regulation considered to exceed the limited discretion granted to Member States, suggest a more suspicious, indeed hostile approach in practice. Finally, what is exceptional about the top-down instances of EU-level price regulation considered above is precisely that, in the market circumstances at issue, the EU institutions were prepared to accept that no less onerous alternative solutions existed to remedy the identified dysfunctions. When the validity of the Roaming Regulation came before the Court of Justice in Vodafone, moreover, the Court expressly rejected a ‘best possible option’ standard of review in favour of the more deferential ‘manifest inappropriateness’ standard, justifying its approach on the basis that the EU legislature (but not, it would seem, Member States) ‘must be allowed a broad discretion in areas in which its action involves political, economic and social choices’.348 Thus, price regulation is frequently an available policy option, but is rarely viewed as optimal—unless, of course, the EU institutions decide the contrary. Another important, and largely overlooked, aspect of the treatment of price regulation is its relationship to the internal market qua single market. As argued, domestic rules that limit private price-setting are formally anathema to the philosophical bent of development of the internal market. Yet this desire to preserve the free functioning of the price formation mechanism, and specifically, to stamp out divergences in domestic practices regarding price regulation, belies the inherent difficulties of harmonizing prices. It is considerably more straightforward for EU law to prompt alignment of, for instance, domestic rules governing sales practices or qualification of providers than it is to require the elimination of price differences between Member States. As Advocate General Wahl noted in AKKA, ‘elements such as—to name but a few—domestic taxes, the particular characteristics of the national labour market and local consumers’ preferences may significantly affect the final prices of the relevant product or service’.349 Moreover, as the Court itself acknowledged, ‘there are, as a general rule, significant differences in price levels between Member States for identical services, those differences being closely linked with the differences in citizens’ purchasing power’.350 Considering the validity of the Airport Charges Directive, Advocate General Mengozzi similarly argued that different national circumstances mean that quite different fee levels may remain appropriate across the EU, even applying common principles for price-setting.351 In this regard, again, the Roaming Regulation was quite extraordinary, implying as it did that a single appropriate price (nominally, price cap) could be identified for and applied across the twenty-eight Member States. (The Interchange Fee Regulation sidesteps this problem by adopting a percentage-of-transaction-value approach.) Persistent, often significant, differences in price across the internal market—‘organic’ in the sense that they arise as a result of variances in supply and demand, rather than public or private manipulation of the price formation mechanism—arguably call into question the contention that price regulation functions as an appreciable barrier to market interpentration. Even absent domestic controls, de facto variations in the effective price across the internal market may have similar negative effects on incentives for participation and competitive behaviour. Forcing complete alignment of prices is (largely) beyond the remit and indeed the concern of EU law. Yet what the numerous cases addressing price regulation demonstrate is that differences attributable to ‘artificial’ intervention—such as price controls—are inherently suspect in a way that organic differences simply cannot be. Finally, it is instructive to note the variety of procedural postures identifiable across the jurisprudence addressing price regulation. These cases should not be read, solely or even primarily, as an EU-level institutional attack on domestic controls. In fact, many of the most prominent decisions, from Keck to Scotch Whisky, initially involved somewhat opportunistic attempts by traders to invoke EU law to attack inconvenient national rules; efforts that receive varying degrees of assistance from the Court of Justice. Others involve Member State attempts to challenge EU-level efforts to control352 or mandate price regulation,353 typically premised on subsidiarity concerns. Of course, the Commission retains jurisdiction to pursue Member States whose pricing controls might infringe EU law and thus amount to a failure to fulfil EU-level obligations.354 As cases such as Deutsche Telekom illustrate, however, what is ostensibly the most proper legal approach may not be the most strategically effective one. Most interesting going forward perhaps is the increasing decentralization of the antitrust rules, involving both NCAs and private plaintiffs in enforcement at national level. Experience with the former suggests that domestic enforcers are more ready to pursue alleged exploitative harms than their EU-level counterpart; it is hardly to be expected that private litigants will exercise greater restraint. What is remarkable about this wide-ranging catalogue is the diversity of perspectives it reveals: not only the winners and losers of the wealth redistribution that price controls frequently represent, but also broader constitutional and even restitutionary concerns. The dilemma of regulating prices within the EU thus raises legal issues that are exceptional yet transcend easy categorization; this article has sought to throw greater light upon these complex questions. IX. Conclusion That ‘money makes the world go round’ is a contemporary cliché, and the operation of the internal market is no exception. The free-functioning of the price formation mechanism is, at least in theory, pivotal to its effective operation: both to secure an efficient distribution in the short term, and to incentivize greater economic activity within the internal market in the longer term. Moreover, market regulation by means of the ‘invisible hand’ bypasses the often-controversial question of which polity, the EU or its Member States, should have jurisdiction to ‘pick winners’ and determine the optimal market outcome going forward. Yet the treatment of price regulation under EU law points to certain paradoxes that lie within the concept of a ‘highly competitive social market economy’. Pricing and the price formation mechanism are central components of any system of open competition; yet free formation of prices cannot alone guarantee effective competition, nor it is indispensable to well-functioning markets in the broader sense. The social policy concerns and market conditions that underpin most regulation are typically national in origin and nature; yet the existence of multiple discrete and discordant price control structures is inapposite in moving towards an ostensible single market. Price regulation and its discontents within EU law thus reflect the inherent tensions and compromises that arise from an inevitable sharing of regulatory jurisdiction within the internal market, alongside the complications that stem from a plurality of legitimate yet conflicting regulatory goals. This article has sought to unpick the treatment of price regulation, identifying and exploring discrete strands within EU case law and regulatory practice: considering punitive, prohibitive, permissive, and even prescriptive perspectives. The various approaches adopted provide insight into the complexity of both the underlying regulatory phenomenon and the wider task of developing the internal market within a multi-level institutional structure. The article has further advanced a tentative explanation for the acknowledged distinctive status of price regulation within EU law. Crucially, such controls restrict not only how or how vigorously undertakings can compete within the internal market, but may also impact more fundamentally upon the interior motivations and entrepreneurial impluses which determine whether economic actors are prepared to participate at all in the market process. The approach of the Court of Justice in Metro (II) thus comes more readily into focus:355 price competition is not an absolute value, yet EU law is deeply reluctant to sanction any wholesale departure from its axiomatic market model. ‘Open and undistorted competition’ is thus both slogan and archetype, although not, ultimately, an unbending prescription within EU law. Footnotes 1 C-121/15 ANODE EU:C:2016:637, para. 30. 2 Alongside the substantive competition rules in Articles 101–109 Treaty on the Functioning of the EU (TFEU), see references to avoiding distortions of competition in Articles 32(c), 113, 116, and 348 TFEU, and ‘the principle of an open market economy with free competition’ in Articles 119, 120, and 127 TFEU. 3 Article 3(3), Treaty of European Union (TEU). 4 Opinion of Advocate General Poiares Maduro in C-58/08 Vodafone EU:C:2009:596, para. 38. 5 Opinion in Vodafone, para. 42. 6 See, eg, Commission Decision of 9 November 2010 in Case AT.39258 Airfreight, para. 900: ‘Price being the main instrument of competition …’. 7 Opinion of Advocate General Szpunar in C-148/15 Deutsche Parkinson EU:C:2016:394, para. 18. 8 Opinion in Deutsche Parkinson, para. 1. 9 Opinion in Vodafone, para. 1. 10 For discussion of the inherent tensions between the ‘social’ and ‘market’ within the internal market, see de Witte, ‘The Architecture of the EU’s Social Market Economy’ in Koutrakos and Snell (eds), Research Handbook on the Law of the EU’s Internal Market (Cheltenham: Edward Elgar Publishing, 2017). 11 C-333/14 Scotch Whisky EU:C:2015:845. 12 Regulation 717/2007 of 27 June 2007 on roaming on public mobile telephone networks within the Community and amending Directive 2002/21/EC (OJ L171/32, 29 June 2007) (‘Roaming Regulation’). 13 See e.g. Gerber, Law and Competition in Twentieth Century Europe (Oxford: Oxford University Press, 1998). 14 Discussing the atypical treatment of price regulation under the free movement provisions, see eg Barnard, The Substantive Law of the EU: The Four Freedoms (Oxford: Oxford University Press, 2016), 87; Alemmano, ‘Balancing Free Movement and Public Health: The Case of Minimum Unit Pricing of Alcohol in Scotch Whisky’, (2016) 53 CML Rev 1037, 1047–51; and Opinion of Advocate General Bot in C-333/14 Scotch Whisky EU:C:2015:527, fn.53. 15 Several of the most important cases considering the principle of subsidiarity concern EU-level efforts to control price regulation: see C-58/08 Vodafone EU:C:2010:321 and C-176/09 Commission v Luxembourg EU:C:2011:290. 16 Authoritative accounts include Mankiw and Taylor, Economics (3rd edn, London: Thomson Learning, 2014), particularly ch. 3. 17 Generally, Baldwin, Cave, and Lodge, Understanding Regulation (2nd edn, Oxford: Oxford University Press, 2011), chs 22 and 25. 18 Decker, Modern Economic Regulation (Cambridge: Cambridge University Press, 2014), ch. 5. 19 Motta, Competition Policy: Theory and Practice (Cambridge: Cambridge University Press, 2004), 25. 20 Generally, Kahn, The Economics of Regulation (Cambridge, MA: The MIT Press, 1988). 21 In most economies, price controls exist only within public utility sectors: Baldwin et al. (n 17), 443. 22 Generally, Viscusi, Harrington, and Vernon, Economics of Regulation and Antitrust (4th edn, Cambridge, MA: MIT Press, 2005). 23 Viscusi et al. (n 22), 663–9. 24 Viscusi et al. (n 22), 358. 25 Baldwin et al. (n 17), 476. 26 See, eg, Stigler, ‘The Theory of Economic Regulation’ (1971) 2(1) The Bell Journal of Economics and Management Science, 3–21. 27 See, eg, Posner, ‘The Concept of Regulatory Capture: A Short, Inglorious History’ in Carpenter and Moss (eds), Preventing Regulatory Capture (Cambridge: Cambridge University Press, 2014). 28 See, eg, Breyer, Regulation and its Reform (Cambridge, MA: Harvard University Press,1982). 29 See, eg, the EU’s emissions trading scheme: Directive 2003/87/EC of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L275/32, 25 October 2003). 30 Baldwin et al. (n 17), 110–33. 31 European Commission, Updating and Simplifying the Community Acquis (COM(2003)71 final), 2 February 2003. 32 European Commission, Smart Regulation in the European Union (COM(2010)543 final), 8 October 2010, 3. 33 See n 9 above. 34 Article 4(2)(a) TFEU. 35 See n 1 above. 36 C-26/76 Metro (II) EU:C:1977:167, para. 21. 37 Recent pronouncements include C-100/05 Commission v Italy (Trailers) EU:C:2009:66, on free movement of goods, and C-554/12 Commission v DEI EU:C:2014:2085, concerning Article 106(1) TFEU. 38 Generally, Moschel, ‘The Proper Scope of Government Viewed from an Ordoliberal Perspective: The Example of Competition Policy’ (2001) 157 Journal of Institutional and Theoretical Economics 3. 39 Echoing Ogus, Regulation: Legal Form and Economic Theory (Oxford: Clarendon Press, 1994), 30. 40 Opinion in Vodafone, para. 38. 41 ANODE, para.3 0. 42 Dashwood, ‘States in the European Union,’ (1998) 23 EL Rev 201, 213. 43 Larouche, Competition and Regulation in European Telecommunications (Oxford: Hart Publishing, 2000), 124. 44 Majone, Dilemmas of European Integration: The Ambiguities and Pitfalls of Integration by Stealth (Oxford: Oxford University Press, 2005), 149–50. 45 Compare Moravcsik, ‘In Defence of the “Democratic Deficit”: Reassessing Legitimacy in the European Union’ (2002) 40 Journal of Common Market Studies 603–24, and Follesdal and Hix, ‘Why There is a Democratic Deficit in the EU: A Response to Majone and Moravcsik’ (2006) 44 Journal of Common Market Studies 533–62. 46 Barnard (n14), 17. 47 See eg Mizutani and Uranishi, ‘Does Vertical Separation Reduce Cost? An Empirical Analysis of the Rail Industry in European and East Asian OECD Countries’ (2013) 43 Journal of Regulatory Economics 31–59. 48 De Witte, ‘Sex, Drugs and EU Law: The Recognition of Moral and Ethical Diversity in EU Law’ (2013) 50 CML Rev 1545, 1553–4. 49 Article 5(3) TFEU. 50 Dashwood (1998), 216. 51 Dashwood (1998), 211. 52 Craig, ‘Subsidiarity: A Political and Legal Analysis,’ (2012) 50 Journal of Common Market Studies 72, 73. 53 Öberg, ‘Subsidiarity as a Limit to the Exercise of EU Competences’ (2017) 36 Yearbook of European Law, 391–420, 15. 54 See n 15 above. 55 Article 4(2)(a), TFEU. 56 Majone (n 44), 149–50. 57 Generally, Höpner and Schäfer, ‘A New Phase of European Integration: Organised Capitalisms in Post-Ricardian Europe’ (2010) 33 West European Politics 344. 58 Öberg (n 53), 8. 59 Article 5(4), TEU. 60 See also Andreangeli, ‘Making Markets Work in the Public Interest: Combatting Hazardous Alcohol Consumption through Minimum Pricing Rules in Scotland’ (2017) 36 Yearbook of European Law, 522–52, arguing that free movement should grant greater latitude to domestic policy making under the principle of conferral. 61 Scharpf, Governing in Europe: Effective and Democratic? (Oxford: Oxford University Press, 1999), 63. 62 See e.g. C-94/04 Cipolla EU:C:2006:758, para. 61. 63 European Commission, XXVIIth Report on Competition Policy (1997), 29. 64 See n 106 below. 65 De Witte (n 48), 1546–56. 66 See eg European Commission, Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings (OJ C45/7, 24.2.2009), para. 19, and T-472/13 Lundbeck EU:T:2016:449, para. 386. 67 C-62/86 AKZO v Commission EU:C:1991:286, para. 70. 68 See n 63 above. 69 While pricing commitments in merger proceedings may result, obliquely, in de facto regulation, such remedies are deeply disfavoured and, at least in theory, wholly exceptional: see Commission Notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004 (OJ C267/1, 22 October 2008), para. 17. 70 Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (OJ L1/1, 4.1.2003), particularly Chapter III. 71 Regulation 1/2003, particularly Articles 3 and 5. 72 C-453/99 Courage v Crehan EU:C:2001:465. 73 O’Donoghue and Padilla, The Law and Economics of Article 82 EC (Oxford: Hart Publishing, 2006), 621–2; Motta, Competition Policy: Theory and Practice (Cambridge: Cambridge University Press, 2004), 69; Evans and Padilla, ‘Excessive Prices: Using Economics to Define Administrable Legal Rules’ (2005) 1 Journal of Competition Law & Economics 97, 110–13; and Akman and Garrod, ‘When are Excessive Prices Unfair?’ (2011) 7 Journal of Competition Law & Economics 403. 74 O’Donoghue and Padilla (n 73), 622–5. 75 O’Donoghue & Padilla (n 73), 627–8. 76 Opinion of Advocate General Wahl in C-177/16 AKKA EU:C:2017:286, para. 48. 77 Opinion of Advocate General Spzunar in C-74/14 ETURAS EU:C:2015:493, para. 68. 78 In theory, any breach of Article 101(1) may be justified under Article 101(3): T-17/93 Matra Hachette EU:T:1994:89, para. 85. The Commission, however, is sceptical that hardcore restraints like price-fixing might satisfy the exemption criteria: Guidelines on the application of Article 81(3) of the Treaty (OJ C101/97, 27 April 2004), para. 46. 79 See eg C-286/13 Dole EU:C:2015:184. 80 See eg C-161/84 Pronuptia de Paris EU:C:1986:41. 81 Opinion in AKKA, para. 117. 82 Enforcement Priorities, paras 23–27. See also O’Donoghue and Padilla (n 73), 603. 83 See eg C-413/14 Intel EU:C:2017:632. 84 See eg C-202/07 France Télécom EU:C:2009:214. 85 See eg C-280/08 Deutsche Telekom EU:C:2010:603. 86 See eg T-228/97 Irish Sugar EU:T:1999:246. 87 See eg C-7/97 Oscar Bronner EU:C:1998:569. 88 See, eg, Commissioner Neelie Kroes, Taking Competition Seriously—Antitrust Reform in Europe (SPEECH/05/157), Brussels, 10 March 2005: ‘… when we break up cartels, it is to stop money being stolen from customers’ pockets’. 89 See eg Whelan, The Criminalization of European Cartel Enforcement (Oxford: Oxford University Press, 2014). 90 European Commission, Guidelines on Vertical Restraints (OJ C130/1, 19 May 2010), para. 224. 91 Enforcement Priorities, para. 19. 92 Enforcement Priorities, para. 23. 93 AKZO, paras 70–72. 94 C-27/76 United Brands EU:C:1978:22, para. 250. 95 United Brands, para. 252. 96 C-177/16 AKKA EU:C:2017:689, para. 37. 97 AKKA, paras 38 & 55. 98 Opinion in AKKA, paras 103–105. 99 Opinion in AKKA, paras 48–49. 100 Gal, ‘Monopoly Pricing as an Antitrust Offence in the US and the EC: Two Systems of Belief About Monopoly?’ (2004) 49 Antitrust Bulletin 343, 376. 101 European Commission, XXVIIth Report on Competition Policy (1997), 77. 102 Report by the EAGCP, An Economic approach to Article 82, July 2005, p. 11. 103 Enforcement Priorities, para. 7. 104 Commission Decision of 23 July 2004 in COMP/A.36.568/D3—Scandlines v Port of Helsingborg. 105 AKKA, paras 101–107 & 128. 106 European Commission, Staff Working Document on Ten Years of Antitrust Enforcement under Regulation 1/2003 (COM(2014)453), 9 July 2014, paras 65–73. 107 Commission Decision of 19 December 2007 in COMP/34.579—MasterCard, COMP/36.518—EuroCommerce and COMP/38.580—Commercial Cards (OJ C264/8, 6 November 2009); upheld on appeal in C-382/12 P MasterCard EU:C:2014:2201. 108 Commission Decisions in COMP/39.398—VISA MIF of 8 December 2010 (OJ C79/8, 12 March 2011) and 26 February 2014 (OJ C147/7, 16 May 2014). 109 See, eg Competition and Markets Authority, Unfair pricing in respect of the supply of phenytoin sodium capsules in the UK, Case CE/9742-13, 7 December 2016. 110 Speech of Commissioner Vestager, ‘Protecting Consumers from Exploitation’, Chillin’ Competition Conference, Brussels, 21 November 2016. 111 European Commission Press Release, Antitrust: Commission opens formal investigation into Aspen Pharma’s pricing practices for cancer medicines, IP/17/1323, Brussels, 15 May 2017. 112 Speech of Commissioner Vestager, ‘Competition for a Fairer Society’, 10th Annual Global Antitrust Enforcement Symposium, Georgetown, 20 September 2016. 113 Lamadrid de Pablo, ‘Competition Law as Fairness’ (2017) 8 Journal of European Competition Law and Policy 147. 114 T-201/04 Microsoft EU:T:2007:289, confirming Microsoft’s obligation to provide interoperability information to resolve a refusal to supply. 115 Microsoft was subsequently fined an additional €860 million for failure to provide the mandated information: T-167/08 Microsoft EU:T:2012:323. 116 See eg Crane ‘Antitrust Antifederalism’ (2008) 96 California Law Review 1, 14–15. 117 Wagner-Won Papp, ‘Best and even better practices in commitment procedures after Alrosa: The dangers of abandoning the “struggle for competition law”’ (2012) 49 CML Rev 929. 118 C-441/07 P Commission v Alrosa EU:C:2010:377, para. 39. 119 See, eg, First, ‘Is Antitrust Law?’ (1995) 10 Antitrust 9. 120 Wagner-Von Papp (n 117), 960. 121 Commission Decision of 20 September 2016 in AT.39759—ARA Foreclosure (OJ C432/6, 23 November 2016). 122 See eg Wollmann, ‘ARA Foreclosure: A Step Towards ‘Consent Decrees’ in EU Antitrust Proceedings’ (2017) 8 Journal of European Competition Law and Policy 167. 123 Pursuant to Recital (13), Regulation 1/2003, the Commission cannot find infringements or impose fines in Article 9 cases. 124 Appeals have been brought by third parties: see C-441/07 P Commission v Alrosa EU:C:2010:377, and T-342/11 CEEES EU:T:2014:60. 125 Commission Decision of 15 November 2011 in COMP/39.592—Standard & Poor’s (OJ C31/8, 4 February 2012). 126 Commission Decision of 9 December 2009 in COMP/38.636—Rambus (OJ C30/17, 6 February 2010). 127 See n 108 above. 128 See eg Communication from the Commission on quantifying harm in actions for damages based on breaches of Article 101 or 102 of the TFEU (OJ C167/19, 13 June 2013), para. 1. 129 Commission Decision of 13 December 2011 in COMP/39.692—IBM Maintenance Services (OJ C18/6, 21 January 2012). 130 Commission Decision of 20 December 2012 in COMP/39.654—Reuters Instrument Codes (RICs) (OJ C326/4, 12 November 2013). 131 In Microsoft, paras 1271–1278, the General Court held that the Commission cannot, in an infringement decision, impose a monitoring trustee on defendants. 132 According to Recital (13), Regulation 1/2003, excluding ‘cases where the Commission intends to impose a fine.’ 133 See n 123 above. 134 See, eg, ‘Interview with Johannes Laitenberger, Director-General for Competition, European Commission’ The Antitrust Source, June 2017. 135 Deutsche Telekom, paras 80–82; see also C-359/95 P & C-379/95 Ladbroke Racing EU:C:1997:531, paras 33–34 136 Opinion of Advocate General Mazak in C-280/08 Deutsche Telekom EU:C:2010:212, para. 21. 137 See, generally, Monti, ‘Managing the Intersection of Utilities Regulation and EC Competition Law’ (2008) 4 Competition Law Review 123. 138 Deutsche Telekom, paras 169–183. 139 Deutsche Telekom, paras 176–181. 140 Commission Directive 90/388/EEC of 28 June 1990 on competition in the markets for telecommunications services (OJ L192/10, 24 July 1990). 141 In particular, Articles 258 & 260 TFEU. Confirming the permissibility of this approach, see Deutsche Telekom, paras 44–47. 142 Deutsche Telekom, para. 279. 143 See, eg, C-188/83 Hermann Witte EU:C:1984:309, para. 15; C-162/84 Vlachou EU:C:1986:56, para. 6; and C-155/14 Evonik Degussa and AlzChem EU:C:2016:446, para. 58. 144 See eg Fox, ‘We Protect Competition, You Protect Competitors’ (2003) 26 World Competition 149. 145 See n 98 above. 146 For discussion of the market access principle, and its implicit limits, see Barnard (n 14), 19–24. 147 C-267/91 Keck and Mithouard EU:C:1993:905, paras 14–17. 148 Keck, para. 13. 149 Keck, para. 16. 150 C-34/95 De Agostini EU:C:1997:344. 151 C-108/09 Ker-Optika EU:C:2010:341. 152 C-565/08 Commission v Italy EU:C:2011:188, para. 49. 153 See eg Scotch Whisky. While Keck held that price regulation falls outside Article 34 where applied equally and without discriminatory impact, Scotch Whisky suggests that such controls are likely to be viewed as a ‘measure having equivalent effect’ hindering market access and thus, prima facie, an infringement (para. 32, following approach of Opinion, paras 59–60). 154 See eg Cipolla. 155 See eg C-465/05 Commission v Italy EU:C:2007:781, and C-442/02 CaixaBank France EU:C:2004:586. 156 See eg Lovdahl-Gormsen, A Principled Approach to Abuse of Dominance (Cambridge: Cambridge University Press, 2010), 95–104. 157 The movement away from Keck supports this view; contrast the earlier approach of Poiares Maduro, ‘Reforming the Market or the State? Article 30 and the European Constitution: Economic Freedom and Political Rights’ (1997) 3 European Law Journal 55, 65. 158 Barnard (n 14), 87, n 127. 159 Deutsche Parkinson, para. 24. 160 See eg C-82/77 van Tiggele EU:C:1978:10, paras 14 & 18. 161 Caixa-Bank France, paras 12–14. 162 Cipolla, para. 59; Case C-465/05 Commission v Italy, para. 125. 163 C-148/15 Deutsche Parkinson EU:C:2016:776, paras 24–27. 164 C-465/05 Commission v Italy, para. 119. 165 C-65/75 Tasca EU:C:1976:30, para. 13. 166 Opinion of Advocate General Poaires Maduro in C-94/04 Cipolla EU:C:2006:76, para. 69. 167 See, to this effect, Tasca, para. 10. 168 Scotch Whisky, para. 44, 169 Scotch Whisky, para. 20. 170 Opinion in Scotch Whisky, para. 37. 171 Regulation 1308/2013 of 17 December 2013 establishing a common organization of the markets in agricultural products and repealing Council Regulations 922/72, 234/79, 1037/2001, and 1234/2007 (OJ L347/671, 20 December 2013). 172 Scotch Whisky, para. 44. 173 Scotch Whisky, paras 31 & 32. 174 Opinion in Scotch Whisky, para. 59–60. 175 See eg van Tiggele, cited in the Opinion in Scotch Whisky, para. 65. 176 C-565/08 Commission v Italy EU:C:2011:188, para. 51. 177 See also Opinion of Advocate General Mazak in that case, describing the principal objection to the legislation as constituting a ‘restriction on the contractual freedom’ of service users (EU:C:2010:403, para. 32). Such language echoes the mere ‘limitation on commercial freedom’ that presumptively fell outside the purview of the free movement rules under Keck (para. 14), yet was assumed to constitute an obstacle to free movement in Commission v Italy, if mandatory in nature. 178 C-565/08 Commission v Italy, para. 53. 179 Deutsche Parkinson, para. 43. 180 Opinion in Deutsche Parkinson, para. 1. 181 Cipolla, para. 61. 182 Deutsche Parkinson, para. 35. 183 Opinion in Cipolla, para. 58. 184 Scotch Whisky, para. 38. 185 Opinion in Scotch Whisky, para. 83. 186 Opinion in Deutsche Parkinson, para. 78. 187 C-105/12 Essent EU:C:2013:242, concerning public ownership of energy infrastructure. 188 C-438/05 Viking Line EU:C:2007:772, concerning the right to strike. 189 C-341/05 Laval EU:C:2007:809, concerning the right to strike. 190 Opinion in Deutsche Parkinson, para. 38. 191 Opinion in Deutsche Parkinson, para. 1. 192 Opinion in C-565/08 Commission v Italy, para. 34. 193 Caixa-Bank France, para. 19. 194 See e.g. Scotch Whisky, para. 35. 195 Opinion in C-565/08 Commission v Italy, para. 34. 196 Cipolla, para. 62. 197 Deutsche Parkinson, para. 33. 198 Deutsche Parkinson, para. 33. 199 C-531/07 LIBRO EU:C:2009:276, para. 34. 200 Cipolla, para. 62. 201 Cipolla, paras 62–67. 202 Opinion in Deutsche Parkinson, para. 42. 203 See also discussion in Opinion in Scotch Whisky, paras 71–76. 204 Opinion in Scotch Whisky, para. 82. 205 Opinion in Scotch Whisky, para. 83. 206 Opinion in Scotch Whisky, para. 84. 207 Scotch Whisky, paras 36 & 56. 208 See also de Witte (n 48), 1570–1. 209 Article 6(a) TFEU. 210 Scotch Whisky, paras. 45–50. 211 ‘The fundamental problem with an increase in tax is simply that it does not produce a minimum price’: The Scotch Whisky Association and Others v The Lord Advocate and the Advocate General [2016] CSIH 77, para. 196. 212 See, eg, Deutsche Parkinson, para. 42. 213 In distinction to the ‘gradual empirical turn’ within the Court’s approach to proportionality: see Alemmano (n 14), 1049. 214 The Court was persuaded that price competition was as likely to generate higher quality services than the lower quality ones feared by Germany (para. 40, adopting reasoning of Opinion, para. 47): arguable, yet wholly speculative, and curiously missing any consideration of possible free-riding effects that are a central concern of contemporary antitrust discourse. 215 ‘People with reduced mobility could greatly benefit from being able to place orders online and having them delivered directly to their home. Even if they are not accustomed to the alleged intricacies of ordering online, they will often have someone at their side (a carer, a (grand)child, a neighbour, etc.) who is’: Opinion in Deutsche Parkinson, para. 52, endorsed by the Court, para. 37. 216 On the implication of a substantive principle of proportionality, see de Witte (n 48), 1566–70. 217 See concerns expressed by de Witte (n 48), 1569–70; also Andreangeli (n 60). 218 Rationalizing the reluctance of the CJEU to engage in substantive subsidiarity analysis, see Öberg (n 53), 406–7. 219 See also discussion in Opinion in Cipolla, paras 31–37. 220 Cipolla, para. 47. As Cipolla demonstrates, the threshold for finding violation is high (paras 44–54). 221 See eg Commission Decision of 10 February 1999 in Case No.IV/35.703—Portuguese airports (OJ L69/31, 16 March 1999). 222 See eg T-289/08 BUPA v Commission EU:T:2008:29, where the Court accepted that a State-imposed ‘risk equalisation scheme’, which required transfer payments between private health insurers in order to standardize consumer premiums, could be exempted on this basis. 223 Echoing language of Advocate General Szpunar in Deutsche Parkinson, para. 79. 224 In addition to the approaches considered below, further examples are seen in natural gas (Directive 2009/73/EC of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (OJ L211/94, 14 August 2009), Articles 3(2) & 41(1)(a)), rail (Directive 2012/34/EU of 21 November 2012 establishing a single European railway area (OJ L343/32, 14 December 2012), Arts 29–36), and ground-handling (Council Directive 96/67/EC of 15 October 1996 on access to the groundhandling market at Community airports (OJ L272/36, 25 October 1996), Article 16(3)). 225 In keeping with the logic of the shared competences: Article 4 TFEU. 226 See eg Lovdahl-Gormsen (n 156), 92, arguing that price regulation is a natural implication of supporting less-efficient competitors in liberalizing markets. 227 In the telecommunications sector, see e.g. C-202/07 France Télécom EU:C:2009:214, C-280/08 Deutsche Telekom EU:C:2010:603 and C-295/12 Telefónica EU:C:2014:2062. In the electricity sector, see eg Commission Decision of 26 November 2008 in COMP/39.388 German Electricity Wholesale Market and COMP/39.389 German Electricity Balancing Market (OJ C36/8, 13 February 2009). In relation to airport charges, see eg Commission Decision of 10 February 1999 in Case No IV/35.703 Portuguese airports (OJ L69/31, 16 March 1999); Commission Decision of 10 February 1999 in Case No IV/35.767 Ilmailulaitos/Luftfartsverket (OJ L 69/24, 16 March 1999); and Commission Decision of 26 July 2000 (Spanish Airports) (OJ L208/36, 18 August 2000). In relation to pharmaceutical products, the market distortions introduced by differentiated domestic price controls were explored in the (in)famous judgment in C-501/06 GlaxoSmithKline EU:C:2009:610; see also the Commission’s on-going investigation into price-gouging in the sector, n 111 above. 228 Opinion of Advocate General Ruiz-Jarabo Colomer in C-265/08 Federutility EU:C:2009:640, para. 43. 229 Recital (35), Directive 2009/72/EC of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC (OJ L211/55, 14.8.2009) (‘Electricity Directive’). 230 Article 3(2), Electricity Directive. 231 Article 3(3), Electricity Directive. 232 Articles 32(1) and 37(1)(a), Electricity Directive. 233 See n 87 above. 234 Pelkmans and Luchetta, Enjoying a Single Market for Network Industries? Notre Europea—Jacques Delors Institute, Studies & Reports 95 (February 2013), 31. 235 Recital (13), Directive 2002/19/EC of 7 March 2002 on access to, and interconnection of, electronic communications networks and associated facilities (OJ L108/7, 24.4.2002) (‘Access Directive’). 236 Recital (5), Access Directive. 237 Article 13, Access Directive. 238 Article 8, Access Directive. 239 Namely, ‘a position of economic strength affording [an undertaking] the power to behave to an appreciable extent independently of competitors, customers and ultimately consumers’: Article 14(2), Directive 2002/21/EC of 7 March 2002 on a common regulatory framework for electronic communications networks and services (OJ L108/33, 24 April 2002) (‘Framework Directive’), reflecting the definition from United Brands, para. 65. 240 Enforcement Priorities, para. 11. 241 Recital (7), Access Directive. 242 Article 7, Access Directive. 243 Article 16(3), Framework Directive. 244 In accordance with Article 7(2), Access Directive; compare the ever-diminishing approaches in the Commission Recommendations of 11 February 2003 (OJ L144/45, 8 May 2003), 17 December 2007 (OJ L344/65, 28 December 2007) and 9 October 2014 (OJ L295/75, 11 October 2014), respectively. 245 Member States retain residual ability to regulate on alternative bases, such as consumer protection powers: Vodafone, para 43. 246 Directive 2009/12/EC of 11 March 2009 on airport charges (OJ L70/11, 14 March 2009) (‘Airport Charges Directive’). 247 Recital (2), Airport Charges Directive. 248 Article 1(1), Airport Charges Directive. 249 Recital (2), Airport Charges Directive. 250 See e.g. recitals (2), (15) and (17); confirmed in Commission v Luxembourg, para. 70 251 The Directive preserves the right of Member States to apply ‘additional regulatory measures’ such as direct regulation of charges, provided these comply with EU law, but does not mandate such an approach: Article 1(5), Airport Charges Directive. 252 Confirmed in Commission v Luxembourg, para. 42. 253 Language taken from the Commission’s website describing the Directive, available at <https://ec.europa.eu/growth/sectors/healthcare/competitiveness/products-pricing-reimbursement/transparency-directive_en> accessed 8 December 2017. 254 Council Directive 89/105/EEC of 21 December 1988 relating to the transparency of measures regulating the prices of medicinal products for human use and their inclusion in the scope of national health insurance systems (OJ L40/8, 11 February 1989) (‘Transparency Directive’). 255 Proposal for a Directive of the European Parliament and of the Council relating to the transparency of measures regulating the prices of medicinal products for human use and their inclusion in the scope of public health insurance systems (COM(2012)084 final), 1 March 2012. 256 See Annex to Commission Work Programme 2015 (COM(2014)910 final), 16 December 2014, p. 10. The Proposal was formally withdrawn in OJ C80/17, 7 March 2015. 257 Article 7, Access Directive; Article 6, Airport Charges Directive; Articles 2–5 & 7, Transparency Directive. 258 Articles 13(4) & 15, Access Directive; Articles 3–5 &7, Airport Charges Directive; Article 3, Electricity Directive; Articles 2–5, Transparency Directive. 259 Article 3, Airport Charges Directive; Article 3, Electricity Directive; 260 Article 6, Framework Directive; Article 6, Airport Charges Directive; Articles 37(2), Electricity Directive. 261 Article 3, Airport Charges Directive; Article 2(2), Transparency Directive; Article 8(4), Access Directive. 262 Article 2(2), Transparency Directive. 263 Similarly, de Witte (n 48), 1573. 264 Article 3(10), Electricity Directive; Article 11(3), Airport Charges Directive; Article 8(5), Access Directive; Articles 2–3 & 6–8, Transparency Directive. 265 Article 3(2), Framework Directive and Article 35(4)(a), Electricity Directive. 266 Article 3(3), Framework Directive and Article 35(4), Electricity Directive. 267 Article 3(3)(a), Framework Directive and Article 35(4)(b)(ii), Electricity Directive. 268 C‑424/15 Ormaetxea Garai EU:C:2016:780, paras 45–46. Although addressing the recast Framework Directive, the almost identical provisions in the Electricity Directive suggest the reasoning applies equally. 269 Article 11, Airport Charges Directive. 270 See n 255, draft Article 8. 271 European Commission, DG Competition Report on Energy Sector Inquiry (SEC(2006) 1724), 10 January 2007, para. 1047. 272 C-265/08 Federutility EU:C:2009:640. 273 Specifically in the context of the Third Energy Package: ANODE, para. 35. 274 C-36/14 Commission v Poland EU:C:2015:570. 275 ANODE, para. 26. 276 Opinion in Vodafone, para. 15. 277 Opinion in Vodafone, para. 15. 278 See Vodafone, para. 67, where the Court endorsed the approach in Recital (13), Roaming Regulation. 279 Opinion in Federutility, para. 53. 280 An approach seen, for instance, in the outcomes of the Commission’s energy and pharmaceutical sector inquiries: see European Commission, Pharmaceutical Sector Inquiry. Final Report, 8 July 2008, and n 205 above. 281 See n 42 above. 282 Opinion in Vodafone, para. 1. 283 Opinion in Vodafone, para. 9. 284 European Commission, Working Document on the Initial Findings of the Sector Inquiry into Mobile Roaming Charges, 13 December 2000. 285 See European Commission Press Releases IP/05/901, ‘Commission warns consumers on cost of using mobile phone abroad and targets lack of price transparency’, 11 July 2005; IP/05/1217, ‘Commission launches consumer website on the costs of mobile roaming in Europe’, 4 October 2005; and IP/04/1458, ‘Commissioner Reding welcomes EU-wide investigation on cost of using a mobile phone abroad’, 10 December 2004. 286 Commission Staff Working Paper, Impact Assessment of Policy Options in Relation to a Commission Proposal for a Regulation of the European Parliament and of the Council on Roaming on Public Mobile Networks within the Community (COM(2006)382 final), 12 July 2006, 12–13. 287 European Commission, Proposal for a Regulation of the European Parliament and of the Council on roaming on public mobile networks within the Community and amending Directive 2002/21/EC on a common regulatory framework for electronic communications networks and services (COM(2006)382 final), 12 July 2006. 288 COM(2006)382, 17. 289 COM(2006)382, 22. 290 Roaming Regulation. 291 Regulation 544/2009 of 18 June 2009 amending Regulation 717/2007 on roaming on public mobile telephone networks within the Community and Directive 2002/21/EC on a common regulatory framework for electronic communications networks and services (OJ L167/12, 29 June 2009). 292 Regulation 531/2012 of 13 June 2012 on roaming on public mobile communications networks within the Union (OJ L172/10, 30 June 2012). 293 Regulation (EU) 2015/2120 of 25 November 2015 laying down measures concerning open internet access and amending Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services and Regulation (EU) No 531/2012 on roaming on public mobile communications networks within the Union (OJ L310/1, 26 November 2015). 294 See, eg, Malaguti and Guerrieri, Multilateral Interchange Fees: Competition and regulation in light of recent legislative developments, European Credit Research Institute Research Report No.14, January 2014, 17–18. 295 Communication from the Commission, Sector Inquiry under Article 17 of Regulation (EC) No 1/2003 on retail banking (Final Report) (COM(2007)33 final), 31 January 2007. 296 See nn 107 and 108 above. 297 European Commission, Proposal for a Regulation of the European Parliament and of the Council on interchange fees for card-based payment transactions (COM(2013)550 final), 24 July 2013. 298 Regulation (EU) 2015/751 of 29 April 2015 on interchange fees for card-based payment transactions (OJ L123/1, 19 May 2015) (‘Interchange Fee Regulation’), particularly Article 1. 299 COM(2013)550, 8. 300 Articles 3&4, Interchange Fee Regulation. 301 Article 17(1), Regulation 1/2003. 302 See nn 284 and 295 above. 303 Other activities within both sectors have similarly attracted antitrust scrutiny: see T-328/03 O2 (Germany) EU:T:2006:116, and T-461/07 Visa Europe EU:T:2011:181. 304 Commission Press Releases IP/04/994, ‘Commission challenges UK international roaming rates’, 26 July 2004, and IP/05/161, ‘Commission challenges international roaming rates for mobile phones in Germany’, 10 February 2005. 305 Klotz, ‘The Application of EC Competition Law (Articles 81 and 82) in the Telecommunications Sector’, in Koenig, Bartosch, Braun, and Romes (eds), EC Competition and Telecommunications Law (2nd edn, Alphen aan den Rijn: Kluwer Law International BV, 2009), 132–33. 306 COM(2006)382, p. 38. 307 Commission Press Release IP/07/1113, ‘Commission closes proceedings against part roaming tariffs in the UK and Germany’, 18 July 2007. 308 See n 108 above. 309 See n 107 above. 310 Speech of Commmissioner Joaquin Almunia, ‘Introductory remarks on proposal for regulation on interchange fees for cards, Internet and mobile payments’, (SPEECH/13/660), 22 July 2013. 311 COM(2006)382, 19–20. 312 COM(2006)382, 26. 313 See, eg, Interchange Fee Regulation, recitals (6) and (9). 314 Communication from the Commission, A Digital Single Market Strategy for Europe (COM(2015)192 final), 6 May 2015. 315 Echoing Oberg, see n 58 above. 316 COM(2006)382, 7 and COM(2013)550, 14. 317 C-376/98 Germany v Parliament and Council EU:C:2000:544, para. 83. 318 Opinion in Vodafone, para. 22 (emphasis added). On this point, see COM(2006)382, 6, and COM(2013)550 final, 3. 319 Accepted in the context of the Roaming Regulation in Vodafone, para. 47, and spelled out in recitals (12) and (13) of the Interchange Fee Regulation. 320 Opinion in Vodafone, para. 21. 321 Opinion in Vodafone, para. 22. 322 A possibility is the ‘flexibility provision’ under Article 352 TFEU, which provides a residual basis for legislation ‘to attain one of the objectives set out in the Treaties’ in the absence of ‘the necessary powers’, but requires Council unanimity. 323 COM(2006)382, 6. 324 COM(2006)382, 13. 325 COM(2006)382, 12. 326 The validity of the Interchange Fee Regulation was upheld, obliquely, in C-304/16 American Express Co. v The Lords Commissions of Her Majesty's Treasury EU:C:2018:67. 327 See, eg Recital (12) of the Roaming Regulation, which recognizes the regime it establishes as a ‘departure’ from the competition-focused approached of telecommunications regulation generally. The logic of the Interchange Fee Regulation, according to Recital (9), is that limiting one dimension of economic freedom is necessary to promote competition longer term. 328 See n 77 above. 329 See n 168 above. 330 See n 159 above. 331 See n 1 above. 332 See n 278 above. 333 See, eg, C-319/92 Haim EU:C:1994:47. 334 See, eg, C-133/95 Rau EU:C:1987:244. 335 See, eg, Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market (OJ L149/22, 11 June 2005). 336 See, eg, Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ L95/29, 21 April 1993). 337 See n 293 above. 338 See, eg, C-475/99 Ambulanz Glockner EU:C:2001:577, and C-113/07 SELEX EU:C:2009:191. 339 Verizon Communications v Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004). 340 Berkey Photo, Inc. v Eastman Kodak Company, 603 F.2d 263 (1979). 341 See n 98 above. 342 See n 176 above. 343 See n 153 above. For further discussion, see Alemmano (n 14), 1047–51. 344 ‘… contrary to what has previously been decided …’: Keck, para. 16. 345 A concern flagged by Spaventa, ‘Leaving Keck behind? The free movement of goods after the rulings in Commission v Italy and Mickelsson and Roos’, 34 EL Rev 914 (2009), 929. 346 See, eg, nn 180 & 228 above. 347 C-331/88 ex parte FEDESA EU:C:1990:391, para. 13. 348 Vodafone, para. 52. 349 Opinion in AKKA, para. 40. 350 AKKA, para. 46, approving of Opinion in AKKA, para. 85. 351 Opinion in Commission v Luxembourg EU:C:2010:776, para. 87. 352 See, eg Commission v Luxembourg. 353 For instance, in the litigation regarding the Interchange Fee Regulation, C-304/16 Amex (n 326), Advocate General Campos Sanchez-Bordona advised that the reference be rejected because both parties to the nominal dispute—American Express and the UK Treasury—agreed about the (minimalist) interpretation of the Regulation preferred: see Opinion at EU:C:2017:524, paras 23–48. 354 Article 258 TFEU; see, eg, Commission v Italy (n 152) and Commission v Poland (n 274). 355 See n 36 above. © The Author(s) 2018. Published by Oxford University Press. All rights reserved. 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Yearbook of European LawOxford University Press

Published: May 4, 2018

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