The new frontiers of Article 102 TFEU: antitrust imperialism or judicious intervention?

The new frontiers of Article 102 TFEU: antitrust imperialism or judicious intervention? Abstract The purpose of this article is to examine whether and to what extent Article 102 of the Treaty on the Functioning of the European Union is being applied to more and more practices with less and less regard for the rules, procedures and remedies provided by other fields of law that also apply to those practices. It argues that the case-law and decisional practice under Article 102 reveals both signs of ‘antitrust imperialism’ and cases that, inevitably, turned on their particular facts and circumstances. It concludes by offering six propositions that appear to inform the application of Article 102 to conduct of dominant firms that is also subject to other legal rules. I.Introduction EU competition law applies to an ever-wider range of economic activities and sectors and continually throws up fresh questions and challenges. The expansion appears to show no signs of abating under Article 102 Treaty on the Functioning of the European Union (TFEU). The EU case of AstraZeneca v Commission1 and the UK case of Reckitt Benckiser2 reveal that a dominant firm’s compliance with regulatory procedures for deregistering marketing authorizations for medicinal products may nevertheless infringe Article 102. In June 2017 the European Commission imposed a record fine of €2.42 billion on Google Inc for violation of Article 102.3 The Commission found that Google had abused its dominant position in general online search by giving an illegal advantage to another Google product, its comparison shopping service. Specifically, Google was found to have systematically given prominent placement to its own comparison shopping service, while at the same time demoting competing comparison shopping services in its search results.4 Separately, Gazprom, the State-backed Russian gas supplier, reacted to the Commission’s objections to the fairness of pegging its gas prices to oil prices by asserting that it ‘adheres to all the norms of international law and national legislation in the countries where the Gazprom Group conducts business’;5 although it has also sought to settle the case amicably. Meanwhile, the Bundeskartellamt, the German competition authority, is investigating whether Facebook has abused a dominant position by imposing terms of service that are said to be incompatible with data protection rules.6 What these different practices have in common is the fact that they are subject not only to competition law but also to (at least) one other branch of law, whether in the form of regulation, intellectual property law or data protection. Whether one agrees with it or not, it is undeniable that Article 102 TFEU has been applied to a wide range of business practices and sectors. The aim of this article is to examine whether Article 102 is being applied to more and more practices with less and less regard for the rules, procedures, and remedies provided by other fields of law that also apply to those practices. Some commentators take the view that EU competition law and policy should not trespass on turf that is properly subject to other areas of law. For example, Sir Robin Jacob has strongly criticized the competition authorities in the EU for ‘harassing inventive industries’, and has deprecated the authorities’ quest ‘ for instant gratification in the shape of lower prices to consumers now at the expense of the benefits of delayed gratification in the shape of innovation for the future.’7 His criticism was, essentially, that intellectual property rights confer exclusivity upon their owners for a reason, namely to encourage innovation, and those rights should be neither limited nor undermined to satisfy the scruples of competition authorities. This criticism has been levied in particular at competition law investigations into prices for branded and generic drugs in the pharmaceutical sector,8 which is known for its high levels of investment in research and development. Other commentators argue, however, that the ‘competition law shows its traditional power as the field of law that serves as a “repair service” for other fields of economic law that lack sanctioning mechanisms – at least as long as a dominant company is involved’.9 The Court of Justice has made clear that the reach of Article 102 TFEU is not cut down simply because the conduct in question complies with another legal rule.10 If the ‘other rule’ requires conduct prohibited by Article 102 and is imposed by national law, then the relevant Member State may itself infringe Article 4(3) Treaty on European Union (TEU) in conjunction with Article 102 TFEU.11 If it is another rule of EU law that gives rise to conduct that would infringe Article 102 TFEU, the question is how the other rule relates to Article 102. Article 103(2)(c) TFEU provides that the Council may adopt regulations or directives ‘to define, if need be, in the various branches of the economy, the scope of the provisions of Articles 101 and 102’.12 Otherwise, the Treaty (in the form of Article 102 TFEU) has primacy over secondary EU legislation, but of course has to be reconciled with other primary EU law.13 The point can be tested in the following way: consider a hypothetical scenario in which a dominant firm destroys the manufacturing facilities of its principal competitor. Can such a conduct ever amount to an abuse of a dominant position? An immediate and obvious answer is ‘no’, because such conduct is criminal and should be dealt with by criminal law. Moreover, it could be argued that such conduct has nothing to do with the dominant firm using its market power to exploit consumers or exclude competitors. Indeed, that was exactly how one judge at first instance responded to such a hypothetical:14 For a dominant supplier to arrange to have a competitor’s factory blow up is a tort and may well strengthen his dominant position, but I do not see how it can be called an abuse of his dominant position. The same is true of other torts such as malicious prosecution. On the other side of the ledger, it could be argued that the fact that conduct is criminal (or contravenes some other law) should not prevent it from also being a violation of Article 102 TFEU. It is possible to abuse a dominant position without actually exercising or relying on market power.15 Rather, the question is whether the dominant firm was seeking to compete by using means other than those based on the merits.16 The EU Courts have been careful not to define or limit what may amount to ‘competition on the merits’. In Intel v Commission17 the Grand Chamber of the Court of Justice repeated what it had said in Post Danmark I,18 that competition on the merits may, by definition, lead to the departure from the market or the marginalization of competitors that are less efficient and so less attractive to consumers from the point of view of, among other things, price, choice, quality, or innovation. The Court also emphasized that Article 102 TFEU prohibits a dominant undertaking from, among other things, adopting pricing practices that have an exclusionary effect on competitors considered to be as efficient as it is itself and strengthening its dominant position other than by competition on the merits.19 Thus, ‘competition on the merits’ means that competitors that are as efficient as (or more efficient than) the dominant firm may compete and consumers to base their purchasing decisions on their assessment of who offers the best price and the best quality product or service. Conversely, competition on the merits does not encompass obtaining a competitive advantage by destroying a rival’s factory or by disseminating ‘misleading and disparaging information’ about the quality and safety of one of a competitor’s products.20 The remainder of this article will examine these issues further and is structured as follows. The second section will examine the recent interpretation and application of Article 102 TFEU in four areas, all of which overlapped with a different area of law and were controversial. The purpose of that section will be to see if competition law has an imperialist streak and thereby overrides other areas of law. This will be followed by a third section, which discusses six possible limits on the substantive scope of Article 102. Some of those limits are well-established, such as non-economic activity falling outside the scope of the competition rules; others are perhaps less well known, but no less important, such as the principle of proportionality. The article concludes by offering some guiding principles in Section IV. II. Signs of ‘Imperialism’ under Article 102? The proper scope of Article 102 can be traced back to the earliest commentary on Article 102. In 1970, René Joliet wrote that conduct should be unlawful under what was then Article 86 European Economic Community (EEC) (now Article 102 TFEU) if, but only if, there was ‘ monopolistic exploitation of the market’.21 In his view, Article 102 was not concerned with ‘ the interference with other firm’s freedom to compete and the use of exclusionary practices’ to maintain or strengthen a dominant position.22 His view was however rejected by the first judgment concerning Article 102: Europemballage Corporation and Continental Can Co Inc v Commission.23 As is well-known in competition law circles, the Commission objected under Article 102 to Continental Can acquiring 80 per cent of the shares and convertible debentures of a competitor, Thomassen and Drijver-Verblivan. The Commission’s view was that the acquisition would practically eliminate competition in the German markets for meat cans, fish cans, and metal tops for glass jars. Starting as it meant to go on, the Court of Justice held it was necessary to interpret Article 102 in the light of the spirit of the Treaty generally. Article 3(f) EEC at the time (now Protocol 27 to the TEU and TFEU) required the institution of a system ensuring that competition in the common market is not distorted.24 With this aim in mind, the Court held that in principle a dominant undertaking involved in a merger that substantially fetters competition could infringe Article 102.25 It is not necessary to limit Article 102 to direct exploitation of consumers. Nor is it necessary for a dominant firm to use its market power in order to commit an abuse, although the degree of market power may well be relevant to whether a practice is capable of having an exclusionary effect.26 Since the seminal judgment in Continental Can, the trajectory of the law and policy under Article 102 has sought to protect consumers, the proper functioning of the internal market and genuine undistorted competition. For example, it is not necessary for the dominance, the abuse, and the effects of the abuse all to be in the same market.27 Furthermore, Article 102 has been interpreted and applied broadly to protect consumers, the competitive process and individual competitors, insofar as their interests cannot be separated from the maintenance of an effective competition structure.28 Recent enforcement continues to explore (some would say stretch) the outer boundaries of the law and policy under Article 102. It is the author’s view that the limits of Article 102 should depend on whether there is an act (or omission) of a dominant undertaking that distorts the competitive process or is directly exploitative of consumers. A different view would be to draw the outer boundary of Article 102 by reference to the existence of another law or a regulatory regime that controls the impugned behaviour, in which case competition law might be excluded, or rendered unnecessary, by the operation of that law or regulation.29 Four matters from enforcement in recent years have been selected as contributing to this debate; they are: the behaviour of dominant undertakings that is also subject to controls and obligations imposed by sector-specific regulation; the behaviour of dominant undertakings that is also covered by specific procedures under patent law, such as opposition procedures and litigation; an owner of a standard-essential patent (‘SEP’) that holds a dominant position and tries to enforce the claims of that patent by seeking an injunction from a court; and the alleged misappropriation by a dominant undertaking of third party content that is protected by intellectual property rights. Each matter will be discussed in turn below, before returning to the more general question as to whether recent cases demonstrate a tendency for EU competition law to override the enforcement of other laws and, even if there is such a tendency, whether the cases are nevertheless examples of judicious intervention under Article 102 TFEU. Article 102 and regulatory controls applied to dominant undertakings The first matter of major significance is the interaction between competition law and policy, on the one hand, and sector-specific regulation, on the other. Regulatory controls are often imposed on undertakings that have significant market power, for example not to discriminate unduly or to share essential facilities, in the absence of effective competition. A threshold question that arises is whether only regulation should apply to regulated undertakings. In other words, should a regulatory framework serve as a basis for implied immunity from competition law?30 As a general proposition, the existence of a regulatory regime designed to remedy and avoid competitive harm supplants the need for, and application of, US antitrust law.31 Even if regulation is not specifically designed to avoid such harm, the regulatory requirements may still take precedence over antitrust law. For example, in Credit Suisse Securities (USA) LLC v Billing32 the US Supreme Court interpreted the US securities laws as implicitly precluding the application of antitrust law to investment banks underwriting an initial public offering and imposing certain terms of sale upon potential investors. In reaching that conclusion, the Court was specifically concerned by the burdens of antitrust litigation and the risk ‘ that antitrust courts are likely to make unusually serious mistakes’ that might discourage underwriting syndicates from behaving in ways that are permitted or even encouraged by securities law.33 Alternatively, where a regulatory scheme exists, it may be thought that the additional benefit to competition provided by the enforcement of antitrust law is likely to be small. In Verizon Communications v Law Offices of Curtis VTrinko, LLP34 the US Supreme Court rejected an allegation that Verizon was guilty of monopolisation by denying interconnection services to competing telephone companies. The Court rejected the allegation because it went much further than the already extensive regulatory provisions for network access and, in any event, the ‘ cost of false positives counsels against an undue expansion of §2 liability cost of false positives counsels against an undue expansion of §2 liability’. By contrast, regulatory obligations do not necessarily or impliedly pre-empt the application of EU competition law. Anti-competitive conduct is excluded from the scope of Articles 101 and 102 TFEU only if it is required by the legal framework or if the regulatory obligations preclude the possibility of competitive conduct.35 In Deutsche Telekom (DT),36 the Commission decided that DT had abused its dominant position for charging its competitors for accessing the local loop (last mile connecting the telecoms network to residential homes) a price higher than that paid by DT’s own retail customers. DT’s margin squeeze made it impossible for competitors as (or more efficient than) DT to compete for subscribers in the downstream broadband market in Germany. An important feature of this case was the fact that RegTP, the German telecoms regulator at the time, had specifically reviewed and approved DT’s wholesale prices. One of the questions for the Court of Justice was whether RegTP’s approval meant that Article 102 could (or should) not be applied to DT’s prices. The Court gave a clear answer to the question: DT’s special responsibility under Article 102 was unaffected by RegTP’s actions and views. The mere fact that DT may have been encouraged by the intervention of RegTP to maintain the pricing practices that led to the margin squeeze of downstream competitors did not absolve DT from liability under Article 102 TFEU.37 Whilst the regulatory framework and RegTP’s intervention were relevant as part of the legal context, they did not prevent DT from adjusting its retail prices and thus bearing responsibility for having engaged in an anti-competitive margin squeeze. It is not so much that Article 102 ignored or superseded DT’s regulatory obligations as those obligations did not prevent or remedy the abusive margin squeeze. What lies behind the different approach taken by the US and EU to applying competition law to the behaviour of regulated undertakings that hold a monopoly or dominant position? The fear of mistaken inferences has clearly influenced the modest way that the US Supreme Court has applied antitrust law in recent years—or, more accurately, has refrained from applying antitrust law—as it is deemed to be more important that legitimate pro-competitive behaviour is neither inhibited nor censured.38 The US courts and agencies have tended to have less confidence in enforcement of competition law than their European counterparts (in particular when antitrust law is used as a means of expanding liability beyond the baseline established by sector-specific regulation). The approach and philosophy in the EU is quite different. The approach in the EU is generally to impose regulatory obligations where there is ineffective competition in a particular sector39 and in any event to apply competition law to undertakings in all sectors. The philosophy in the EU was neatly summarized by Philip Lowe, a former Director-General of DG COMP, when he said that ‘as head of a competition authority charged with protecting consumer welfare, I am at least as concerned about false negatives, i.e. under-enforcement, as I am about false positives, i.e. over-enforcement’.40 This would seem to be for three reasons in particular. Firstly, the even-handed concern about false negatives and false positives makes sense when many regulated utilities in the EU are, to a greater or lesser extent, dominated by former State-owned monopolies operating at all levels of trade.41 An obvious implication of such market structures is that the competitive process is embryonic and is therefore more vulnerable to anti-competitive foreclosure. Indeed, it is noticeable that the European Commission has taken action against the exclusionary and/or exploitative behaviour of incumbent firms in a number of regulated sectors, including gas,42 electricity,43 telecommunications,44 railway transport,45 to name just a few. The importance of such action should not be under-estimated. In cases where the competent regulator has either been too weak or even ‘captured’ by the incumbent operator, the Commission’s enforcement of EU competition law has simply been to do what was necessary to protect competition. In the UK, the Government46 has similarly been keen for sectoral regulators to apply competition law within their respective spheres of activity more often than has been the case to date.47 A second reason in favour of the application of Article 102 to regulated undertakings is that EU competition law and regulation share the same overriding objective. For example, the common regulatory framework for electronic communications and Article 102 are both founded on the Union’s commitment to establish an internal market.48 They both pursue the same specific goals of competition, efficiency, and consumer welfare and both apply the same concepts; the regulatory idea of ‘significant market power’ has been assimilated to that of a dominant position under Article 102.49 Former Commissioner Monti went as far as to say that ‘[r]egulatory policy cannot be seen anymore as independent of competition policy: it must be seen as a part of a broader set of tools of intervention on the economy based on competition analysis principles’.50 This suggests that economic regulation and competition law can and should complement one another in terms of their approach (regulatory intervention in relation to anticipated market failure and, where appropriate, enforcement of Article 102 to punish and deter the abuse of market power) and outcomes (ex ante regulatory controls and/or ex post fines and directions issued under competition law). Indeed, sometimes intervention under competition law produces an outcome akin to regulation. A series of investigations by the Commission into the practices of dominant firms allegedly hindering competitors’ access to gas and electricity infrastructure are examples of such intervention; they all culminated in legally-binding commitments that not only opened up those markets but also regulated the terms of access.51 A third reason, which has been discussed extensively elsewhere,52 is the EU has sought to cultivate a more balanced approach to public and private enforcement than that exists in the US. Admittedly, this reason is neither solely nor specifically concerned with regulated sectors. However, it does help to explain the different way that the US and EU have responded to the existence of regulatory structures. In the US, Calkins and Kovacic have both used the term ‘equilibrating tendencies’ to explain how enforcement authorities and courts have used the means within their control—that is to say, bringing prosecutions and setting the standards on liability—to limit the excesses of private plaintiffs (and their lawyers) pursuing claims for treble damages.53 These equilibrating tendencies explain why the US courts have progressively and profoundly narrowed the scope of antitrust laws in general and the role of those laws in regulated sectors in particular.54 Such tendencies are unnecessary in the EU. Historically, they were unnecessary because the competition rules were, as often as not, enforced by public authorities acting in the public interest.55 More recently, private enforcement has emerged, indeed flourished, in some Member States of the EU; however, the features of the US system that encourage rampant private enforcement—eg lawyers acting on contingency fees who are enticed by the prospect of juries awarding treble damages—are noticeably absent from the legal systems in the EU. This is unlikely to be changed by the implementation of the Damages Directive with effect from 27 December 2016.56 While the Directive seeks to facilitate private actions for damages, it also seeks to coordinate those actions with effective public enforcement.57 For example, the Directive provides for proportionate disclosure of evidence (Article 5(1)-(3)), including from the file of a competition authority in certain circumstances (Article 6(4)-(5)); however, it also imposes limits on disclosure: courts cannot order disclosure of leniency statements and settlement submissions (Article 6(6)). Thus, a balance is to be struck between helping claimants to overcome the evidential difficulties of proof and preserving the effectiveness of important tools for public enforcement.58 If the hoped-for balance emerges in practice, there should be no need for the competition authorities and courts of the EU to adopt the kind of equilibrating tendencies that have so clearly affected US antitrust law. Misuse of patent procedures Another example of Article 102 TFEU being applied to a new practice in a new context, and with a measure of controversy,59 is the case of AstraZeneca v Commission (AZ).60 The Commission found that AZ had abused its dominant position in two ways: first by misleading patent offices into granting an extended period of patent protection for a drug used to treat gastrointestinal conditions (‘Losec’); and, secondly, by misusing the procedures for marketing anti-ulcer medicines. Both abuses had the common aim of delaying the arrival of competing non-branded (generic) products onto the market, and thereby preserved supra-competitive prices and profits. Each abuse will be discussed in turn below. AZ’s first abuse consisted in making highly misleading representations to patent offices and courts in order to obtain or maintain supplementary protection certificates (‘SPCs’) to which AZ was not entitled, and thereby keep for as long as possible its monopoly on the proton pump inhibitor market.61 The Commission and the EU Courts held that such conduct fell outside the scope of competition on the merits. One of the arguments raised by AZ before the Court of Justice was that the General Court had erred in law in holding that the mere fact of applying for an SPC was sufficient to constitute an abuse. In so doing, the General Court had allegedly conjured up a new ‘abuse in itself’ without considering whether or not competition was affected. Linked to this argument is the implication that Article 102 was being cast adrift from its moorings in a system ensuring that competition in the internal market is not distorted. The Court of Justice rejected all this. Misleading a public body does not, by itself, constitute an abuse, and nor was that the implication of the Commission’s infringement decision. Rather, it is also necessary to demonstrate that a misrepresentation has a potential anti-competitive effect on the market.62 AZ’s conduct was held to be abusive precisely because it had attempted to mislead, and in some instances misled, patent offices with the aim of protecting its patent-enabled monopoly from generic competition for as long as possible.63 It is well-established that it can be abusive for a dominant firm to maintain or strengthen its position—AZ did that in a way that had not been done before, by making misleading representations. Whether or not the competitive process had actually been distorted was irrelevant.64 As the Commission has recognized, there may be circumstances where it is not necessary to carry out a detailed assessment before concluding that the conduct in question is likely to result in consumer harm. AZ’s conduct appears to have raised obstacles to competition without any redeeming virtue and, therefore, its conduct was not competition on the merits.65 Separately, AZ objected to the Commission’s decision on the basis that there already were remedies under patent law for revoking patents that ought not to have been granted, such as opposition procedures before the patent office and/or litigation seeking to revoke an invalid patent. These procedures, so AZ argued, should limit the application of Article 102 TFEU to behaviour that actually has resulted in anti-competitive effects. The General Court rejected this argument and held that: Where behaviour falls within the scope of the competition rules, those rules apply irrespective of whether that behaviour may also be caught by other rules, of national origin or otherwise, which pursue separate objectives. Similarly, the existence of remedies specific to the patent system is not capable of altering the conditions of application of the prohibitions laid down in competition law and, in particular, of requiring, in cases of behaviour such as that at issue in the present case, proof of the anticompetitive effects produced by such behaviour.66 In other words, Article 102 is not ousted by the fact that some form of misconduct may also be rectified under another set of rules. The same point emerges from the fate of AZ’s challenge to the other abuse that it was found to have committed. AZ’s second abuse consisted of it deregistering marketing authorizations for Losec in three Member States, with the intention of delaying market entry of equivalent generic drugs and preventing parallel trade. Deregistration prevented manufacturers of generic drugs from obtaining regulatory approval under an abridged procedure and so delayed their entry. AZ strenuously argued, however, that all it had done was what the relevant EU legislation entitled it to do.67 That is to say, AZ claimed its behaviour was not abusive because it was lawful under the EU legislation on marketing authorizations. The Court of Justice rejected that argument and held that: [T]he illegality of abusive conduct under Article [102 TFEU] is unrelated to its compliance or non-compliance with other legal rules and, in the majority of cases, abuses of dominant positions consist of behaviour which is otherwise lawful under branches of law other than competition law.68 It is submitted that the General Court’s and Court of Justice’s conclusions are convincing on this point, even though the judgments did not really explain why. Three considerations are relevant. First, as a matter of logic and policy, a remedy in one branch of law does not (or at least not necessarily) displace the need for and desirability of action in another branch of law.69 It is clear that patent law has established procedures for challenging patents that ought not to have been granted. But it is not at all clear why the existence (or the invocation) of those procedures should entitle a dominant undertaking to behave in a way that makes it more difficult for competitors to enter the market. The rationale for applying competition law in those circumstances is to achieve the deterrent punishment for practices designed to foreclose access to the market. It should be added, however, that where a patent holder takes advantage of a right or power that is conferred by patent law, it will normally be necessary to consider whether, in doing so, the patentee is furthering an affirmative objective of the patent legislation. Where that is the case, it is submitted that the concept of objective justification provides the most appropriate mechanism within Article 102 TFEU to strike the balance (or resolve the conflict) between the two provisions.70 That was not the case in AstraZeneca. A second consideration is that conduct should not be condemned as abusive in the abstract. As Advocate General Jacobs rightly observed in Syfait, the factors that go to demonstrate that an undertaking’s conduct is abusive or otherwise are highly dependent on the specific economic and regulatory context in which the case arises.71 This factor is also pertinent to the facts of AstraZeneca v Commission—AZ had gone way beyond a legitimate strategy of minimizing the erosion of its sales and behaved in a way that was intended to hinder the introduction of competing products and parallel imports. AZ deregistered the marketing authorizations for Losec capsules without objective justification; it was simply intended to make it more difficult for rival manufacturers to enter the market. A third consideration is that ‘ private economic actors normally act in their own and not in the public interest when they conclude agreements between themselves’.72 It follows that the consequences of their conduct are not necessarily in the public interest. Undertakings will always operate within a national legal framework and competition authorities should be able to scrutinize private actors’ behaviour even where it complies with branches of law other than competition law. Of course, where an undertaking is entrusted with a service of general economic interest, it may have recourse to Article 106(2) TFEU in defence of conduct that is otherwise in breach of Article 102 TFEU. But that possibility does not mean that compliance with other legal rules should cut down the scope of the EU competition rules. Injunctive enforcement of SEPs There is an unavoidable tension both within competition laws and between competition law and intellectual property law as to the balance to be struck between incentives and opportunities to innovate. An innovator’s incentives are maximized where he or she is able to capture, to the greatest possible extent, the profits that flow from his or her innovation. Necessarily, however, that must limit the opportunities that others have to exploit the results of that innovation. In this regard, Lord Hoffmann has spoken (extra-judicially) about the contrast between:73 the ‘structural’ nature of IP rights and the ‘behavioural’ nature of competition law: IP rights provide the overall structure for the protection and exploitation of intellectual creations, while competition law addresses individual instances of aberrant market behaviour. He observed that, where the courts regularly seek to restrict or modify the application of IP rights on a case-by-case basis in order to protect the perceived interests of competition policy, this is a signal that the regulatory process has gone wrong. An issue that tested the interface between intellectual property and competition law is whether threatening, seeking and/or obtaining an injunction from a court to enforce the claims of a SEP could be an abuse of a dominant position. It has been argued that competition law should be slow to interfere with the basic rights of patent holders to prevent others from using their inventions.74 There is a risk, so it is argued, that competition law might be misused by firms that use the teachings protected by a SEP without concluding a licence with them. Others make the case for applying the competition rules by drawing attention to the risk that SEP owners might disregard their commitment to grant licences on fair, reasonable and non-discriminatory (FRAND) and thereby exclude undertakings that have invested in the preparation, adoption, and application of a standard.75 The decision of the Commission in Motorola Mobility76 and the preliminary ruling of the Court of Justice in Huawei Technologies v ZTE Deutschland77 establish that a dominant undertaking can infringe Article 102 by seeking an injunction of a SEP against someone that is willing to take a licence under that patent on fair, reasonable and non-discriminatory (commonly referred to as ‘FRAND’) terms. Do these cases support a thesis that the contours of Article 102 TFEU are expanding and encroaching on other areas of law? Before answering that question, it is right to emphasize the exceptional circumstances in which this issue arises. In outline summary, standardized technologies are increasingly common and fundamental so that products from different firms in different countries can work and interoperate with one another. Once a particular patented technology is chosen as an industry standard (eg 4G), in certain circumstances the owner of that SEP may become an unavoidable trading partner for anyone that wishes to implement the standard in the products they sell (eg mobile phones). Whether the SEP-owner actually becomes an unavoidable trading partner is, of course, a question of fact. In the event the Commission clearly explained the potential problem in its commitment decision in Samsung – Enforcement of UMTS Standard Essential Patents as follows: The industry is thus locked-in, with the risk that each holder of UMTS SEPs may be able to behave in anti-competitive ways, for example by holding-up implementers after the adoption of the standard either by refusing to license the necessary IP or by demanding excessive royalty fees.78 To prevent this hold-up problem, standard-setting organizations provide for the possibility that the owners of SEPs promise to license their patents on fair, reasonable, and non-discriminatory terms.79 SEP owners that hold a dominant position80 are then expected to engage with would-be licensees in good faith and for a reasonable period of time. In Motorola – Enforcement of General Packet Radio Service (GPRS) Standard Essential Patents the Commission decided that Motorola had abused its dominant position by seeking and obtaining an injunction to prevent Apple from using its GPRS technology, even though Apple had shown itself to be willing to negotiate in good faith on FRAND terms and in a timely fashion. The Commission concluded: The finding in this Decision that Motorola has abused a dominant position by seeking and enforcing an injunction against Apple in Germany on the basis of the Cudak GPRS SEP, whilst taking into account the public interest in maintaining effective competition, respects the requirement that a fair balance be struck between the different rights and freedoms protected by the Union legal order: Motorola’s rights linked to IP, Motorola's and Apple’s right of access to a tribunal, and the freedom to conduct a business of Apple and other potential licensees that are not unwilling to enter into a licensing agreement on FRAND terms and conditions.81 In Huawei the Court of Justice acknowledged the need to strike a balance; it referred to the interest in maintaining free competition, on the one hand, and the requirement to safeguard a proprietor’s intellectual-property rights, on the other.82 The Court went on to hold that Article 102 does not prohibit a dominant undertaking that holds a SEP and has given a FRAND commitment from bringing an action for damages caused by an infringement of its patent.83 The Court of Justice held, essentially, that a dominant undertaking that owns a SEP and has given an irrevocable commitment to license that patent on FRAND terms does not abuse its dominant position by bringing an action for infringement and seeking an injunction as long as: prior to bringing that action, the proprietor has, first, alerted the alleged infringer of the infringement complained about by designating that patent and specifying the way in which it has been infringed, and, secondly, after the alleged infringer has expressed its willingness to conclude a licensing agreement on FRAND terms, presented to that infringer a specific, written offer for a licence on such terms, specifying, in particular, the royalty and the way in which it is to be calculated, and where the alleged infringer continues to use the patent in question, the alleged infringer has not diligently responded to that offer, in accordance with recognised commercial practices in the field and in good faith, this being a matter which must be established on the basis of objective factors and which implies, in particular, that there are no delaying tactics.84 Thus the application of Article 102 depends not only on how the dominant firm behaves prior to seeking injunctive relief but also on the response of the alleged infringer. In other words, an action for an injunction should not be an abuse of a dominant position if the alleged infringer’s conduct were to be purely tactical and/or dilatory and/or not serious.85 On the other side of the ledger, Article 102 ought to be applied to unfair or unreasonable conduct by a SEP-holder that holds a dominant position: such conduct is at variance with its commitment to grant licences on FRAND terms and disregards an alleged infringer’s willingness to conclude a licensing agreement on such terms. In short, such conduct constitutes is a method different from those governing normal competition; it harms the willing licensees that have invested in the adoption of a standard. In Samsung Electronics Co Ltd v Telefonaktiebolaget LM Ericsson the English Court of Appeal considered the preliminary ruling in Huawei and indicated that, more generally, if a SEP owner were simply to refuse to honour a FRAND commitment it had given it would at least be at risk of contravening Article 102.86 It is against this background that the question whether the enforcement of Article 102 in this standard-setting context implies ‘antitrust imperialism’ or an unjustified expansion of Article 102 must be considered. It is suggested that the answer is no. It would be incorrect to say that these cases mean that dominant firms are no longer entitled to seek or obtain injunctions of SEPs, let alone ordinary patents. It would be equally wrong to go too far in the other direction and insist that seeking injunctive relief should be immune from the application of Article 102 TFEU. What the infringement decision in Motorola and the preliminary ruling in Huawei reveal is the importance of the special circumstances relating to SEPs that are the subject of a voluntary commitment to license on FRAND terms, and the legitimate expectations to which that commitment gives rise.87 They are also quite clear as to the steps that must be taken by a SEP-holder before bringing an action for a prohibitory injunction in order not to be deemed to be abusing its dominant position. What is less clear is what should happen if an iterative process of FRAND offers occurs, but the parties are unable to agree a licence. The Court of Justice simply noted that the parties may ask an independent third party to set the amount of royalties to be paid.88 If the licence terms were to be set by an independent adjudicator, then it seems much less likely that they would be abusive. It is important also to consider whether the case-law and decisional practice under Article 102 disregards other ways to address the hold-up problem described above. In Huawei Advocate General Wathelet suggested that the problem could be mitigated by a standardization body promulgating minimum requirements for the negotiation of FRAND licensing terms, that is to say, to encourage a form of ‘FRANDly conduct’ before marching to the courtroom.89 The SEP owner’s commitment to grant licences on FRAND terms would also be enforceable as a matter of contract law.90 Alternatively, as O’Donoghue and Padilla have pointed out,91 the courts have a discretionary power to grant injunctive remedies and judges could exercise that power by taking into account whether the patentee has offered a FRAND licence and/or the alleged infringer is willing to enter such a licence. It has to be said that each of these alternatives has strengths and weaknesses. The contractual route provides a direct mechanism for resolving disputes between the SEP holder and the alleged infringer. It provides for the possibility of a court determining the range of FRAND terms (something that has never happened in the EU) and the award of compensatory damages for any losses caused by a breach of the FRAND commitment. But the contractual route does not take into account: (i) the unavoidable need for the alleged infringer to use the SEP in order to implement the standard; (ii) the risk of unfair or unreasonable conduct by the SEP-holder that has previously committed to license on FRAND terms; (iii) the fact that an alleged infringer may be ready, willing and able to enter into a FRAND licence; and, if those facts are present, (iv) the resulting anti-competitive effects in the market for implementing the standard. As for the other alternative of the national court taking into account the behaviour of the SEP-holder and alleged infringer when deciding whether to grant an injunction, this would occur only when an action is brought; it would not control pre-action conduct. In England and Wales injunctions are granted on the balance of justice as between the parties and so the interests of consumers might be left out of account. Further, this route would also open up the possibility of different approaches to the injunctive enforcement of SEPs in different jurisdictions across the courts of Member States of the EU. In light of the foregoing, neither of these alternatives means that there is no role for the application of Article 102. There is no single, definitive way to make sure that SEPs are licensed on FRAND terms. Enforcement of the contractual obligation to grant licences on FRAND terms; competition law and the court’s power to grant injunctions co-exist. All three contexts involve considerations of FRAND, and the interesting issue in future will be whether it is necessary to distinguish between them.92 Whether a proposed licence term falls within the range of FRAND terms may even differ depending on whether the licence terms have been consensually agreed or determined by a court (in the context of a contested application for an injunction, including a defence based on competition law). For example, parties may agree to terms for a portfolio licence of multiple patents, including SEP and non-essential patents. Such an agreement, if entered into willingly in the absence of exploitation of market power, should not, of itself, breach FRAND principles. It does not necessarily follow, however, that, in the event of litigation, it is, or should be, FRAND for a SEP owner to offer only bundled licences where the counterparty requests a more limited licence.93 Scraping The introduction mentioned the Commission’s decision in relation to Google Shopping. A different competition law objection that has been levied against Google is that it has abused its dominant position in general online search by misappropriating original content from other websites (a practice that is commonly referred to as ‘scraping’). The allegation was investigated by the US Federal Trade Commission, but was dropped after Google gave voluntary assurances to change the way that it displays snippets of information from other websites.94 Notably, one of the Commissioners issued a strongly-worded statement to the effect that he could discern no factual or legal basis for a claim under US antitrust law based on scraping. He was concerned in particular by ‘an unwarranted and unprincipled expansion’ of antitrust liability when remedies already exist for misappropriation under copyright and/or tort law.95 Interestingly, the German Bundeskartellamt decided to close the file on an allegation that Google had attempted to circumvent new copyright legislation that is designed to prevent scraping.96 Separately, the European Commission is investigating the way Google allegedly uses, without consent, content from competing specialized search services in its own general search results. An example of such content is user reviews of products or services. The theory of harm appears to be that the practice of using third party content to promote Google’s own search services may reduce competitors’ incentives to invest in the creation of original content for the benefit of internet users. If users know that Google’s general online search services contain all the relevant information that is available on the worldwide web, their incentives to visit other sites that contain only a part of that information will be significantly reduced, even if those were the sites from which that information originated. When the Commission tested commitments proposed by Google to address its competition concerns in April 2013, it published a ‘question and answer’ about whether it was relevant that an aggrieved website might be able to sue Google for breach of its intellectual property rights. The Commission’s answer was: Intellectual Property law and competition law are two different bodies of law. Compliance with one does not necessarily imply compliance with the other, just like breaching one does not necessarily imply breaching the other. The Commission has analysed Google’s practice from the point of view of competition law. If Google’s market position in web search gives it the ability to copy and use all relevant information available on the web on its own specialised search services, users may no longer have incentives to visit competing services. Competitors of Google may lose the incentive to innovate or invest in the generation of original content. This competition concern arises whether or not the information copied and used by Google is covered by IP rights.97 This ongoing investigation is quite different, therefore, from earlier cases where Article 102 TFEU has been used to override the refusal to license intellectual property rights in the name of promoting a competitive market and consumer welfare. For example, in Microsoft98 the Commission’s case was that Microsoft had refused to supply an indispensable input for work group servers (ie the communications protocol technology) with the risk that effective competition would be eliminated and, that being so, a compulsory licence could be ordered in the absence of a justification to the contrary (of which there was none). The apparent concern in the Google investigation is different. Google’s conduct is said to be distorting consumers’ choice and stifling innovation because it reduces the incentives of intellectual property owners to develop new, original content. That analysis, if it is indeed the Commission’s position, raises a competition concern that is quite separate from any copyright infringement issues. The concern is to avoid the dulling effect of making it too easy for the dominant firm to exploit third parties’ work, whether protected by copyright or not. The question then is whether a competition authority ought to protect the innovation incentives of specialist search websites or allow a general search engine to improve the content of its search engine results pages. III. The search for the outer limits of Article 102 The foregoing discussion prompts a search for the outer limits of Article 102. Must the wrongdoing consist of a material distortion of the competitive process on a relevant market? Or can Article 102 TFEU be applied to the conduct of anyone that is ‘ in a position to generate the effects which the competition rules seek to prevent’?99 Or can one go even further and argue that Article 102 ought to apply to any form of behaviour that is thought to be inconsistent with proper standards of business morality?100 In seeking to answer these questions, this section will briefly examine six possible limits to the scope of Article 102 TFEU. Express derogations The Court of Justice has held that ‘ where the Treaty intended to remove certain activities from the ambit of the competition rules, it made an express derogation to that effect’.101 An example is Article 42 of the TFEU, which provides that ‘ the rules on competition shall apply to production of and trade in agricultural products only to the extent determined by the European Parliament and the Council’. Another example is Article 106(2) TFEU, which provides that undertakings entrusted with the operation of services of general economic interest may avoid the application of the competition rules if such application ‘obstructs’ the performance of the particular tasks assigned to them. In the absence of such derogations, the EU Courts have rejected arguments based on the distinctive features of the sector concerned or on the policy objectives that might conflict with competition.102 Obviously, express derogations are relevant to determining the ambit of EU competition law. They do not, however, provide a complete explanation as to where to draw the line. As explained further below, judicial practice has developed other ways, notably the concepts of non-economic activity and objective justification, which are also able to ‘switch off’ the prohibition. Implied immunity There have been occasions where the Court of Justice has declined to apply the competition rules in order to avoid a clash with another policy or objective pursued by the Treaty. These occasions weaken the suggestion of an inexorable process of antitrust imperialism. They reveal that the EU Courts have considered competition law and policy against the wider context of the Treaties and in light of the relative importance of different activities of the EU. For example, the TFEU encourages social policy leading to the conclusion of collective agreements on working conditions and wages.103 This objective would be undermined if the Treaty were, at the same time, to prohibit such agreements by reason of their inherent effects on competition. Accordingly, in Albany International BV v Stichting Bedrijfspensioenfonds Textielindustrie104 the Court of Justice held that collective agreements between organizations representing employers and workers setting up a sectoral pension fund, by virtue of their nature and purpose, fell outside the scope of Article 101 TFEU.105 The Albany case appears have been decided on the basis that it is sufficient that the collective bargaining agreement was legitimized by its social objectives stated in the TFEU. The Court did not discuss, for example, whether the restraints were a proportionate way of attaining the social objective which they pursued. That could mean that those elements are immaterial as a matter of principle in a case of that kind or that they were simply not material on the facts. The latter is the better explanation and it is reasonable to expect that the Court would intervene in a collective bargaining case if it could be shown that the agreement had a sufficient negative effect on competition and went beyond what is necessary to attain the social objective; but that is not definitively stated by the Court in that case. The European Free Trade Association (EFTA) Court recently considered the Albany ruling in Holship Norge v Norsk Transportarbeiderforbund106 and pointed out that it did not mean, or imply, that all collective agreements fall outside the reach of competition law since: … to exclude all collective agreements from the reach of competition law would go too far. It would create a legal environment where collective agreements containing provisions restricting competition could be concluded, without there being any judicial review of such restrictions. The EFTA Court went on to hold that the Albany exception for collective agreements did not extend to boycotting a port user in order to persuade it to accept a collective agreement that required the user to prefer a third party’s unloading and loading services to its own employees. Such a provision did not pursue social policy objectives or contribute to securing and improving conditions of work and employment for dockworkers. The unanswered, relevant question for present purposes is whether the Court of Justice would decline to apply Article 102 in order to avoid a clash with another policy or objective pursued by the Treaty. The Albany-style exception is, naturally, focused on collective bargaining arrangements. It is, presumably, the case that a dominant undertaking could rely on such an exception if it were a party to such arrangements. It is an open question whether conduct would fall outside Article 102 if it clearly furthered an objective pursued by the Treaty. In a sense, the question is also moot since the concept of objective justification provides an obvious and well-established way for exclusionary conduct that would otherwise be abusive to be justified if it objectively necessary for a policy pursued by the Treaty.107 As the Commission has pointed out, however, whether such conduct is objectively necessary would need to take into account that it is normally the task of public authorities to set and enforce laws and regulations.108 Non-economic activity Articles 101 and 102 TFEU do not apply to activity which, by its nature, its aim and the rules to which it is subject does not belong to the sphere of economic activity, or which is connected with the exercise of the powers of a public authority.109 Certain tasks, such as the maintenance and improvement of air navigation safety110 and the protection of the environment,111 have been held to be non-economic in nature. The case-law has not developed a single test for identifying which activities are non-economic. However, a recurring characteristic of non-economic activity is that it is something only the State can do. In Höfner and Elser v Macrotron the Court of Justice held: The fact that employment procurement activities are normally entrusted to public agencies cannot affect the economic nature of such activities. Employment procurement has not always been, and is not necessarily, carried out by public entities. That finding applies in particular to executive recruitment.112 (emphasis added). In Ambulanz Glöckner Advocate General Jacobs gave another example of something that only the State can do—deciding whether to grant a licence to run a public ambulance service. According to the Advocate General, this is ‘ a typical administrative decision taken in the exercise of prerogatives conferred by law which are usually reserved for public authorities’.113 This raises a point that helps us to identify the limits of Article 102 TFEU, and indeed of EU competition law generally, namely the type of control that is thought to be appropriate for controlling the behaviour in question. When determining whether or not an activity carried on by the State or a State entity is economic in nature and thus subject to competition law, Advocate General Poiares Maduro has warned that: … the Court is entering dangerous territory, since it must find a balance between the need to protect undistorted competition on the common market and respect for the powers of the Member States. The power of the State which is exercised in the political sphere is subject to democratic control. A different type of control is imposed on economic operators acting on a market: their conduct is governed by competition law.114 Thus, the unique position of public bodies as actors in the public interest and performing the quintessential functions of the State is a sound reason for subjecting them to public law only. Conversely, private firms and public bodies competing on a market ought in principle to be subject to the competition rules.115 Whether the conduct is capable of having anti-competitive effects A different criterion for identifying the contours of Article 102 TFEU could be whether the entity is in a position to generate the effects which the competition rules seek to prevent.116 This criterion was endorsed by the UK Competition Appeal Tribunal in BetterCare v Director General of Fair Trading, a case about a public authority that had contracted out the provision of social care services to a private care home in Belfast.117 The Tribunal took the view that, in the absence of any statutory exclusion, the presumption should be that the competition rules are intended to apply. The Tribunal emphasized the fact that the healthcare trust was accused of discriminatory, exclusionary and unfair trading practices, all of which could fall within the mischief of domestic competition law.118 Such an approach reflects the view—arguably implicit in Articles 106(1) and (2) of the TFEU119—that neither public service obligations nor special or exclusive rights prevent an operator’s activities from being regarded as economic activities. It is submitted, however, that the ability to commit infringements of the rules of competition law is an inadequate and inappropriate basis for drawing the boundaries of those rules.120 There is, first of all, the objection that such an approach is circular: EU competition law only prohibits anti-competitive conduct if it is engaged in by undertakings and one should not, therefore, seek to define an undertaking by reference to such conduct. In this connection, it is important not to elide the ‘undertaking’ issue with the separate question of whether there is any infringement of Articles 101 and/or 102 TFEU.121 Secondly, possibly as a result, an effects-based approach may lead to an over-inclusive definition of undertaking: if private operators do not, and could not, undertake the activity in question—because profit-making would be ‘impossible’—then there is a strong argument that the activity ought to be regarded as non-economic and fall outside of the competition rules, irrespective of the ability to generate anti-competitive effects.122 A third issue is that a purchase falls within the scope of EU competition law only in so far as it forms part of the exercise of an economic activity.123 Procurement for the purposes of social activity is therefore not caught by competition law, even though the purchaser may wield very considerable economic power, even giving rise to a monopsony.124 Interestingly, the Advocate General in FENIN pointed out that, if a criterion based on the effects of conduct were to be adopted, the effectiveness of the rules relating to public procurement would be reduced.125 He did not elaborate on this point, but it might be that he considered that the disputed behaviour in that case—the purchase of medical instruments by the Spanish national health system—ought to have been subject to a different type of control to competition law. Whether conduct leads to an increase in price It might be thought that the application of Article 102 TFEU should be determined by reference to whether or not the behaviour increases prices or is designed to achieve that end. The European Commission has used the term ‘anti-competitive foreclosure’ to describe a situation where effective access of actual or potential competitors to supplies or markets is hampered or eliminated as a result of the conduct of the dominant undertaking whereby the dominant undertaking is likely to be in a position to profitably increase prices to the detriment of consumers.126 This fits with the concern about exclusionary conduct being that it enables the dominant firm to entrench or extend its market power. Furthermore, Article 102 is also directed towards the conduct of dominant firms that use their market power in an exploitative manner (exclusionary effects are not necessary).127 On closer inspection, however, the prospect of ‘increased prices’ cannot be used as the litmus test for applying Article 102 in all cases. Conduct to increase prices does not deserve to be condemned if, for example, it seeks to raise price to the competitive level rather than above it. Introducing competition into a previously monopsonistic market is likely to lead to an increase in prices, but is unlikely to be objectionable in itself. Separately, it is well-established that below-cost price-cutting can be abusive without proof of later recouping the losses through higher prices.128 A different example of the same point is that the Commission may object to pricing practices of a dominant firm that prevent or delay a decline in prices that would otherwise have occurred.129 To summarize: whether exclusionary conduct directly or indirectly increases (or is likely to increase) price is naturally relevant to, but not always determinative of, the application of Article 102.130 Whether conduct is proportionate to the pursuit of a legitimate objective A different limit on the application and scope of Article 102 TFEU is whether the conduct in question is proportionate to any legitimate interest that is being pursued and whether the impugned conduct is likely to limit competition more than is necessary.131 The Court of Justice based its analysis on proportionality in United Brands v Commission.132 The Court acknowledged that it was lawful for an undertaking in a dominant position to pursue a policy of quality when choosing its sellers, but a ban on customers reselling green bananas raised obstacles to trading, ‘ ‘the effect of which went beyond the objective to be attained’ and was therefore abusive.133 In the same case, the Court established a point that has been repeated many times since, that a dominant firm is entitled to protect its own commercial interests if they are attacked, but may only take reasonable steps to do so.134 By contrast, United Brands took unreasonable steps when it refused to supply bananas to a Danish distributor that had taken part in an advertising campaign for one of its competitors.135 In other words, that was not a proportionate protection of United Brands’ commercial interests. In Tetra Pak I Judge Kirschner, acting as an Advocate General to the former Court of First Instance (now General Court), suggested that the principle of proportionality in this context means that: An undertaking in a dominant position may act in a profit-oriented way, strive through its efforts to improve its market position and pursue its legitimate interests. But in so doing it may employ only such methods as are necessary to pursue those legitimate aims. In particular it may not act in a way which, foreseeably, will limit competition more than is necessary.136 This principle has been applied in a wide variety of dominance cases, including a refusal to continue providing access to a local crematorium,137 selective price-cutting by a liner conference in maritime transport,138 to charging a flat-rate royalty for music licensed by a copyright collecting society.139 It is also a constituent element of the concept of objective justification and the efficiency defence, which often referred to by the sobriquet of ‘Article 102(3)’.140 In Streetmap.EU v Google,141 for example, the issue was whether it was an abuse of a dominant position for Google to display only a thumbnail map from Google Maps in its search results. The Court held that such conduct did not appreciably restrict competition in online maps, but, if it were wrong about that, Google’s conduct was in any event objectively justified. The interesting point for present purposes is that the Judge found that proportionality does not simply require the identification of a less anti-competitive alternative measure. That is because ‘ ‘proportionality does not require adoption of an alternative that is much less efficient in terms of greatly increased cost or which imposes an unreasonable burden (at the very least in a case where there is no suggestion that the conduct impugned was likely to eliminate competition)’.142 In other words, as one might expect, proportionality involves consideration of the cost, effectiveness, and practicality of alternatives to the conduct complained about. The foregoing discussion assumes that all types of unilateral conduct should be subject to a single standard of proportionality. It appears, however, that assumption is inconsistent with what the EU Courts have in fact done. While the Court of Justice has pointed out that Article 102 does not envisage any variation in form or degree in the concept of a dominant position,143 it has applied the proportionality principle with particular stringency when a firm enjoys a position of super-dominance or quasi-monopoly. One of the exceptional features of Compagnie Maritime Belge Transport,144 which supported the Court’s finding that above-cost selective price cuts were abusive, was the fact that the liner conference, Cewal, held a market share of 90 per cent.145 Advocate General Fennelly explained the position very clearly: … the Court of First Instance committed no error of law in finding that the response of Cewal members to the entrance of G&C [a competitor] was not ‘reasonable and proportionate’. To my mind, Article [102] cannot be interpreted as permitting monopolists or quasi-monopolists to exploit the very significant market power which their super-dominance confers so as to preclude the emergence either of a new or additional competitor. Where an undertaking, or group of undertakings whose conduct must be assessed collectively, enjoys a position of such overwhelming dominance verging on monopoly, comparable to that which existed in the present case at the moment when G&C entered the relevant market, it would not be consonant with the particularly onerous special obligation affecting such a dominant undertaking not to impair further the structure of the feeble existing competition for them to react, even to aggressive price competition from a new entrant, with a policy of targeted, selective price cuts designed to eliminate that competitor.146 The UK Competition Appeal Tribunal adopted a similar approach to below-cost price-cutting by a pharmaceutical undertaking that was seeking to respond to competition that had emerged after its patent had expired in Napp Pharmaceutical Holdings Ltd v Director General of Fair Trading.147 The Tribunal held Napp, the dominant undertaking, had charged prices well below average variable costs, and targeted competitors on a selective basis, while having no lawful objective justification for doing so. This was a disproportionate and unlawful response to competition.148 It is clear, therefore, that the principle of proportionality informs the law and policy under Article 102. Briefly, reverting to Huawei, although the judgment does not refer to that principle in terms, it is quite clear that it played a role and rightly so—it would be neither reasonable nor proportionate for the owner of a SEP that has committed to licence that patent on FRAND terms then to ignore that commitment and seek an injunction against a counterparty that is willing to enter into such a licence. That is the key point that underpins the judgment and, moreover, the Commission’s infringement decision in Motorola, and, while those cases may be controversial in some quarters,149 the principle of proportionality gives that point a degree of legal pedigree. The link between dominance and abuse In Tetra Pak II the Court of Justice held that the application of Article 102 presupposes a link between the dominant position and the alleged abusive conduct, which is normally not present where conduct on a market other than the dominated market produces effects on that distinct market.150 This follows, of course, from the wording of the Treaty, referring to an abuse of a dominant position as opposed to a free-standing abuse by an undertaking on any market of any kind. It also follows from the judgment in Intel v Commission,151 where the Court of Justice clarified its earlier seminal judgment in Hoffmann-La Roche152 on exclusivity rebates and held that, where a dominant firm adduces evidence that its conduct has no foreclosure effect, the Commission must analyse, inter alia, the extent of the undertaking’s dominant position on the relevant market (since that affects the capacity of its conduct to foreclosure competition). It is well-established case-law that conduct on a non-dominated market that is closely associated with a dominated market, but does not affect the dominated market, can be abusive, but only in ‘special circumstances’. It is frustrating, but perhaps unavoidable, that the ‘special circumstances’ have never been clearly defined by the Court. They have arisen in two cases to date: Tetra Pak II153 and Microsoft.154 In Tetra Pak II, the special circumstances included Tetra Pak holding quasi-monopolistic positions in the dominated markets; Tetra Pak’s shares of each of the non-dominated markets approaching dominance; there were significant cross-over technologies used in the dominated and non-dominated markets; and Tetra Pak faced competition from the same competitor in the dominated and non-dominated markets.155 The same features were present in the Microsoft case that linked Microsoft’s dominant position in operating systems for personal computers to the closely related market for work group servers.156 Reverting to one of the ongoing investigations mentioned in the introduction, the ongoing case against Facebook in Germany, it appears that the link (however attenuated it may be) between dominance and abuse will be important. In this regard, it is relevant to note that the German and French competition authorities have jointly analysed the implications and challenges resulting from data collection in the digital economy and other industries.157 The European Data Protection Supervisor has also spoken of the need for greater clarity as to the interaction between the laws governing consumer protection, data protection, and competition.158 Space precludes a detailed discussion of that fascinating topic here. Suffice it to note that the German and French competition authorities recognize that the accumulation of vast quantities of data is not, in itself, a competition problem. But they go on to identify the ‘close link’ that may well exist between some (often online) markets on which a firm is dominant, on the one hand, and the gathering of huge amounts of data that is used to reinforce or strengthen the firm’s position in the dominated market. What this shows is that, while any investigation into the collection and use of online data by a dominant firm would be ground-breaking in the sense that it has not been done before, it does not appear to stretch the substantive scope of Article 102. Indeed, it is not as far-reaching as Tetra Pak II and seems much closer to the less extreme case of BPB Industries,159 where the dominant position held in the plasterboard market was held to be of relevance to the conduct of BPB on the market for plaster, since that conduct strengthened BPB’s position on the dominated market and created barriers to entry into that market.160 Whether the same can be said for the data collected and used by Facebook is unclear; the outcome of the German competition authority’s investigation is eagerly awaited. IV. Conclusion The title of this article asked whether recent enforcement under Article 102 TFEU shows signs of ‘antitrust imperialism’ or provides examples of judicious intervention. The answer is both. Imperialism commonly refers to a policy of extending a country’s power and influence over another country (and is, as often as not, controversial). There is no doubt that Article 102 has been applied in new sectors and to new practices on dominated or associated markets. It is also clear that the Article 102 is not restrained by the existence of other legal rules or a dominant firm’s compliance with those rules. Imperialism may not be quite the right term to describe these developments, but Article 102 certainly has a broad remit. The key point is really that intervention under Article 102 appears to have been warranted and justifiable in the decisions discussed above. Article 102 is, indeed must be, sensitive to the relevant legal and regulatory framework. The point is neatly illustrated by the case of SotLélos,161 which concerned whether GlaxoSmithKline was entitled, under Article 102, to reduce supplies of a drug to wholesalers in Greece to the extent that those supplies were intended for export to another Member State. That question arose in circumstances where wholesalers wanted supply in Greece (that regulated prices at a low level) and intended to export the drugs to Member States that regulated prices at a much higher level. The Court of Justice held that State-controlled mechanisms of price regulation in the pharmaceutical sector do not preclude the application of Article 102.162 But the Court went on to recognize that the parallel trade in question was largely driven by those State mechanisms, and: Furthermore, in the light of the Treaty objectives to protect consumers by means of undistorted competition and the integration of national markets, the [EU] rules on competition are also incapable of being interpreted in such a way that, in order to defend its own commercial interests, the only choice left for a pharmaceuticals company in a dominant position is not to place its medicines on the market at all in a Member State where the prices of those products are set at a relatively low level.163 That being so, the Court held that it is reasonable and proportionate, and thus lawful under Article 102, for a dominant firm to refuse to supply wholesalers that engage in parallel exports (induced by State intervention) when exporting threatens its legitimate commercial interests and the orders of the wholesalers are ‘ out of the ordinary’.164 This shows that there are certain limits to the outer scope of Article 102 TFEU, and specifically that Article 102 is not to be applied in such a way that a dominant firm has no choice but to refrain from selling on the market at all. I conclude by offering six propositions that appear to inform the application of Article 102 to conduct of dominant undertakings that is also subject to other legal rules: The fact that a dominant firm fails to comply with a regulation or another legal rule does not, in itself, give birth to a (new) abuse of a dominant position. The fact that a dominant firm complies with a regulation or legal rule does not preclude the application of Article 102, unless that regulation or rule eliminates any possibility of competitive activity on its part.165 While it is possible to abuse a dominant position without actually exercising or relying on market power.166 Article 102 cannot be applied to conduct of a dominant undertaking that is separate from, and has nothing to do with, the market where it is dominant. Indeed, the extent of a dominant position may be highly relevant to the effects, and lawfulness, of a dominant firm’s behaviour. Article 102 can be applied to allegedly exclusionary conduct only if there is evidence of an actual or potential anti-competitive effect.167 Article 102 does not apply if there is either a derogation in the Treaty from the competition rules or the conduct complained about is non-economic in nature. Conduct of a dominant firm does not infringe Article 102 TFEU where its objective is a separate goal of the EU, or another legitimate goal of public policy, and the conduct is objectively necessary and proportionate for securing the attainment of that goal.168 Footnotes 1 Case C-457/10 P AstraZeneca v Commission [2013] 4 CMLR 233. 2 Decision No CA98/02/2011 (Case CE/8931/08) Decision of 12 April 2011, <https://www.gov.uk/cma> accessed 27 November 2017. 3 Commission Press Release IP/17/1784, 27 June 2017, on appeal Case T-612/17 Google and Alphabet v Commission, not yet decided. 4 For comment on this theory of harm see Bo Vesterdorf, ‘Theories of Self-preferencing and Duty to Deal - Two Sides of the Same Coin?’ (2015) 1(1) Competition Law & Policy Debate 4–9 with Nicolas Petit, ‘Theories of Self-preferencing under Article 102: A Reply to Bo Vesterdorf’, <i-comp.org>. 5 OAO Gazprom Press Statement, 22 April 2015. 6 Bundeskartellamt Press Statement, 2 March 2016. 7 Sir Robin Jacob, ‘Competition Authorities Support Grasshoppers: Competition Law as a Threat to Innovation’ (2013) 9 Competition Policy International 15. 8 See eg Commission Press Release IP/17/1323, 15 May 2017: Commission opens formal investigation into Aspen Pharma’s pricing practices for cancer medicines. 9 Rupprecht Podszun, ‘Can Competition Law Repair Patent Law and Administrative Procedures?’ (2014) 51 CML Rev 281, at 288. A different example might be the investigation of a suspected cartel involving German diesel car manufacturers in circumstances where there is no possibility of a consumer collective actions for commercial misrepresentation under German law; ‘Cartel Scandal puts German Business Culture on the Line’ Financial Times, London (30 July 2017). 10 AstraZeneca (n 1), para 133. 11 Case 13/77 INNO v ATAB [1977] ECR 2115, paras 30–31. 12 See eg art 42 TFEU. 13 An obvious example of a case reconciling art 101 with other primary EU law is Case C-67/96 Albany International BV v Stichting [1999] ECR I-5751, which is discussed below. 14 Pitney Bowes v Francotyp-Postalia GmbH [1990] 3 CMLR 466, para 17. 15 Case 6/72 Europemballage and Continental Can v Commission [1973] ECR 215, para 27. 16 Case C-52/09 TeliaSonera Sverige [2011] ECR I-527, paras 24, 43, and 88; see also Case T-65/98 Van den Bergh Foods v Commission [2003] ECR II-4653, para 157. 17 Case C-413/14 P Intel v Commission EU:C:2017:632, para 134. 18 Case C-209/10 Post Danmark EU:C:2012:172, para 22. 19 Intel v Commission (n 17), para 136. 20 See the French competition authority’s Decision 14-D-08 of 24 July 2014 regarding practices implemented in the sector for the sale of fresh dairy products in the French West Indies, upheld on appeal on 24 September 2015; the Decision and judgment are accessible at <http://www.autoritedelaconcurrence.fr> accessed 27 November 2017. 21 Rene Joliet, Monopolisation and Abuse of Dominant Positions: A Comparative Study of the American and European Approaches to the Control of Economic Power (Liége 1970) 250. 22 ibid; see also Ernst-Joachim Mestmäcker, ‘Towards A Concept of Workable European Competition Law’ in Kiran Klaus Patel and Heike Schweitzer (eds), The Historical Foundations of EU Competition Law (OUP 2013) 201–02. 23 Case 6/72 Continental Can v Commission [1973] ECR 215. 24 ibid, para 24; see more recently TeliaSonera (n 16), paras 20–22. 25 ibid, paras 25–26. 26 Intel v Commission (n 17) para 139. 27 Case C-333/94 P Tetra Pak International v Commission [1996] ECR I-5951, para 27 (‘Tetra Pak II’). 28 Case C-481/01 P(R) NDC Health v IMS EU:C:2002:223, paras 80–84. 29 For discussion of the converse situation and a possible gap under art 102 see Federico Etro and Ioannis Kokkoris (eds), Competition Law and the Enforcement of Article 102 (OUP 2010) ch 9. 30 See generally Robert O'Donoghue and Jorge Padilla, The Law and Economics of Article 102 TFEU (2nd edn, Hart 2013) 44–47. 31 Silver v New York Stock Exchange, 373 US 341 (1963). 32 551 US 264 (2007). 33 One of the main reasons why mistakes are so serious in the US is the fact that US law provides for the award of mandatory treble damages to the injured party; on treble damages see Patricia Hanh Rosochowicz, ‘Deterrence and the Relationship between Public and Private Enforcement of Competition Law’ (2005) <http://www.ibanet.org/LPD/Antitrust_Trade_Law_Section/Antitrust/EU_Private_Litigation_Working_Group.aspx > accessed 27 November 2017. 34 Verizon Communications v Law Office of Curtis V Trinko LLP, 540 US 398 (2004). 35 Cases C-359/95 P and C-379/95 P Commission and France v Ladbroke Racing [1997] ECR I-6265, paras 33–34. 36 OJ [2003] L 263/9, upheld on appeal Case T-271/03 Deutsche Telekom v Commission [2008] ECR II-477, upheld on further appeal Case C-280/08 P Deutsche Telekom v Commission [2010] ECR I-9555. 37 Deutsche Telekom (n ), para 84. 38 Trinko (n 22); Pacific Bell Telephone Co v linkLine Communications, Inc, 555 US 438 (2009). 39 See Council Directive 2002/21/EC of March 2002 on a common regulatory framework for electronic communications networks and services [2002] OJ L 108/33, recital (27). 40 <https://ec.europa.eu/competition/speeches/text/sp2007_02_en.pdf> accessed 27 November 2017. 41 On this point see Case C-109/03 KPN Telecom [2004] ECR I-11273, Opinion of AG Maduro, para 55. 42 See eg GDF Suez, Commission Press Release, IP/09/1872, 3 December 2009; E.ON, Commission Press Release, IP/10/494, 4 May 2010. 43 See eg CEZ, Commission Press Release, IP/12/320, 10 April 2013; Bulgarian Electricity Holding, Commission Press Release, IP/15/6289, 10 December 2015. 44 Wanadoo España vTelefónica Decision C(2007) 3196 final (Case COMP/38.784), upheld on appeal Case T-336/07 Telefónica and Telefónica de España v Commission [2012] 5 CMLR 931, upheld on appeal Case C-295/12 P Telefónica SA and Telefónica de España v Commission [2014] 5 CMLR 857. 45 See eg Deutsche Bahn, Commission Press Release, IP/13/1289, 18 December 2013; note that the commitments in this case were released early on 8 April 2016: Commission Press Release, IP/16/1322. 46 See eg Department for Business, Innovation & Skills, Government’s response to consultation ‘Growth, Competition and the Competition regime’, March 2012, paras 8.7–8.13 <https://www.gov.uk> accessed 27 November 2017. 47 On this issue see Richard Whish, ‘National Competition Law Goals and the Commission’s Guidance on Article 82 EC: the UK experience’ in Lorenzo Federico Pace (ed), European Competition Law: The Impact of the Commission's Guidance on Article 102 (Edward Elgar 2011) ch 7. 48 Art 114 TFEU for the CRF and Protocol 27 to the TEU/TFEU for art 102 TFEU. 49 British Telecommunications plc v Office of Communications (VULA) [2016] CAT 3, paras 101–03, referring to Council Directive 2002/21/EC of March 2002 on a common regulatory framework for electronic communications networks and services [2002] OJ L 108/33, Art 14 (2). Note the Proposal for a Directive of the European Parliament and of the Council establishing the European Electronic Communications Code (Recast) COM(2016)590. 50 Mario Monti, ‘Competition and Regulation in the New Framework’ Speech of 15 July 2003, <http://ec.europa.eu/competition/speeches/> accessed 27 November 2017. 51 See cases cited at nn 29–30 above. 52 See eg Clifford Jones, Private Enforcement of Antitrust Law in the EU, UK and USA (OUP 1999); Ioannis Lianos, Peter Davis, and Paolisa Nebbia, Damages Claims for the Infringement of Competition Law (OUP 2015). 53 Stephen Calkins, ‘Summary Judgment, Motions to Dismiss, and Other Examples of Equilibrating Tendencies in the Antitrust System’ (1986) 74 Geo LJ 1065; William Kovacic, ‘Private Participation in the Enforcement of Public Competition Laws’ Speech of 15 May 2003, <https://www.ftc.gov> accessed 27 November 2017. 54 See cases cited at n 26 above. 55 Wouter Wils, ‘Should Private Antitrust Enforcement Be Encouraged in Europe?’ (2003) 26 World Competition 473. 56 Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union, [2014] OJ L349/1 (‘Damages Directive’). 57 ibid, recital 6. 58 ibid, recitals 15 and 26. 59 See eg Frances Murphy and Francesco Liberatore, ‘Abuse of Regulatory Procedures—the AstraZeneca Case’ (2009) 30 ECLR 314 223–29 (pt 1), 289–300 (pt 2) and 314–23 (pt 3). 60 AstraZeneca (Case COMP/A 37507/F3) Commission Decision 2006/857/EC [2005] OJ L 332/24, upheld on appeal to the General Court: Case T-321/05 AstraZeneca v Commission [2010] ECR II-2805 (‘GC judgment in AstraZeneca’), upheld on further appeal to the Court of Justice: AstraZeneca (n 1). 61 A SPC extends the patent protection for a maximum period of five years for medicinal products subject to a marketing authorization procedure. 62 AstraZeneca (n 1), para 112 and case-law cited. 63 ibid, paras 93–98. 64 AstraZeneca (n 60), judgment of the General Court, para 376. 65 See similarly the ‘naked restrictions’, ie the payments to customers to delay the launch of a competitor’s product, in Case T-286/09 Intel v Commission EU:T:2014:547, paras 201–20 (not considered on appeal to the Court of Justice). 66 ibid, para 366. 67 Council Directive 65/65/EEC of 26 January 1965 on the approximation of provisions laid down by Law, Regulation or Administrative Action relating to proprietary medicinal products [1965] OJ L 369/22, 24. 68 AstraZeneca (n 1), para 132. 69 A counter-argument is that the perceived problem of deregistration could be solved by amending the relevant regulatory legislation and allowing generics to rely on the original registration in support of their application for a marketing authorization. 70 On objective justification see below CMBT (n 138). 71 Case C-53/03 Syfait v GlaxoSmithKline plc [2005] ECR I-4609, Opinion of AG Jacobs, para 68. 72 Albany (n 13), Opinion of AG Jacobs, para 184. 73 Burrell Lecture 2004 on ‘Intellectual Property, Free Movement and Competition: Conflicting of Complimentary?’, a summary <http://ipkitten.blogspot.co.uk/2004/02/burrell-lecture-2004.html> accessed 27 November 2017. 74 Damien Geradin and Miguel Rato, ‘FRAND Commitment and EC Competition Law: A Reply to Philippe Chappatte’ (2010) 6 ECJ 129, 150–53. 75 Philippe Chappatte, ‘FRAND Commitments – The Case for Antitrust Intervention’ (2009) 5 ECJ 320. 76 Motorola Mobility (Case AT 39985), Decision of 29 April 2014. 77 Case C-170/13 Huawei Technologies Co Ltd v ZTE Corp [2015] 5 CMLR 779; for comment see Nicolas Petit, ‘Huawei v ZTE: Judicial Conservatism at the Patent-Antitrust Interaction’ CPI Antitrust Chronicle, October 2015 (2) <https://www.competitionpolicyinternational.com> accessed 27 November 2017. 78 Samsung - Enforcement of UMTS standard essential patents (Case AT 39939) Commission Decision of 29 April 2014, para 58; for a more detailed discussion see Alexandros Zografos, ‘The SEP Holder’s Guide to the Antitrust Galaxy: FRAND and Injunctions’ (2014) 37 World Competition 53. 79 Commission’s Guidelines of 14 January 2011 on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements [2011] OJ C11/01. 80 Motorola Mobility (n 76), para 226 (ownership of a SEP did not automatically confer dominance). 81 ibid, para 510. 82 Huawei (n 77), para 42. 83 ibid, para 2 of the operative part of the judgment; see also paras 74–75. 84 ibid, para 1 of the operative part of the judgment; see also paras 55–64 and 71. 85 Case C-170/13 Huawei v ZTE EU:C:2014:2391, para 88 of the AG Opinion. 86 [2016] EWCA Civ 489, para 35. 87 Huawei (n 77), paras 51 and 53. 88 ibid, para 68; cf Samsung Commitment Decision (n 78), para 78 (providing for situations of deadlock to be resolved by a court or an arbitration tribunal). 89 Huawei (n 77), Opinion of AG Wathelet, para 11. 90 Geradin and Rato (n 74) 145–48, and 169. 91 O’Donoghue and Padilla (n 30) 700–01. 92 German courts have already begun to ‘operationalise’ Huawei: see eg Nicolas Petit, ‘Antitrust Claims in a Standards Context’, ASPI-LES, APEB conference, 14 June 2016 (on file with author). 93 Case 193/83 Windsurfing International v Commission [1986] ECR I-611, paras 36 and 85. 94 In the Matter of Google Inc (FTC File No 111-0163), Statement of the Federal Trade Commission of 3 January 2013 <https://www.ftc.gov> accessed 27 November 2017. 95 ibid, Concurring and Dissenting Statement of (former) Commissioner Rosch Regarding Google’s Search Practices. 96 Case B2-126/14 Bundeskartellamt decision of 25 April 2016 concerning the dispute Google versus various press publishers and VG Media about the use of the ancillary copyright of press publishers, <http://www.bundeskartellamt.de> accessed 27 November 2017. 97 Commission MEMO-13-383, 25 April 2013. 98 Microsoft (Case COMP/C-3/37.792) OJ [2007] L32/23, substantially upheld on appeal to the General Court Case T-201/04 Microsoft v Commission [2007] ECR II-3601. 99 Case C-218/00 Cisal v INAIL [2002] ECR I-691, Opinion of AG Jacobs, para 71. 100 NYNEX Corp v Discon Inc, 525 US 128, at 137 (1998) (Breyer J). 101 Joined Cases 209/84 to 213/84 Ministère Public v Asjes [1986] ECR 1425, para 40. 102 Case 172/80 Züchner v Bayerische Vereinsbank [1981] ECR 2021, paras 6–9. 103 TFEU provisions Title X (Social Policy) arts 151, 153(1), 156. 104 Albany (n 13). 105 ibid, para 60. 106 Case E-14/15 Holship Norge AS v Norsk Transportarbeiderforbund [2016] EFTA Ct Rep, judgment of 19 April 2016. 107 Case C-209/10 Post Danmark I EU:C:2012:172, paras 40–42. 108 Guidance on the Commission's enforcement priorities in applying Article [102 TFEU] to abusive exclusionary conduct by dominant undertakings, OJ [2009] C 45/7 (‘Enforcement Priorities Guidance’), para 29 and case-law cited. 109 Case C-1/12 Ordem dos Tecnicos Oficiais de Contas v Autoridade da Concorrencia [2013] 4 CMLR 651, para 40. 110 Case C-113/07 P SELEX Sistemi Integrati SpA v Commission [2009] ECR I-2207, paras 70–71. 111 Case C-343/95 Calì & Figli v Servizi Ecologici Porto di Genova [1997] ECR I-1547, paras 22–23. 112 Case C-41/90 Höfner and Elser v Macrotron [1991] ECR I-1979, para 22. 113 Case C-475/99 Ambulanz Glöckner v Landkreis Südwestpfalz [2001] ECR I-8089, Opinion of AG Jacobs, paras 71–81. 114 Case C-205/03 P FENIN v Commission [2006] ECR I-6295, Opinion of AG Maduro, para 26 (‘FENIN’). 115 ‘Government in Markets: Why competition matters – a guide for policy makers’, OFT 1113, September 2009 <https://www.gov.uk> accessed 27 November 2017. 116 Cisal (n 99), para 71. 117 [2002] CAT 7, para 259. 118 ibid, paras 190, 202 and 265–67. 119 The equivalent provision in UK law to Article 106(2) is Competition Act 1998, Sch 3, para 4. 120 The text that follows in this section is based, in part, on the author’s contribution to Division 1 of Butterworths Competition Law Service (LexisNexis). 121 FENIN I (n 114), para 14. 122 Okeoghene Odudu, The Boundaries of EC Competition Law: The Scope of Article 81 (OUP 2006) 42–45 (discussing public goods). 123 SELEX (n 110). 124 Case T-319/99 FENIN v Commission [2003] ECR II-357, para 37. 125 FENIN (n 114), Opinion of AG Maduro, para 65. 126 Enforcement Priorities Guidance (n 108), para 19; note however that para 11 of the Guidance explains that the expression ‘increase prices’ is used to include the power to maintain prices above the competitive level and is used as shorthand for the various ways in which the parameters of competition—such as prices, output, innovation, the variety or quality of goods or services—can be influenced to the advantage of the dominant undertaking and to the detriment of consumers. 127 1998 Football World Cup, OJ [2000] L 5/55, para 100 (expressly rejecting the submission that Article 102 cannot apply in the absence of an effect on the structure of competition in a given market). 128 Case C-202/07 P France Télécom v Commission [2009] ECR I-2369, para 110; TeliaSonera (n 16), para 100. 129 Guidance on Enforcement Priorities under Article 102 (n 108), para 71. 130 Obviously, art 102 also applies to exploitative and/discriminatory conduct. 131 Renato Nazzini, The Foundations of European Union Competition Law: The Objective and Principles of Article 102 (OUP 2011) 157–58. 132 Case 27/76 United Brands v Commission [1978] ECR 207. 133 ibid, para 158. 134 ibid, para 189; see more recently Cases C-468/06 to C-478/06 Sot. Lélos kai Sia v GlaxoSmithKline [2008] ECR I-7139 (‘Sot. Lélos’), paras 69–71. 135 United Brands (n 132), paras 191–92. 136 Case T-51/89 Tetra Pak Rausing SA v Commission ECR II-209, Opinion of AG Kirschner, para 68. 137 Burgess v OFT [2005] CAT 25, para 365. 138 Cases T-24, 26 and 28/93 Compagnie Maritime Belge v Commission [1996] ECR II-1201, paras 146–48. 139 Case C-395/87 Ministère Public v Tournier [1989] ECR I-2521, para 45. 140 Post Danmark I (n 107) para 42. 141 Streetmap.EU Ltd v Google Inc [2016] EWHC 253 (Ch) (the author acted for the claimant in this action). 142 ibid, para 149. 143 TeliaSonera (n 16) para 80. 144 CMBT (n 138) above. 145 ibid, para 119. 146 ibid, Opinion of AG Fennelly, para 137. 147 [2002] CAT 1, paras 344–45. 148 ibid, paras 225–29 and 231–306. 149 See eg Annalisa Tosdevin, ‘’Willing or not Willing, that is the Question’: Thoughts on the Motorola Decision’ [2015] Comp Law 85. 150 Tetra Pak II (n 27), para 27. 151 Case C-413/14 P Intel v Commission EU:C:2017:632, para 139; see similarly Case C-52/09 TeliaSonera EU:C:2011:83, para 81. 152 Case 85/76 Hoffmann-La Roche v Commission EU:C:1979:36, para 89. 153 Tetra Pak II (n 27). 154 Microsoft Decision (n 98), paras 526–40; see also Burgess (n 137), paras 380–81. 155 Case T-83/91 Tetra Pak International v Commission [1994] ECR II-755, paras 118–21, upheld on appeal to the Court of Justice Tetra Pak II (n 27), paras 28–29. 156 Microsoft Decision (n 98), paras 529–33, 541. 157 Competition Law and Data (10 May 2016) <https://www.bundeskartellamt.de> accessed 27 November 2017; see further Daniel Rubinfeld and Michal Gal, ‘Access Barriers to Big Data’ <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2830586> accessed 27 November 2017. 158 Magnus Franklin and Lewis Crofts, ‘EU Watchdog Set to Steer Privacy’s Role in Competition Policy’ 20 June 2016 <www.mlex.com> accessed 25 October 2017. 159 Case T-65/89 BPB Industries and British Gypsum v Commission [1993] ECR II-389. 160 Huawei (n 77) is another example of an abuse committed in the non-dominated market for implementing a standard in order to protect the SEP-holder’s position in its dominated market. 161 Sot. Lélos (n 134). 162 ibid, para 67. 163 ibid, para 68; cf the second abuse found in AstraZeneca (n 1), which meant that AZ was not allowed to withdraw its drug, at least not by deregistering the marketing authorisation for that drug. 164 ibid, paras 69–70 and case-law cited. 165 As noted in the introduction, if the rule of law is a national measure, the Member State may infringe art 4(3) TEU in conjunction with art 102 TFEU. 166 Microsoft Appeal (n 98), para 1344. 167 See the important clarification provided by the Court of Justice as to the need to assess the effects of exclusivity rebates when (as seems very likely) a dominant firm adduces evidence that its conduct did not have a foreclosure effect: Case C-413/14 P Intel v Commission EU:C:2017:632, paras 137–38. 168 Subject, of course, to the point about dominant firms not arrogating the task of public authorities to themselves, on which see Case T-30/89 Hilti v Commission [1991] ECR II-1439, paras 118–19. © The Author 2017. 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The new frontiers of Article 102 TFEU: antitrust imperialism or judicious intervention?

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Abstract

Abstract The purpose of this article is to examine whether and to what extent Article 102 of the Treaty on the Functioning of the European Union is being applied to more and more practices with less and less regard for the rules, procedures and remedies provided by other fields of law that also apply to those practices. It argues that the case-law and decisional practice under Article 102 reveals both signs of ‘antitrust imperialism’ and cases that, inevitably, turned on their particular facts and circumstances. It concludes by offering six propositions that appear to inform the application of Article 102 to conduct of dominant firms that is also subject to other legal rules. I.Introduction EU competition law applies to an ever-wider range of economic activities and sectors and continually throws up fresh questions and challenges. The expansion appears to show no signs of abating under Article 102 Treaty on the Functioning of the European Union (TFEU). The EU case of AstraZeneca v Commission1 and the UK case of Reckitt Benckiser2 reveal that a dominant firm’s compliance with regulatory procedures for deregistering marketing authorizations for medicinal products may nevertheless infringe Article 102. In June 2017 the European Commission imposed a record fine of €2.42 billion on Google Inc for violation of Article 102.3 The Commission found that Google had abused its dominant position in general online search by giving an illegal advantage to another Google product, its comparison shopping service. Specifically, Google was found to have systematically given prominent placement to its own comparison shopping service, while at the same time demoting competing comparison shopping services in its search results.4 Separately, Gazprom, the State-backed Russian gas supplier, reacted to the Commission’s objections to the fairness of pegging its gas prices to oil prices by asserting that it ‘adheres to all the norms of international law and national legislation in the countries where the Gazprom Group conducts business’;5 although it has also sought to settle the case amicably. Meanwhile, the Bundeskartellamt, the German competition authority, is investigating whether Facebook has abused a dominant position by imposing terms of service that are said to be incompatible with data protection rules.6 What these different practices have in common is the fact that they are subject not only to competition law but also to (at least) one other branch of law, whether in the form of regulation, intellectual property law or data protection. Whether one agrees with it or not, it is undeniable that Article 102 TFEU has been applied to a wide range of business practices and sectors. The aim of this article is to examine whether Article 102 is being applied to more and more practices with less and less regard for the rules, procedures, and remedies provided by other fields of law that also apply to those practices. Some commentators take the view that EU competition law and policy should not trespass on turf that is properly subject to other areas of law. For example, Sir Robin Jacob has strongly criticized the competition authorities in the EU for ‘harassing inventive industries’, and has deprecated the authorities’ quest ‘ for instant gratification in the shape of lower prices to consumers now at the expense of the benefits of delayed gratification in the shape of innovation for the future.’7 His criticism was, essentially, that intellectual property rights confer exclusivity upon their owners for a reason, namely to encourage innovation, and those rights should be neither limited nor undermined to satisfy the scruples of competition authorities. This criticism has been levied in particular at competition law investigations into prices for branded and generic drugs in the pharmaceutical sector,8 which is known for its high levels of investment in research and development. Other commentators argue, however, that the ‘competition law shows its traditional power as the field of law that serves as a “repair service” for other fields of economic law that lack sanctioning mechanisms – at least as long as a dominant company is involved’.9 The Court of Justice has made clear that the reach of Article 102 TFEU is not cut down simply because the conduct in question complies with another legal rule.10 If the ‘other rule’ requires conduct prohibited by Article 102 and is imposed by national law, then the relevant Member State may itself infringe Article 4(3) Treaty on European Union (TEU) in conjunction with Article 102 TFEU.11 If it is another rule of EU law that gives rise to conduct that would infringe Article 102 TFEU, the question is how the other rule relates to Article 102. Article 103(2)(c) TFEU provides that the Council may adopt regulations or directives ‘to define, if need be, in the various branches of the economy, the scope of the provisions of Articles 101 and 102’.12 Otherwise, the Treaty (in the form of Article 102 TFEU) has primacy over secondary EU legislation, but of course has to be reconciled with other primary EU law.13 The point can be tested in the following way: consider a hypothetical scenario in which a dominant firm destroys the manufacturing facilities of its principal competitor. Can such a conduct ever amount to an abuse of a dominant position? An immediate and obvious answer is ‘no’, because such conduct is criminal and should be dealt with by criminal law. Moreover, it could be argued that such conduct has nothing to do with the dominant firm using its market power to exploit consumers or exclude competitors. Indeed, that was exactly how one judge at first instance responded to such a hypothetical:14 For a dominant supplier to arrange to have a competitor’s factory blow up is a tort and may well strengthen his dominant position, but I do not see how it can be called an abuse of his dominant position. The same is true of other torts such as malicious prosecution. On the other side of the ledger, it could be argued that the fact that conduct is criminal (or contravenes some other law) should not prevent it from also being a violation of Article 102 TFEU. It is possible to abuse a dominant position without actually exercising or relying on market power.15 Rather, the question is whether the dominant firm was seeking to compete by using means other than those based on the merits.16 The EU Courts have been careful not to define or limit what may amount to ‘competition on the merits’. In Intel v Commission17 the Grand Chamber of the Court of Justice repeated what it had said in Post Danmark I,18 that competition on the merits may, by definition, lead to the departure from the market or the marginalization of competitors that are less efficient and so less attractive to consumers from the point of view of, among other things, price, choice, quality, or innovation. The Court also emphasized that Article 102 TFEU prohibits a dominant undertaking from, among other things, adopting pricing practices that have an exclusionary effect on competitors considered to be as efficient as it is itself and strengthening its dominant position other than by competition on the merits.19 Thus, ‘competition on the merits’ means that competitors that are as efficient as (or more efficient than) the dominant firm may compete and consumers to base their purchasing decisions on their assessment of who offers the best price and the best quality product or service. Conversely, competition on the merits does not encompass obtaining a competitive advantage by destroying a rival’s factory or by disseminating ‘misleading and disparaging information’ about the quality and safety of one of a competitor’s products.20 The remainder of this article will examine these issues further and is structured as follows. The second section will examine the recent interpretation and application of Article 102 TFEU in four areas, all of which overlapped with a different area of law and were controversial. The purpose of that section will be to see if competition law has an imperialist streak and thereby overrides other areas of law. This will be followed by a third section, which discusses six possible limits on the substantive scope of Article 102. Some of those limits are well-established, such as non-economic activity falling outside the scope of the competition rules; others are perhaps less well known, but no less important, such as the principle of proportionality. The article concludes by offering some guiding principles in Section IV. II. Signs of ‘Imperialism’ under Article 102? The proper scope of Article 102 can be traced back to the earliest commentary on Article 102. In 1970, René Joliet wrote that conduct should be unlawful under what was then Article 86 European Economic Community (EEC) (now Article 102 TFEU) if, but only if, there was ‘ monopolistic exploitation of the market’.21 In his view, Article 102 was not concerned with ‘ the interference with other firm’s freedom to compete and the use of exclusionary practices’ to maintain or strengthen a dominant position.22 His view was however rejected by the first judgment concerning Article 102: Europemballage Corporation and Continental Can Co Inc v Commission.23 As is well-known in competition law circles, the Commission objected under Article 102 to Continental Can acquiring 80 per cent of the shares and convertible debentures of a competitor, Thomassen and Drijver-Verblivan. The Commission’s view was that the acquisition would practically eliminate competition in the German markets for meat cans, fish cans, and metal tops for glass jars. Starting as it meant to go on, the Court of Justice held it was necessary to interpret Article 102 in the light of the spirit of the Treaty generally. Article 3(f) EEC at the time (now Protocol 27 to the TEU and TFEU) required the institution of a system ensuring that competition in the common market is not distorted.24 With this aim in mind, the Court held that in principle a dominant undertaking involved in a merger that substantially fetters competition could infringe Article 102.25 It is not necessary to limit Article 102 to direct exploitation of consumers. Nor is it necessary for a dominant firm to use its market power in order to commit an abuse, although the degree of market power may well be relevant to whether a practice is capable of having an exclusionary effect.26 Since the seminal judgment in Continental Can, the trajectory of the law and policy under Article 102 has sought to protect consumers, the proper functioning of the internal market and genuine undistorted competition. For example, it is not necessary for the dominance, the abuse, and the effects of the abuse all to be in the same market.27 Furthermore, Article 102 has been interpreted and applied broadly to protect consumers, the competitive process and individual competitors, insofar as their interests cannot be separated from the maintenance of an effective competition structure.28 Recent enforcement continues to explore (some would say stretch) the outer boundaries of the law and policy under Article 102. It is the author’s view that the limits of Article 102 should depend on whether there is an act (or omission) of a dominant undertaking that distorts the competitive process or is directly exploitative of consumers. A different view would be to draw the outer boundary of Article 102 by reference to the existence of another law or a regulatory regime that controls the impugned behaviour, in which case competition law might be excluded, or rendered unnecessary, by the operation of that law or regulation.29 Four matters from enforcement in recent years have been selected as contributing to this debate; they are: the behaviour of dominant undertakings that is also subject to controls and obligations imposed by sector-specific regulation; the behaviour of dominant undertakings that is also covered by specific procedures under patent law, such as opposition procedures and litigation; an owner of a standard-essential patent (‘SEP’) that holds a dominant position and tries to enforce the claims of that patent by seeking an injunction from a court; and the alleged misappropriation by a dominant undertaking of third party content that is protected by intellectual property rights. Each matter will be discussed in turn below, before returning to the more general question as to whether recent cases demonstrate a tendency for EU competition law to override the enforcement of other laws and, even if there is such a tendency, whether the cases are nevertheless examples of judicious intervention under Article 102 TFEU. Article 102 and regulatory controls applied to dominant undertakings The first matter of major significance is the interaction between competition law and policy, on the one hand, and sector-specific regulation, on the other. Regulatory controls are often imposed on undertakings that have significant market power, for example not to discriminate unduly or to share essential facilities, in the absence of effective competition. A threshold question that arises is whether only regulation should apply to regulated undertakings. In other words, should a regulatory framework serve as a basis for implied immunity from competition law?30 As a general proposition, the existence of a regulatory regime designed to remedy and avoid competitive harm supplants the need for, and application of, US antitrust law.31 Even if regulation is not specifically designed to avoid such harm, the regulatory requirements may still take precedence over antitrust law. For example, in Credit Suisse Securities (USA) LLC v Billing32 the US Supreme Court interpreted the US securities laws as implicitly precluding the application of antitrust law to investment banks underwriting an initial public offering and imposing certain terms of sale upon potential investors. In reaching that conclusion, the Court was specifically concerned by the burdens of antitrust litigation and the risk ‘ that antitrust courts are likely to make unusually serious mistakes’ that might discourage underwriting syndicates from behaving in ways that are permitted or even encouraged by securities law.33 Alternatively, where a regulatory scheme exists, it may be thought that the additional benefit to competition provided by the enforcement of antitrust law is likely to be small. In Verizon Communications v Law Offices of Curtis VTrinko, LLP34 the US Supreme Court rejected an allegation that Verizon was guilty of monopolisation by denying interconnection services to competing telephone companies. The Court rejected the allegation because it went much further than the already extensive regulatory provisions for network access and, in any event, the ‘ cost of false positives counsels against an undue expansion of §2 liability cost of false positives counsels against an undue expansion of §2 liability’. By contrast, regulatory obligations do not necessarily or impliedly pre-empt the application of EU competition law. Anti-competitive conduct is excluded from the scope of Articles 101 and 102 TFEU only if it is required by the legal framework or if the regulatory obligations preclude the possibility of competitive conduct.35 In Deutsche Telekom (DT),36 the Commission decided that DT had abused its dominant position for charging its competitors for accessing the local loop (last mile connecting the telecoms network to residential homes) a price higher than that paid by DT’s own retail customers. DT’s margin squeeze made it impossible for competitors as (or more efficient than) DT to compete for subscribers in the downstream broadband market in Germany. An important feature of this case was the fact that RegTP, the German telecoms regulator at the time, had specifically reviewed and approved DT’s wholesale prices. One of the questions for the Court of Justice was whether RegTP’s approval meant that Article 102 could (or should) not be applied to DT’s prices. The Court gave a clear answer to the question: DT’s special responsibility under Article 102 was unaffected by RegTP’s actions and views. The mere fact that DT may have been encouraged by the intervention of RegTP to maintain the pricing practices that led to the margin squeeze of downstream competitors did not absolve DT from liability under Article 102 TFEU.37 Whilst the regulatory framework and RegTP’s intervention were relevant as part of the legal context, they did not prevent DT from adjusting its retail prices and thus bearing responsibility for having engaged in an anti-competitive margin squeeze. It is not so much that Article 102 ignored or superseded DT’s regulatory obligations as those obligations did not prevent or remedy the abusive margin squeeze. What lies behind the different approach taken by the US and EU to applying competition law to the behaviour of regulated undertakings that hold a monopoly or dominant position? The fear of mistaken inferences has clearly influenced the modest way that the US Supreme Court has applied antitrust law in recent years—or, more accurately, has refrained from applying antitrust law—as it is deemed to be more important that legitimate pro-competitive behaviour is neither inhibited nor censured.38 The US courts and agencies have tended to have less confidence in enforcement of competition law than their European counterparts (in particular when antitrust law is used as a means of expanding liability beyond the baseline established by sector-specific regulation). The approach and philosophy in the EU is quite different. The approach in the EU is generally to impose regulatory obligations where there is ineffective competition in a particular sector39 and in any event to apply competition law to undertakings in all sectors. The philosophy in the EU was neatly summarized by Philip Lowe, a former Director-General of DG COMP, when he said that ‘as head of a competition authority charged with protecting consumer welfare, I am at least as concerned about false negatives, i.e. under-enforcement, as I am about false positives, i.e. over-enforcement’.40 This would seem to be for three reasons in particular. Firstly, the even-handed concern about false negatives and false positives makes sense when many regulated utilities in the EU are, to a greater or lesser extent, dominated by former State-owned monopolies operating at all levels of trade.41 An obvious implication of such market structures is that the competitive process is embryonic and is therefore more vulnerable to anti-competitive foreclosure. Indeed, it is noticeable that the European Commission has taken action against the exclusionary and/or exploitative behaviour of incumbent firms in a number of regulated sectors, including gas,42 electricity,43 telecommunications,44 railway transport,45 to name just a few. The importance of such action should not be under-estimated. In cases where the competent regulator has either been too weak or even ‘captured’ by the incumbent operator, the Commission’s enforcement of EU competition law has simply been to do what was necessary to protect competition. In the UK, the Government46 has similarly been keen for sectoral regulators to apply competition law within their respective spheres of activity more often than has been the case to date.47 A second reason in favour of the application of Article 102 to regulated undertakings is that EU competition law and regulation share the same overriding objective. For example, the common regulatory framework for electronic communications and Article 102 are both founded on the Union’s commitment to establish an internal market.48 They both pursue the same specific goals of competition, efficiency, and consumer welfare and both apply the same concepts; the regulatory idea of ‘significant market power’ has been assimilated to that of a dominant position under Article 102.49 Former Commissioner Monti went as far as to say that ‘[r]egulatory policy cannot be seen anymore as independent of competition policy: it must be seen as a part of a broader set of tools of intervention on the economy based on competition analysis principles’.50 This suggests that economic regulation and competition law can and should complement one another in terms of their approach (regulatory intervention in relation to anticipated market failure and, where appropriate, enforcement of Article 102 to punish and deter the abuse of market power) and outcomes (ex ante regulatory controls and/or ex post fines and directions issued under competition law). Indeed, sometimes intervention under competition law produces an outcome akin to regulation. A series of investigations by the Commission into the practices of dominant firms allegedly hindering competitors’ access to gas and electricity infrastructure are examples of such intervention; they all culminated in legally-binding commitments that not only opened up those markets but also regulated the terms of access.51 A third reason, which has been discussed extensively elsewhere,52 is the EU has sought to cultivate a more balanced approach to public and private enforcement than that exists in the US. Admittedly, this reason is neither solely nor specifically concerned with regulated sectors. However, it does help to explain the different way that the US and EU have responded to the existence of regulatory structures. In the US, Calkins and Kovacic have both used the term ‘equilibrating tendencies’ to explain how enforcement authorities and courts have used the means within their control—that is to say, bringing prosecutions and setting the standards on liability—to limit the excesses of private plaintiffs (and their lawyers) pursuing claims for treble damages.53 These equilibrating tendencies explain why the US courts have progressively and profoundly narrowed the scope of antitrust laws in general and the role of those laws in regulated sectors in particular.54 Such tendencies are unnecessary in the EU. Historically, they were unnecessary because the competition rules were, as often as not, enforced by public authorities acting in the public interest.55 More recently, private enforcement has emerged, indeed flourished, in some Member States of the EU; however, the features of the US system that encourage rampant private enforcement—eg lawyers acting on contingency fees who are enticed by the prospect of juries awarding treble damages—are noticeably absent from the legal systems in the EU. This is unlikely to be changed by the implementation of the Damages Directive with effect from 27 December 2016.56 While the Directive seeks to facilitate private actions for damages, it also seeks to coordinate those actions with effective public enforcement.57 For example, the Directive provides for proportionate disclosure of evidence (Article 5(1)-(3)), including from the file of a competition authority in certain circumstances (Article 6(4)-(5)); however, it also imposes limits on disclosure: courts cannot order disclosure of leniency statements and settlement submissions (Article 6(6)). Thus, a balance is to be struck between helping claimants to overcome the evidential difficulties of proof and preserving the effectiveness of important tools for public enforcement.58 If the hoped-for balance emerges in practice, there should be no need for the competition authorities and courts of the EU to adopt the kind of equilibrating tendencies that have so clearly affected US antitrust law. Misuse of patent procedures Another example of Article 102 TFEU being applied to a new practice in a new context, and with a measure of controversy,59 is the case of AstraZeneca v Commission (AZ).60 The Commission found that AZ had abused its dominant position in two ways: first by misleading patent offices into granting an extended period of patent protection for a drug used to treat gastrointestinal conditions (‘Losec’); and, secondly, by misusing the procedures for marketing anti-ulcer medicines. Both abuses had the common aim of delaying the arrival of competing non-branded (generic) products onto the market, and thereby preserved supra-competitive prices and profits. Each abuse will be discussed in turn below. AZ’s first abuse consisted in making highly misleading representations to patent offices and courts in order to obtain or maintain supplementary protection certificates (‘SPCs’) to which AZ was not entitled, and thereby keep for as long as possible its monopoly on the proton pump inhibitor market.61 The Commission and the EU Courts held that such conduct fell outside the scope of competition on the merits. One of the arguments raised by AZ before the Court of Justice was that the General Court had erred in law in holding that the mere fact of applying for an SPC was sufficient to constitute an abuse. In so doing, the General Court had allegedly conjured up a new ‘abuse in itself’ without considering whether or not competition was affected. Linked to this argument is the implication that Article 102 was being cast adrift from its moorings in a system ensuring that competition in the internal market is not distorted. The Court of Justice rejected all this. Misleading a public body does not, by itself, constitute an abuse, and nor was that the implication of the Commission’s infringement decision. Rather, it is also necessary to demonstrate that a misrepresentation has a potential anti-competitive effect on the market.62 AZ’s conduct was held to be abusive precisely because it had attempted to mislead, and in some instances misled, patent offices with the aim of protecting its patent-enabled monopoly from generic competition for as long as possible.63 It is well-established that it can be abusive for a dominant firm to maintain or strengthen its position—AZ did that in a way that had not been done before, by making misleading representations. Whether or not the competitive process had actually been distorted was irrelevant.64 As the Commission has recognized, there may be circumstances where it is not necessary to carry out a detailed assessment before concluding that the conduct in question is likely to result in consumer harm. AZ’s conduct appears to have raised obstacles to competition without any redeeming virtue and, therefore, its conduct was not competition on the merits.65 Separately, AZ objected to the Commission’s decision on the basis that there already were remedies under patent law for revoking patents that ought not to have been granted, such as opposition procedures before the patent office and/or litigation seeking to revoke an invalid patent. These procedures, so AZ argued, should limit the application of Article 102 TFEU to behaviour that actually has resulted in anti-competitive effects. The General Court rejected this argument and held that: Where behaviour falls within the scope of the competition rules, those rules apply irrespective of whether that behaviour may also be caught by other rules, of national origin or otherwise, which pursue separate objectives. Similarly, the existence of remedies specific to the patent system is not capable of altering the conditions of application of the prohibitions laid down in competition law and, in particular, of requiring, in cases of behaviour such as that at issue in the present case, proof of the anticompetitive effects produced by such behaviour.66 In other words, Article 102 is not ousted by the fact that some form of misconduct may also be rectified under another set of rules. The same point emerges from the fate of AZ’s challenge to the other abuse that it was found to have committed. AZ’s second abuse consisted of it deregistering marketing authorizations for Losec in three Member States, with the intention of delaying market entry of equivalent generic drugs and preventing parallel trade. Deregistration prevented manufacturers of generic drugs from obtaining regulatory approval under an abridged procedure and so delayed their entry. AZ strenuously argued, however, that all it had done was what the relevant EU legislation entitled it to do.67 That is to say, AZ claimed its behaviour was not abusive because it was lawful under the EU legislation on marketing authorizations. The Court of Justice rejected that argument and held that: [T]he illegality of abusive conduct under Article [102 TFEU] is unrelated to its compliance or non-compliance with other legal rules and, in the majority of cases, abuses of dominant positions consist of behaviour which is otherwise lawful under branches of law other than competition law.68 It is submitted that the General Court’s and Court of Justice’s conclusions are convincing on this point, even though the judgments did not really explain why. Three considerations are relevant. First, as a matter of logic and policy, a remedy in one branch of law does not (or at least not necessarily) displace the need for and desirability of action in another branch of law.69 It is clear that patent law has established procedures for challenging patents that ought not to have been granted. But it is not at all clear why the existence (or the invocation) of those procedures should entitle a dominant undertaking to behave in a way that makes it more difficult for competitors to enter the market. The rationale for applying competition law in those circumstances is to achieve the deterrent punishment for practices designed to foreclose access to the market. It should be added, however, that where a patent holder takes advantage of a right or power that is conferred by patent law, it will normally be necessary to consider whether, in doing so, the patentee is furthering an affirmative objective of the patent legislation. Where that is the case, it is submitted that the concept of objective justification provides the most appropriate mechanism within Article 102 TFEU to strike the balance (or resolve the conflict) between the two provisions.70 That was not the case in AstraZeneca. A second consideration is that conduct should not be condemned as abusive in the abstract. As Advocate General Jacobs rightly observed in Syfait, the factors that go to demonstrate that an undertaking’s conduct is abusive or otherwise are highly dependent on the specific economic and regulatory context in which the case arises.71 This factor is also pertinent to the facts of AstraZeneca v Commission—AZ had gone way beyond a legitimate strategy of minimizing the erosion of its sales and behaved in a way that was intended to hinder the introduction of competing products and parallel imports. AZ deregistered the marketing authorizations for Losec capsules without objective justification; it was simply intended to make it more difficult for rival manufacturers to enter the market. A third consideration is that ‘ private economic actors normally act in their own and not in the public interest when they conclude agreements between themselves’.72 It follows that the consequences of their conduct are not necessarily in the public interest. Undertakings will always operate within a national legal framework and competition authorities should be able to scrutinize private actors’ behaviour even where it complies with branches of law other than competition law. Of course, where an undertaking is entrusted with a service of general economic interest, it may have recourse to Article 106(2) TFEU in defence of conduct that is otherwise in breach of Article 102 TFEU. But that possibility does not mean that compliance with other legal rules should cut down the scope of the EU competition rules. Injunctive enforcement of SEPs There is an unavoidable tension both within competition laws and between competition law and intellectual property law as to the balance to be struck between incentives and opportunities to innovate. An innovator’s incentives are maximized where he or she is able to capture, to the greatest possible extent, the profits that flow from his or her innovation. Necessarily, however, that must limit the opportunities that others have to exploit the results of that innovation. In this regard, Lord Hoffmann has spoken (extra-judicially) about the contrast between:73 the ‘structural’ nature of IP rights and the ‘behavioural’ nature of competition law: IP rights provide the overall structure for the protection and exploitation of intellectual creations, while competition law addresses individual instances of aberrant market behaviour. He observed that, where the courts regularly seek to restrict or modify the application of IP rights on a case-by-case basis in order to protect the perceived interests of competition policy, this is a signal that the regulatory process has gone wrong. An issue that tested the interface between intellectual property and competition law is whether threatening, seeking and/or obtaining an injunction from a court to enforce the claims of a SEP could be an abuse of a dominant position. It has been argued that competition law should be slow to interfere with the basic rights of patent holders to prevent others from using their inventions.74 There is a risk, so it is argued, that competition law might be misused by firms that use the teachings protected by a SEP without concluding a licence with them. Others make the case for applying the competition rules by drawing attention to the risk that SEP owners might disregard their commitment to grant licences on fair, reasonable and non-discriminatory (FRAND) and thereby exclude undertakings that have invested in the preparation, adoption, and application of a standard.75 The decision of the Commission in Motorola Mobility76 and the preliminary ruling of the Court of Justice in Huawei Technologies v ZTE Deutschland77 establish that a dominant undertaking can infringe Article 102 by seeking an injunction of a SEP against someone that is willing to take a licence under that patent on fair, reasonable and non-discriminatory (commonly referred to as ‘FRAND’) terms. Do these cases support a thesis that the contours of Article 102 TFEU are expanding and encroaching on other areas of law? Before answering that question, it is right to emphasize the exceptional circumstances in which this issue arises. In outline summary, standardized technologies are increasingly common and fundamental so that products from different firms in different countries can work and interoperate with one another. Once a particular patented technology is chosen as an industry standard (eg 4G), in certain circumstances the owner of that SEP may become an unavoidable trading partner for anyone that wishes to implement the standard in the products they sell (eg mobile phones). Whether the SEP-owner actually becomes an unavoidable trading partner is, of course, a question of fact. In the event the Commission clearly explained the potential problem in its commitment decision in Samsung – Enforcement of UMTS Standard Essential Patents as follows: The industry is thus locked-in, with the risk that each holder of UMTS SEPs may be able to behave in anti-competitive ways, for example by holding-up implementers after the adoption of the standard either by refusing to license the necessary IP or by demanding excessive royalty fees.78 To prevent this hold-up problem, standard-setting organizations provide for the possibility that the owners of SEPs promise to license their patents on fair, reasonable, and non-discriminatory terms.79 SEP owners that hold a dominant position80 are then expected to engage with would-be licensees in good faith and for a reasonable period of time. In Motorola – Enforcement of General Packet Radio Service (GPRS) Standard Essential Patents the Commission decided that Motorola had abused its dominant position by seeking and obtaining an injunction to prevent Apple from using its GPRS technology, even though Apple had shown itself to be willing to negotiate in good faith on FRAND terms and in a timely fashion. The Commission concluded: The finding in this Decision that Motorola has abused a dominant position by seeking and enforcing an injunction against Apple in Germany on the basis of the Cudak GPRS SEP, whilst taking into account the public interest in maintaining effective competition, respects the requirement that a fair balance be struck between the different rights and freedoms protected by the Union legal order: Motorola’s rights linked to IP, Motorola's and Apple’s right of access to a tribunal, and the freedom to conduct a business of Apple and other potential licensees that are not unwilling to enter into a licensing agreement on FRAND terms and conditions.81 In Huawei the Court of Justice acknowledged the need to strike a balance; it referred to the interest in maintaining free competition, on the one hand, and the requirement to safeguard a proprietor’s intellectual-property rights, on the other.82 The Court went on to hold that Article 102 does not prohibit a dominant undertaking that holds a SEP and has given a FRAND commitment from bringing an action for damages caused by an infringement of its patent.83 The Court of Justice held, essentially, that a dominant undertaking that owns a SEP and has given an irrevocable commitment to license that patent on FRAND terms does not abuse its dominant position by bringing an action for infringement and seeking an injunction as long as: prior to bringing that action, the proprietor has, first, alerted the alleged infringer of the infringement complained about by designating that patent and specifying the way in which it has been infringed, and, secondly, after the alleged infringer has expressed its willingness to conclude a licensing agreement on FRAND terms, presented to that infringer a specific, written offer for a licence on such terms, specifying, in particular, the royalty and the way in which it is to be calculated, and where the alleged infringer continues to use the patent in question, the alleged infringer has not diligently responded to that offer, in accordance with recognised commercial practices in the field and in good faith, this being a matter which must be established on the basis of objective factors and which implies, in particular, that there are no delaying tactics.84 Thus the application of Article 102 depends not only on how the dominant firm behaves prior to seeking injunctive relief but also on the response of the alleged infringer. In other words, an action for an injunction should not be an abuse of a dominant position if the alleged infringer’s conduct were to be purely tactical and/or dilatory and/or not serious.85 On the other side of the ledger, Article 102 ought to be applied to unfair or unreasonable conduct by a SEP-holder that holds a dominant position: such conduct is at variance with its commitment to grant licences on FRAND terms and disregards an alleged infringer’s willingness to conclude a licensing agreement on such terms. In short, such conduct constitutes is a method different from those governing normal competition; it harms the willing licensees that have invested in the adoption of a standard. In Samsung Electronics Co Ltd v Telefonaktiebolaget LM Ericsson the English Court of Appeal considered the preliminary ruling in Huawei and indicated that, more generally, if a SEP owner were simply to refuse to honour a FRAND commitment it had given it would at least be at risk of contravening Article 102.86 It is against this background that the question whether the enforcement of Article 102 in this standard-setting context implies ‘antitrust imperialism’ or an unjustified expansion of Article 102 must be considered. It is suggested that the answer is no. It would be incorrect to say that these cases mean that dominant firms are no longer entitled to seek or obtain injunctions of SEPs, let alone ordinary patents. It would be equally wrong to go too far in the other direction and insist that seeking injunctive relief should be immune from the application of Article 102 TFEU. What the infringement decision in Motorola and the preliminary ruling in Huawei reveal is the importance of the special circumstances relating to SEPs that are the subject of a voluntary commitment to license on FRAND terms, and the legitimate expectations to which that commitment gives rise.87 They are also quite clear as to the steps that must be taken by a SEP-holder before bringing an action for a prohibitory injunction in order not to be deemed to be abusing its dominant position. What is less clear is what should happen if an iterative process of FRAND offers occurs, but the parties are unable to agree a licence. The Court of Justice simply noted that the parties may ask an independent third party to set the amount of royalties to be paid.88 If the licence terms were to be set by an independent adjudicator, then it seems much less likely that they would be abusive. It is important also to consider whether the case-law and decisional practice under Article 102 disregards other ways to address the hold-up problem described above. In Huawei Advocate General Wathelet suggested that the problem could be mitigated by a standardization body promulgating minimum requirements for the negotiation of FRAND licensing terms, that is to say, to encourage a form of ‘FRANDly conduct’ before marching to the courtroom.89 The SEP owner’s commitment to grant licences on FRAND terms would also be enforceable as a matter of contract law.90 Alternatively, as O’Donoghue and Padilla have pointed out,91 the courts have a discretionary power to grant injunctive remedies and judges could exercise that power by taking into account whether the patentee has offered a FRAND licence and/or the alleged infringer is willing to enter such a licence. It has to be said that each of these alternatives has strengths and weaknesses. The contractual route provides a direct mechanism for resolving disputes between the SEP holder and the alleged infringer. It provides for the possibility of a court determining the range of FRAND terms (something that has never happened in the EU) and the award of compensatory damages for any losses caused by a breach of the FRAND commitment. But the contractual route does not take into account: (i) the unavoidable need for the alleged infringer to use the SEP in order to implement the standard; (ii) the risk of unfair or unreasonable conduct by the SEP-holder that has previously committed to license on FRAND terms; (iii) the fact that an alleged infringer may be ready, willing and able to enter into a FRAND licence; and, if those facts are present, (iv) the resulting anti-competitive effects in the market for implementing the standard. As for the other alternative of the national court taking into account the behaviour of the SEP-holder and alleged infringer when deciding whether to grant an injunction, this would occur only when an action is brought; it would not control pre-action conduct. In England and Wales injunctions are granted on the balance of justice as between the parties and so the interests of consumers might be left out of account. Further, this route would also open up the possibility of different approaches to the injunctive enforcement of SEPs in different jurisdictions across the courts of Member States of the EU. In light of the foregoing, neither of these alternatives means that there is no role for the application of Article 102. There is no single, definitive way to make sure that SEPs are licensed on FRAND terms. Enforcement of the contractual obligation to grant licences on FRAND terms; competition law and the court’s power to grant injunctions co-exist. All three contexts involve considerations of FRAND, and the interesting issue in future will be whether it is necessary to distinguish between them.92 Whether a proposed licence term falls within the range of FRAND terms may even differ depending on whether the licence terms have been consensually agreed or determined by a court (in the context of a contested application for an injunction, including a defence based on competition law). For example, parties may agree to terms for a portfolio licence of multiple patents, including SEP and non-essential patents. Such an agreement, if entered into willingly in the absence of exploitation of market power, should not, of itself, breach FRAND principles. It does not necessarily follow, however, that, in the event of litigation, it is, or should be, FRAND for a SEP owner to offer only bundled licences where the counterparty requests a more limited licence.93 Scraping The introduction mentioned the Commission’s decision in relation to Google Shopping. A different competition law objection that has been levied against Google is that it has abused its dominant position in general online search by misappropriating original content from other websites (a practice that is commonly referred to as ‘scraping’). The allegation was investigated by the US Federal Trade Commission, but was dropped after Google gave voluntary assurances to change the way that it displays snippets of information from other websites.94 Notably, one of the Commissioners issued a strongly-worded statement to the effect that he could discern no factual or legal basis for a claim under US antitrust law based on scraping. He was concerned in particular by ‘an unwarranted and unprincipled expansion’ of antitrust liability when remedies already exist for misappropriation under copyright and/or tort law.95 Interestingly, the German Bundeskartellamt decided to close the file on an allegation that Google had attempted to circumvent new copyright legislation that is designed to prevent scraping.96 Separately, the European Commission is investigating the way Google allegedly uses, without consent, content from competing specialized search services in its own general search results. An example of such content is user reviews of products or services. The theory of harm appears to be that the practice of using third party content to promote Google’s own search services may reduce competitors’ incentives to invest in the creation of original content for the benefit of internet users. If users know that Google’s general online search services contain all the relevant information that is available on the worldwide web, their incentives to visit other sites that contain only a part of that information will be significantly reduced, even if those were the sites from which that information originated. When the Commission tested commitments proposed by Google to address its competition concerns in April 2013, it published a ‘question and answer’ about whether it was relevant that an aggrieved website might be able to sue Google for breach of its intellectual property rights. The Commission’s answer was: Intellectual Property law and competition law are two different bodies of law. Compliance with one does not necessarily imply compliance with the other, just like breaching one does not necessarily imply breaching the other. The Commission has analysed Google’s practice from the point of view of competition law. If Google’s market position in web search gives it the ability to copy and use all relevant information available on the web on its own specialised search services, users may no longer have incentives to visit competing services. Competitors of Google may lose the incentive to innovate or invest in the generation of original content. This competition concern arises whether or not the information copied and used by Google is covered by IP rights.97 This ongoing investigation is quite different, therefore, from earlier cases where Article 102 TFEU has been used to override the refusal to license intellectual property rights in the name of promoting a competitive market and consumer welfare. For example, in Microsoft98 the Commission’s case was that Microsoft had refused to supply an indispensable input for work group servers (ie the communications protocol technology) with the risk that effective competition would be eliminated and, that being so, a compulsory licence could be ordered in the absence of a justification to the contrary (of which there was none). The apparent concern in the Google investigation is different. Google’s conduct is said to be distorting consumers’ choice and stifling innovation because it reduces the incentives of intellectual property owners to develop new, original content. That analysis, if it is indeed the Commission’s position, raises a competition concern that is quite separate from any copyright infringement issues. The concern is to avoid the dulling effect of making it too easy for the dominant firm to exploit third parties’ work, whether protected by copyright or not. The question then is whether a competition authority ought to protect the innovation incentives of specialist search websites or allow a general search engine to improve the content of its search engine results pages. III. The search for the outer limits of Article 102 The foregoing discussion prompts a search for the outer limits of Article 102. Must the wrongdoing consist of a material distortion of the competitive process on a relevant market? Or can Article 102 TFEU be applied to the conduct of anyone that is ‘ in a position to generate the effects which the competition rules seek to prevent’?99 Or can one go even further and argue that Article 102 ought to apply to any form of behaviour that is thought to be inconsistent with proper standards of business morality?100 In seeking to answer these questions, this section will briefly examine six possible limits to the scope of Article 102 TFEU. Express derogations The Court of Justice has held that ‘ where the Treaty intended to remove certain activities from the ambit of the competition rules, it made an express derogation to that effect’.101 An example is Article 42 of the TFEU, which provides that ‘ the rules on competition shall apply to production of and trade in agricultural products only to the extent determined by the European Parliament and the Council’. Another example is Article 106(2) TFEU, which provides that undertakings entrusted with the operation of services of general economic interest may avoid the application of the competition rules if such application ‘obstructs’ the performance of the particular tasks assigned to them. In the absence of such derogations, the EU Courts have rejected arguments based on the distinctive features of the sector concerned or on the policy objectives that might conflict with competition.102 Obviously, express derogations are relevant to determining the ambit of EU competition law. They do not, however, provide a complete explanation as to where to draw the line. As explained further below, judicial practice has developed other ways, notably the concepts of non-economic activity and objective justification, which are also able to ‘switch off’ the prohibition. Implied immunity There have been occasions where the Court of Justice has declined to apply the competition rules in order to avoid a clash with another policy or objective pursued by the Treaty. These occasions weaken the suggestion of an inexorable process of antitrust imperialism. They reveal that the EU Courts have considered competition law and policy against the wider context of the Treaties and in light of the relative importance of different activities of the EU. For example, the TFEU encourages social policy leading to the conclusion of collective agreements on working conditions and wages.103 This objective would be undermined if the Treaty were, at the same time, to prohibit such agreements by reason of their inherent effects on competition. Accordingly, in Albany International BV v Stichting Bedrijfspensioenfonds Textielindustrie104 the Court of Justice held that collective agreements between organizations representing employers and workers setting up a sectoral pension fund, by virtue of their nature and purpose, fell outside the scope of Article 101 TFEU.105 The Albany case appears have been decided on the basis that it is sufficient that the collective bargaining agreement was legitimized by its social objectives stated in the TFEU. The Court did not discuss, for example, whether the restraints were a proportionate way of attaining the social objective which they pursued. That could mean that those elements are immaterial as a matter of principle in a case of that kind or that they were simply not material on the facts. The latter is the better explanation and it is reasonable to expect that the Court would intervene in a collective bargaining case if it could be shown that the agreement had a sufficient negative effect on competition and went beyond what is necessary to attain the social objective; but that is not definitively stated by the Court in that case. The European Free Trade Association (EFTA) Court recently considered the Albany ruling in Holship Norge v Norsk Transportarbeiderforbund106 and pointed out that it did not mean, or imply, that all collective agreements fall outside the reach of competition law since: … to exclude all collective agreements from the reach of competition law would go too far. It would create a legal environment where collective agreements containing provisions restricting competition could be concluded, without there being any judicial review of such restrictions. The EFTA Court went on to hold that the Albany exception for collective agreements did not extend to boycotting a port user in order to persuade it to accept a collective agreement that required the user to prefer a third party’s unloading and loading services to its own employees. Such a provision did not pursue social policy objectives or contribute to securing and improving conditions of work and employment for dockworkers. The unanswered, relevant question for present purposes is whether the Court of Justice would decline to apply Article 102 in order to avoid a clash with another policy or objective pursued by the Treaty. The Albany-style exception is, naturally, focused on collective bargaining arrangements. It is, presumably, the case that a dominant undertaking could rely on such an exception if it were a party to such arrangements. It is an open question whether conduct would fall outside Article 102 if it clearly furthered an objective pursued by the Treaty. In a sense, the question is also moot since the concept of objective justification provides an obvious and well-established way for exclusionary conduct that would otherwise be abusive to be justified if it objectively necessary for a policy pursued by the Treaty.107 As the Commission has pointed out, however, whether such conduct is objectively necessary would need to take into account that it is normally the task of public authorities to set and enforce laws and regulations.108 Non-economic activity Articles 101 and 102 TFEU do not apply to activity which, by its nature, its aim and the rules to which it is subject does not belong to the sphere of economic activity, or which is connected with the exercise of the powers of a public authority.109 Certain tasks, such as the maintenance and improvement of air navigation safety110 and the protection of the environment,111 have been held to be non-economic in nature. The case-law has not developed a single test for identifying which activities are non-economic. However, a recurring characteristic of non-economic activity is that it is something only the State can do. In Höfner and Elser v Macrotron the Court of Justice held: The fact that employment procurement activities are normally entrusted to public agencies cannot affect the economic nature of such activities. Employment procurement has not always been, and is not necessarily, carried out by public entities. That finding applies in particular to executive recruitment.112 (emphasis added). In Ambulanz Glöckner Advocate General Jacobs gave another example of something that only the State can do—deciding whether to grant a licence to run a public ambulance service. According to the Advocate General, this is ‘ a typical administrative decision taken in the exercise of prerogatives conferred by law which are usually reserved for public authorities’.113 This raises a point that helps us to identify the limits of Article 102 TFEU, and indeed of EU competition law generally, namely the type of control that is thought to be appropriate for controlling the behaviour in question. When determining whether or not an activity carried on by the State or a State entity is economic in nature and thus subject to competition law, Advocate General Poiares Maduro has warned that: … the Court is entering dangerous territory, since it must find a balance between the need to protect undistorted competition on the common market and respect for the powers of the Member States. The power of the State which is exercised in the political sphere is subject to democratic control. A different type of control is imposed on economic operators acting on a market: their conduct is governed by competition law.114 Thus, the unique position of public bodies as actors in the public interest and performing the quintessential functions of the State is a sound reason for subjecting them to public law only. Conversely, private firms and public bodies competing on a market ought in principle to be subject to the competition rules.115 Whether the conduct is capable of having anti-competitive effects A different criterion for identifying the contours of Article 102 TFEU could be whether the entity is in a position to generate the effects which the competition rules seek to prevent.116 This criterion was endorsed by the UK Competition Appeal Tribunal in BetterCare v Director General of Fair Trading, a case about a public authority that had contracted out the provision of social care services to a private care home in Belfast.117 The Tribunal took the view that, in the absence of any statutory exclusion, the presumption should be that the competition rules are intended to apply. The Tribunal emphasized the fact that the healthcare trust was accused of discriminatory, exclusionary and unfair trading practices, all of which could fall within the mischief of domestic competition law.118 Such an approach reflects the view—arguably implicit in Articles 106(1) and (2) of the TFEU119—that neither public service obligations nor special or exclusive rights prevent an operator’s activities from being regarded as economic activities. It is submitted, however, that the ability to commit infringements of the rules of competition law is an inadequate and inappropriate basis for drawing the boundaries of those rules.120 There is, first of all, the objection that such an approach is circular: EU competition law only prohibits anti-competitive conduct if it is engaged in by undertakings and one should not, therefore, seek to define an undertaking by reference to such conduct. In this connection, it is important not to elide the ‘undertaking’ issue with the separate question of whether there is any infringement of Articles 101 and/or 102 TFEU.121 Secondly, possibly as a result, an effects-based approach may lead to an over-inclusive definition of undertaking: if private operators do not, and could not, undertake the activity in question—because profit-making would be ‘impossible’—then there is a strong argument that the activity ought to be regarded as non-economic and fall outside of the competition rules, irrespective of the ability to generate anti-competitive effects.122 A third issue is that a purchase falls within the scope of EU competition law only in so far as it forms part of the exercise of an economic activity.123 Procurement for the purposes of social activity is therefore not caught by competition law, even though the purchaser may wield very considerable economic power, even giving rise to a monopsony.124 Interestingly, the Advocate General in FENIN pointed out that, if a criterion based on the effects of conduct were to be adopted, the effectiveness of the rules relating to public procurement would be reduced.125 He did not elaborate on this point, but it might be that he considered that the disputed behaviour in that case—the purchase of medical instruments by the Spanish national health system—ought to have been subject to a different type of control to competition law. Whether conduct leads to an increase in price It might be thought that the application of Article 102 TFEU should be determined by reference to whether or not the behaviour increases prices or is designed to achieve that end. The European Commission has used the term ‘anti-competitive foreclosure’ to describe a situation where effective access of actual or potential competitors to supplies or markets is hampered or eliminated as a result of the conduct of the dominant undertaking whereby the dominant undertaking is likely to be in a position to profitably increase prices to the detriment of consumers.126 This fits with the concern about exclusionary conduct being that it enables the dominant firm to entrench or extend its market power. Furthermore, Article 102 is also directed towards the conduct of dominant firms that use their market power in an exploitative manner (exclusionary effects are not necessary).127 On closer inspection, however, the prospect of ‘increased prices’ cannot be used as the litmus test for applying Article 102 in all cases. Conduct to increase prices does not deserve to be condemned if, for example, it seeks to raise price to the competitive level rather than above it. Introducing competition into a previously monopsonistic market is likely to lead to an increase in prices, but is unlikely to be objectionable in itself. Separately, it is well-established that below-cost price-cutting can be abusive without proof of later recouping the losses through higher prices.128 A different example of the same point is that the Commission may object to pricing practices of a dominant firm that prevent or delay a decline in prices that would otherwise have occurred.129 To summarize: whether exclusionary conduct directly or indirectly increases (or is likely to increase) price is naturally relevant to, but not always determinative of, the application of Article 102.130 Whether conduct is proportionate to the pursuit of a legitimate objective A different limit on the application and scope of Article 102 TFEU is whether the conduct in question is proportionate to any legitimate interest that is being pursued and whether the impugned conduct is likely to limit competition more than is necessary.131 The Court of Justice based its analysis on proportionality in United Brands v Commission.132 The Court acknowledged that it was lawful for an undertaking in a dominant position to pursue a policy of quality when choosing its sellers, but a ban on customers reselling green bananas raised obstacles to trading, ‘ ‘the effect of which went beyond the objective to be attained’ and was therefore abusive.133 In the same case, the Court established a point that has been repeated many times since, that a dominant firm is entitled to protect its own commercial interests if they are attacked, but may only take reasonable steps to do so.134 By contrast, United Brands took unreasonable steps when it refused to supply bananas to a Danish distributor that had taken part in an advertising campaign for one of its competitors.135 In other words, that was not a proportionate protection of United Brands’ commercial interests. In Tetra Pak I Judge Kirschner, acting as an Advocate General to the former Court of First Instance (now General Court), suggested that the principle of proportionality in this context means that: An undertaking in a dominant position may act in a profit-oriented way, strive through its efforts to improve its market position and pursue its legitimate interests. But in so doing it may employ only such methods as are necessary to pursue those legitimate aims. In particular it may not act in a way which, foreseeably, will limit competition more than is necessary.136 This principle has been applied in a wide variety of dominance cases, including a refusal to continue providing access to a local crematorium,137 selective price-cutting by a liner conference in maritime transport,138 to charging a flat-rate royalty for music licensed by a copyright collecting society.139 It is also a constituent element of the concept of objective justification and the efficiency defence, which often referred to by the sobriquet of ‘Article 102(3)’.140 In Streetmap.EU v Google,141 for example, the issue was whether it was an abuse of a dominant position for Google to display only a thumbnail map from Google Maps in its search results. The Court held that such conduct did not appreciably restrict competition in online maps, but, if it were wrong about that, Google’s conduct was in any event objectively justified. The interesting point for present purposes is that the Judge found that proportionality does not simply require the identification of a less anti-competitive alternative measure. That is because ‘ ‘proportionality does not require adoption of an alternative that is much less efficient in terms of greatly increased cost or which imposes an unreasonable burden (at the very least in a case where there is no suggestion that the conduct impugned was likely to eliminate competition)’.142 In other words, as one might expect, proportionality involves consideration of the cost, effectiveness, and practicality of alternatives to the conduct complained about. The foregoing discussion assumes that all types of unilateral conduct should be subject to a single standard of proportionality. It appears, however, that assumption is inconsistent with what the EU Courts have in fact done. While the Court of Justice has pointed out that Article 102 does not envisage any variation in form or degree in the concept of a dominant position,143 it has applied the proportionality principle with particular stringency when a firm enjoys a position of super-dominance or quasi-monopoly. One of the exceptional features of Compagnie Maritime Belge Transport,144 which supported the Court’s finding that above-cost selective price cuts were abusive, was the fact that the liner conference, Cewal, held a market share of 90 per cent.145 Advocate General Fennelly explained the position very clearly: … the Court of First Instance committed no error of law in finding that the response of Cewal members to the entrance of G&C [a competitor] was not ‘reasonable and proportionate’. To my mind, Article [102] cannot be interpreted as permitting monopolists or quasi-monopolists to exploit the very significant market power which their super-dominance confers so as to preclude the emergence either of a new or additional competitor. Where an undertaking, or group of undertakings whose conduct must be assessed collectively, enjoys a position of such overwhelming dominance verging on monopoly, comparable to that which existed in the present case at the moment when G&C entered the relevant market, it would not be consonant with the particularly onerous special obligation affecting such a dominant undertaking not to impair further the structure of the feeble existing competition for them to react, even to aggressive price competition from a new entrant, with a policy of targeted, selective price cuts designed to eliminate that competitor.146 The UK Competition Appeal Tribunal adopted a similar approach to below-cost price-cutting by a pharmaceutical undertaking that was seeking to respond to competition that had emerged after its patent had expired in Napp Pharmaceutical Holdings Ltd v Director General of Fair Trading.147 The Tribunal held Napp, the dominant undertaking, had charged prices well below average variable costs, and targeted competitors on a selective basis, while having no lawful objective justification for doing so. This was a disproportionate and unlawful response to competition.148 It is clear, therefore, that the principle of proportionality informs the law and policy under Article 102. Briefly, reverting to Huawei, although the judgment does not refer to that principle in terms, it is quite clear that it played a role and rightly so—it would be neither reasonable nor proportionate for the owner of a SEP that has committed to licence that patent on FRAND terms then to ignore that commitment and seek an injunction against a counterparty that is willing to enter into such a licence. That is the key point that underpins the judgment and, moreover, the Commission’s infringement decision in Motorola, and, while those cases may be controversial in some quarters,149 the principle of proportionality gives that point a degree of legal pedigree. The link between dominance and abuse In Tetra Pak II the Court of Justice held that the application of Article 102 presupposes a link between the dominant position and the alleged abusive conduct, which is normally not present where conduct on a market other than the dominated market produces effects on that distinct market.150 This follows, of course, from the wording of the Treaty, referring to an abuse of a dominant position as opposed to a free-standing abuse by an undertaking on any market of any kind. It also follows from the judgment in Intel v Commission,151 where the Court of Justice clarified its earlier seminal judgment in Hoffmann-La Roche152 on exclusivity rebates and held that, where a dominant firm adduces evidence that its conduct has no foreclosure effect, the Commission must analyse, inter alia, the extent of the undertaking’s dominant position on the relevant market (since that affects the capacity of its conduct to foreclosure competition). It is well-established case-law that conduct on a non-dominated market that is closely associated with a dominated market, but does not affect the dominated market, can be abusive, but only in ‘special circumstances’. It is frustrating, but perhaps unavoidable, that the ‘special circumstances’ have never been clearly defined by the Court. They have arisen in two cases to date: Tetra Pak II153 and Microsoft.154 In Tetra Pak II, the special circumstances included Tetra Pak holding quasi-monopolistic positions in the dominated markets; Tetra Pak’s shares of each of the non-dominated markets approaching dominance; there were significant cross-over technologies used in the dominated and non-dominated markets; and Tetra Pak faced competition from the same competitor in the dominated and non-dominated markets.155 The same features were present in the Microsoft case that linked Microsoft’s dominant position in operating systems for personal computers to the closely related market for work group servers.156 Reverting to one of the ongoing investigations mentioned in the introduction, the ongoing case against Facebook in Germany, it appears that the link (however attenuated it may be) between dominance and abuse will be important. In this regard, it is relevant to note that the German and French competition authorities have jointly analysed the implications and challenges resulting from data collection in the digital economy and other industries.157 The European Data Protection Supervisor has also spoken of the need for greater clarity as to the interaction between the laws governing consumer protection, data protection, and competition.158 Space precludes a detailed discussion of that fascinating topic here. Suffice it to note that the German and French competition authorities recognize that the accumulation of vast quantities of data is not, in itself, a competition problem. But they go on to identify the ‘close link’ that may well exist between some (often online) markets on which a firm is dominant, on the one hand, and the gathering of huge amounts of data that is used to reinforce or strengthen the firm’s position in the dominated market. What this shows is that, while any investigation into the collection and use of online data by a dominant firm would be ground-breaking in the sense that it has not been done before, it does not appear to stretch the substantive scope of Article 102. Indeed, it is not as far-reaching as Tetra Pak II and seems much closer to the less extreme case of BPB Industries,159 where the dominant position held in the plasterboard market was held to be of relevance to the conduct of BPB on the market for plaster, since that conduct strengthened BPB’s position on the dominated market and created barriers to entry into that market.160 Whether the same can be said for the data collected and used by Facebook is unclear; the outcome of the German competition authority’s investigation is eagerly awaited. IV. Conclusion The title of this article asked whether recent enforcement under Article 102 TFEU shows signs of ‘antitrust imperialism’ or provides examples of judicious intervention. The answer is both. Imperialism commonly refers to a policy of extending a country’s power and influence over another country (and is, as often as not, controversial). There is no doubt that Article 102 has been applied in new sectors and to new practices on dominated or associated markets. It is also clear that the Article 102 is not restrained by the existence of other legal rules or a dominant firm’s compliance with those rules. Imperialism may not be quite the right term to describe these developments, but Article 102 certainly has a broad remit. The key point is really that intervention under Article 102 appears to have been warranted and justifiable in the decisions discussed above. Article 102 is, indeed must be, sensitive to the relevant legal and regulatory framework. The point is neatly illustrated by the case of SotLélos,161 which concerned whether GlaxoSmithKline was entitled, under Article 102, to reduce supplies of a drug to wholesalers in Greece to the extent that those supplies were intended for export to another Member State. That question arose in circumstances where wholesalers wanted supply in Greece (that regulated prices at a low level) and intended to export the drugs to Member States that regulated prices at a much higher level. The Court of Justice held that State-controlled mechanisms of price regulation in the pharmaceutical sector do not preclude the application of Article 102.162 But the Court went on to recognize that the parallel trade in question was largely driven by those State mechanisms, and: Furthermore, in the light of the Treaty objectives to protect consumers by means of undistorted competition and the integration of national markets, the [EU] rules on competition are also incapable of being interpreted in such a way that, in order to defend its own commercial interests, the only choice left for a pharmaceuticals company in a dominant position is not to place its medicines on the market at all in a Member State where the prices of those products are set at a relatively low level.163 That being so, the Court held that it is reasonable and proportionate, and thus lawful under Article 102, for a dominant firm to refuse to supply wholesalers that engage in parallel exports (induced by State intervention) when exporting threatens its legitimate commercial interests and the orders of the wholesalers are ‘ out of the ordinary’.164 This shows that there are certain limits to the outer scope of Article 102 TFEU, and specifically that Article 102 is not to be applied in such a way that a dominant firm has no choice but to refrain from selling on the market at all. I conclude by offering six propositions that appear to inform the application of Article 102 to conduct of dominant undertakings that is also subject to other legal rules: The fact that a dominant firm fails to comply with a regulation or another legal rule does not, in itself, give birth to a (new) abuse of a dominant position. The fact that a dominant firm complies with a regulation or legal rule does not preclude the application of Article 102, unless that regulation or rule eliminates any possibility of competitive activity on its part.165 While it is possible to abuse a dominant position without actually exercising or relying on market power.166 Article 102 cannot be applied to conduct of a dominant undertaking that is separate from, and has nothing to do with, the market where it is dominant. Indeed, the extent of a dominant position may be highly relevant to the effects, and lawfulness, of a dominant firm’s behaviour. Article 102 can be applied to allegedly exclusionary conduct only if there is evidence of an actual or potential anti-competitive effect.167 Article 102 does not apply if there is either a derogation in the Treaty from the competition rules or the conduct complained about is non-economic in nature. Conduct of a dominant firm does not infringe Article 102 TFEU where its objective is a separate goal of the EU, or another legitimate goal of public policy, and the conduct is objectively necessary and proportionate for securing the attainment of that goal.168 Footnotes 1 Case C-457/10 P AstraZeneca v Commission [2013] 4 CMLR 233. 2 Decision No CA98/02/2011 (Case CE/8931/08) Decision of 12 April 2011, <https://www.gov.uk/cma> accessed 27 November 2017. 3 Commission Press Release IP/17/1784, 27 June 2017, on appeal Case T-612/17 Google and Alphabet v Commission, not yet decided. 4 For comment on this theory of harm see Bo Vesterdorf, ‘Theories of Self-preferencing and Duty to Deal - Two Sides of the Same Coin?’ (2015) 1(1) Competition Law & Policy Debate 4–9 with Nicolas Petit, ‘Theories of Self-preferencing under Article 102: A Reply to Bo Vesterdorf’, <i-comp.org>. 5 OAO Gazprom Press Statement, 22 April 2015. 6 Bundeskartellamt Press Statement, 2 March 2016. 7 Sir Robin Jacob, ‘Competition Authorities Support Grasshoppers: Competition Law as a Threat to Innovation’ (2013) 9 Competition Policy International 15. 8 See eg Commission Press Release IP/17/1323, 15 May 2017: Commission opens formal investigation into Aspen Pharma’s pricing practices for cancer medicines. 9 Rupprecht Podszun, ‘Can Competition Law Repair Patent Law and Administrative Procedures?’ (2014) 51 CML Rev 281, at 288. A different example might be the investigation of a suspected cartel involving German diesel car manufacturers in circumstances where there is no possibility of a consumer collective actions for commercial misrepresentation under German law; ‘Cartel Scandal puts German Business Culture on the Line’ Financial Times, London (30 July 2017). 10 AstraZeneca (n 1), para 133. 11 Case 13/77 INNO v ATAB [1977] ECR 2115, paras 30–31. 12 See eg art 42 TFEU. 13 An obvious example of a case reconciling art 101 with other primary EU law is Case C-67/96 Albany International BV v Stichting [1999] ECR I-5751, which is discussed below. 14 Pitney Bowes v Francotyp-Postalia GmbH [1990] 3 CMLR 466, para 17. 15 Case 6/72 Europemballage and Continental Can v Commission [1973] ECR 215, para 27. 16 Case C-52/09 TeliaSonera Sverige [2011] ECR I-527, paras 24, 43, and 88; see also Case T-65/98 Van den Bergh Foods v Commission [2003] ECR II-4653, para 157. 17 Case C-413/14 P Intel v Commission EU:C:2017:632, para 134. 18 Case C-209/10 Post Danmark EU:C:2012:172, para 22. 19 Intel v Commission (n 17), para 136. 20 See the French competition authority’s Decision 14-D-08 of 24 July 2014 regarding practices implemented in the sector for the sale of fresh dairy products in the French West Indies, upheld on appeal on 24 September 2015; the Decision and judgment are accessible at <http://www.autoritedelaconcurrence.fr> accessed 27 November 2017. 21 Rene Joliet, Monopolisation and Abuse of Dominant Positions: A Comparative Study of the American and European Approaches to the Control of Economic Power (Liége 1970) 250. 22 ibid; see also Ernst-Joachim Mestmäcker, ‘Towards A Concept of Workable European Competition Law’ in Kiran Klaus Patel and Heike Schweitzer (eds), The Historical Foundations of EU Competition Law (OUP 2013) 201–02. 23 Case 6/72 Continental Can v Commission [1973] ECR 215. 24 ibid, para 24; see more recently TeliaSonera (n 16), paras 20–22. 25 ibid, paras 25–26. 26 Intel v Commission (n 17) para 139. 27 Case C-333/94 P Tetra Pak International v Commission [1996] ECR I-5951, para 27 (‘Tetra Pak II’). 28 Case C-481/01 P(R) NDC Health v IMS EU:C:2002:223, paras 80–84. 29 For discussion of the converse situation and a possible gap under art 102 see Federico Etro and Ioannis Kokkoris (eds), Competition Law and the Enforcement of Article 102 (OUP 2010) ch 9. 30 See generally Robert O'Donoghue and Jorge Padilla, The Law and Economics of Article 102 TFEU (2nd edn, Hart 2013) 44–47. 31 Silver v New York Stock Exchange, 373 US 341 (1963). 32 551 US 264 (2007). 33 One of the main reasons why mistakes are so serious in the US is the fact that US law provides for the award of mandatory treble damages to the injured party; on treble damages see Patricia Hanh Rosochowicz, ‘Deterrence and the Relationship between Public and Private Enforcement of Competition Law’ (2005) <http://www.ibanet.org/LPD/Antitrust_Trade_Law_Section/Antitrust/EU_Private_Litigation_Working_Group.aspx > accessed 27 November 2017. 34 Verizon Communications v Law Office of Curtis V Trinko LLP, 540 US 398 (2004). 35 Cases C-359/95 P and C-379/95 P Commission and France v Ladbroke Racing [1997] ECR I-6265, paras 33–34. 36 OJ [2003] L 263/9, upheld on appeal Case T-271/03 Deutsche Telekom v Commission [2008] ECR II-477, upheld on further appeal Case C-280/08 P Deutsche Telekom v Commission [2010] ECR I-9555. 37 Deutsche Telekom (n ), para 84. 38 Trinko (n 22); Pacific Bell Telephone Co v linkLine Communications, Inc, 555 US 438 (2009). 39 See Council Directive 2002/21/EC of March 2002 on a common regulatory framework for electronic communications networks and services [2002] OJ L 108/33, recital (27). 40 <https://ec.europa.eu/competition/speeches/text/sp2007_02_en.pdf> accessed 27 November 2017. 41 On this point see Case C-109/03 KPN Telecom [2004] ECR I-11273, Opinion of AG Maduro, para 55. 42 See eg GDF Suez, Commission Press Release, IP/09/1872, 3 December 2009; E.ON, Commission Press Release, IP/10/494, 4 May 2010. 43 See eg CEZ, Commission Press Release, IP/12/320, 10 April 2013; Bulgarian Electricity Holding, Commission Press Release, IP/15/6289, 10 December 2015. 44 Wanadoo España vTelefónica Decision C(2007) 3196 final (Case COMP/38.784), upheld on appeal Case T-336/07 Telefónica and Telefónica de España v Commission [2012] 5 CMLR 931, upheld on appeal Case C-295/12 P Telefónica SA and Telefónica de España v Commission [2014] 5 CMLR 857. 45 See eg Deutsche Bahn, Commission Press Release, IP/13/1289, 18 December 2013; note that the commitments in this case were released early on 8 April 2016: Commission Press Release, IP/16/1322. 46 See eg Department for Business, Innovation & Skills, Government’s response to consultation ‘Growth, Competition and the Competition regime’, March 2012, paras 8.7–8.13 <https://www.gov.uk> accessed 27 November 2017. 47 On this issue see Richard Whish, ‘National Competition Law Goals and the Commission’s Guidance on Article 82 EC: the UK experience’ in Lorenzo Federico Pace (ed), European Competition Law: The Impact of the Commission's Guidance on Article 102 (Edward Elgar 2011) ch 7. 48 Art 114 TFEU for the CRF and Protocol 27 to the TEU/TFEU for art 102 TFEU. 49 British Telecommunications plc v Office of Communications (VULA) [2016] CAT 3, paras 101–03, referring to Council Directive 2002/21/EC of March 2002 on a common regulatory framework for electronic communications networks and services [2002] OJ L 108/33, Art 14 (2). Note the Proposal for a Directive of the European Parliament and of the Council establishing the European Electronic Communications Code (Recast) COM(2016)590. 50 Mario Monti, ‘Competition and Regulation in the New Framework’ Speech of 15 July 2003, <http://ec.europa.eu/competition/speeches/> accessed 27 November 2017. 51 See cases cited at nn 29–30 above. 52 See eg Clifford Jones, Private Enforcement of Antitrust Law in the EU, UK and USA (OUP 1999); Ioannis Lianos, Peter Davis, and Paolisa Nebbia, Damages Claims for the Infringement of Competition Law (OUP 2015). 53 Stephen Calkins, ‘Summary Judgment, Motions to Dismiss, and Other Examples of Equilibrating Tendencies in the Antitrust System’ (1986) 74 Geo LJ 1065; William Kovacic, ‘Private Participation in the Enforcement of Public Competition Laws’ Speech of 15 May 2003, <https://www.ftc.gov> accessed 27 November 2017. 54 See cases cited at n 26 above. 55 Wouter Wils, ‘Should Private Antitrust Enforcement Be Encouraged in Europe?’ (2003) 26 World Competition 473. 56 Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union, [2014] OJ L349/1 (‘Damages Directive’). 57 ibid, recital 6. 58 ibid, recitals 15 and 26. 59 See eg Frances Murphy and Francesco Liberatore, ‘Abuse of Regulatory Procedures—the AstraZeneca Case’ (2009) 30 ECLR 314 223–29 (pt 1), 289–300 (pt 2) and 314–23 (pt 3). 60 AstraZeneca (Case COMP/A 37507/F3) Commission Decision 2006/857/EC [2005] OJ L 332/24, upheld on appeal to the General Court: Case T-321/05 AstraZeneca v Commission [2010] ECR II-2805 (‘GC judgment in AstraZeneca’), upheld on further appeal to the Court of Justice: AstraZeneca (n 1). 61 A SPC extends the patent protection for a maximum period of five years for medicinal products subject to a marketing authorization procedure. 62 AstraZeneca (n 1), para 112 and case-law cited. 63 ibid, paras 93–98. 64 AstraZeneca (n 60), judgment of the General Court, para 376. 65 See similarly the ‘naked restrictions’, ie the payments to customers to delay the launch of a competitor’s product, in Case T-286/09 Intel v Commission EU:T:2014:547, paras 201–20 (not considered on appeal to the Court of Justice). 66 ibid, para 366. 67 Council Directive 65/65/EEC of 26 January 1965 on the approximation of provisions laid down by Law, Regulation or Administrative Action relating to proprietary medicinal products [1965] OJ L 369/22, 24. 68 AstraZeneca (n 1), para 132. 69 A counter-argument is that the perceived problem of deregistration could be solved by amending the relevant regulatory legislation and allowing generics to rely on the original registration in support of their application for a marketing authorization. 70 On objective justification see below CMBT (n 138). 71 Case C-53/03 Syfait v GlaxoSmithKline plc [2005] ECR I-4609, Opinion of AG Jacobs, para 68. 72 Albany (n 13), Opinion of AG Jacobs, para 184. 73 Burrell Lecture 2004 on ‘Intellectual Property, Free Movement and Competition: Conflicting of Complimentary?’, a summary <http://ipkitten.blogspot.co.uk/2004/02/burrell-lecture-2004.html> accessed 27 November 2017. 74 Damien Geradin and Miguel Rato, ‘FRAND Commitment and EC Competition Law: A Reply to Philippe Chappatte’ (2010) 6 ECJ 129, 150–53. 75 Philippe Chappatte, ‘FRAND Commitments – The Case for Antitrust Intervention’ (2009) 5 ECJ 320. 76 Motorola Mobility (Case AT 39985), Decision of 29 April 2014. 77 Case C-170/13 Huawei Technologies Co Ltd v ZTE Corp [2015] 5 CMLR 779; for comment see Nicolas Petit, ‘Huawei v ZTE: Judicial Conservatism at the Patent-Antitrust Interaction’ CPI Antitrust Chronicle, October 2015 (2) <https://www.competitionpolicyinternational.com> accessed 27 November 2017. 78 Samsung - Enforcement of UMTS standard essential patents (Case AT 39939) Commission Decision of 29 April 2014, para 58; for a more detailed discussion see Alexandros Zografos, ‘The SEP Holder’s Guide to the Antitrust Galaxy: FRAND and Injunctions’ (2014) 37 World Competition 53. 79 Commission’s Guidelines of 14 January 2011 on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements [2011] OJ C11/01. 80 Motorola Mobility (n 76), para 226 (ownership of a SEP did not automatically confer dominance). 81 ibid, para 510. 82 Huawei (n 77), para 42. 83 ibid, para 2 of the operative part of the judgment; see also paras 74–75. 84 ibid, para 1 of the operative part of the judgment; see also paras 55–64 and 71. 85 Case C-170/13 Huawei v ZTE EU:C:2014:2391, para 88 of the AG Opinion. 86 [2016] EWCA Civ 489, para 35. 87 Huawei (n 77), paras 51 and 53. 88 ibid, para 68; cf Samsung Commitment Decision (n 78), para 78 (providing for situations of deadlock to be resolved by a court or an arbitration tribunal). 89 Huawei (n 77), Opinion of AG Wathelet, para 11. 90 Geradin and Rato (n 74) 145–48, and 169. 91 O’Donoghue and Padilla (n 30) 700–01. 92 German courts have already begun to ‘operationalise’ Huawei: see eg Nicolas Petit, ‘Antitrust Claims in a Standards Context’, ASPI-LES, APEB conference, 14 June 2016 (on file with author). 93 Case 193/83 Windsurfing International v Commission [1986] ECR I-611, paras 36 and 85. 94 In the Matter of Google Inc (FTC File No 111-0163), Statement of the Federal Trade Commission of 3 January 2013 <https://www.ftc.gov> accessed 27 November 2017. 95 ibid, Concurring and Dissenting Statement of (former) Commissioner Rosch Regarding Google’s Search Practices. 96 Case B2-126/14 Bundeskartellamt decision of 25 April 2016 concerning the dispute Google versus various press publishers and VG Media about the use of the ancillary copyright of press publishers, <http://www.bundeskartellamt.de> accessed 27 November 2017. 97 Commission MEMO-13-383, 25 April 2013. 98 Microsoft (Case COMP/C-3/37.792) OJ [2007] L32/23, substantially upheld on appeal to the General Court Case T-201/04 Microsoft v Commission [2007] ECR II-3601. 99 Case C-218/00 Cisal v INAIL [2002] ECR I-691, Opinion of AG Jacobs, para 71. 100 NYNEX Corp v Discon Inc, 525 US 128, at 137 (1998) (Breyer J). 101 Joined Cases 209/84 to 213/84 Ministère Public v Asjes [1986] ECR 1425, para 40. 102 Case 172/80 Züchner v Bayerische Vereinsbank [1981] ECR 2021, paras 6–9. 103 TFEU provisions Title X (Social Policy) arts 151, 153(1), 156. 104 Albany (n 13). 105 ibid, para 60. 106 Case E-14/15 Holship Norge AS v Norsk Transportarbeiderforbund [2016] EFTA Ct Rep, judgment of 19 April 2016. 107 Case C-209/10 Post Danmark I EU:C:2012:172, paras 40–42. 108 Guidance on the Commission's enforcement priorities in applying Article [102 TFEU] to abusive exclusionary conduct by dominant undertakings, OJ [2009] C 45/7 (‘Enforcement Priorities Guidance’), para 29 and case-law cited. 109 Case C-1/12 Ordem dos Tecnicos Oficiais de Contas v Autoridade da Concorrencia [2013] 4 CMLR 651, para 40. 110 Case C-113/07 P SELEX Sistemi Integrati SpA v Commission [2009] ECR I-2207, paras 70–71. 111 Case C-343/95 Calì & Figli v Servizi Ecologici Porto di Genova [1997] ECR I-1547, paras 22–23. 112 Case C-41/90 Höfner and Elser v Macrotron [1991] ECR I-1979, para 22. 113 Case C-475/99 Ambulanz Glöckner v Landkreis Südwestpfalz [2001] ECR I-8089, Opinion of AG Jacobs, paras 71–81. 114 Case C-205/03 P FENIN v Commission [2006] ECR I-6295, Opinion of AG Maduro, para 26 (‘FENIN’). 115 ‘Government in Markets: Why competition matters – a guide for policy makers’, OFT 1113, September 2009 <https://www.gov.uk> accessed 27 November 2017. 116 Cisal (n 99), para 71. 117 [2002] CAT 7, para 259. 118 ibid, paras 190, 202 and 265–67. 119 The equivalent provision in UK law to Article 106(2) is Competition Act 1998, Sch 3, para 4. 120 The text that follows in this section is based, in part, on the author’s contribution to Division 1 of Butterworths Competition Law Service (LexisNexis). 121 FENIN I (n 114), para 14. 122 Okeoghene Odudu, The Boundaries of EC Competition Law: The Scope of Article 81 (OUP 2006) 42–45 (discussing public goods). 123 SELEX (n 110). 124 Case T-319/99 FENIN v Commission [2003] ECR II-357, para 37. 125 FENIN (n 114), Opinion of AG Maduro, para 65. 126 Enforcement Priorities Guidance (n 108), para 19; note however that para 11 of the Guidance explains that the expression ‘increase prices’ is used to include the power to maintain prices above the competitive level and is used as shorthand for the various ways in which the parameters of competition—such as prices, output, innovation, the variety or quality of goods or services—can be influenced to the advantage of the dominant undertaking and to the detriment of consumers. 127 1998 Football World Cup, OJ [2000] L 5/55, para 100 (expressly rejecting the submission that Article 102 cannot apply in the absence of an effect on the structure of competition in a given market). 128 Case C-202/07 P France Télécom v Commission [2009] ECR I-2369, para 110; TeliaSonera (n 16), para 100. 129 Guidance on Enforcement Priorities under Article 102 (n 108), para 71. 130 Obviously, art 102 also applies to exploitative and/discriminatory conduct. 131 Renato Nazzini, The Foundations of European Union Competition Law: The Objective and Principles of Article 102 (OUP 2011) 157–58. 132 Case 27/76 United Brands v Commission [1978] ECR 207. 133 ibid, para 158. 134 ibid, para 189; see more recently Cases C-468/06 to C-478/06 Sot. Lélos kai Sia v GlaxoSmithKline [2008] ECR I-7139 (‘Sot. Lélos’), paras 69–71. 135 United Brands (n 132), paras 191–92. 136 Case T-51/89 Tetra Pak Rausing SA v Commission ECR II-209, Opinion of AG Kirschner, para 68. 137 Burgess v OFT [2005] CAT 25, para 365. 138 Cases T-24, 26 and 28/93 Compagnie Maritime Belge v Commission [1996] ECR II-1201, paras 146–48. 139 Case C-395/87 Ministère Public v Tournier [1989] ECR I-2521, para 45. 140 Post Danmark I (n 107) para 42. 141 Streetmap.EU Ltd v Google Inc [2016] EWHC 253 (Ch) (the author acted for the claimant in this action). 142 ibid, para 149. 143 TeliaSonera (n 16) para 80. 144 CMBT (n 138) above. 145 ibid, para 119. 146 ibid, Opinion of AG Fennelly, para 137. 147 [2002] CAT 1, paras 344–45. 148 ibid, paras 225–29 and 231–306. 149 See eg Annalisa Tosdevin, ‘’Willing or not Willing, that is the Question’: Thoughts on the Motorola Decision’ [2015] Comp Law 85. 150 Tetra Pak II (n 27), para 27. 151 Case C-413/14 P Intel v Commission EU:C:2017:632, para 139; see similarly Case C-52/09 TeliaSonera EU:C:2011:83, para 81. 152 Case 85/76 Hoffmann-La Roche v Commission EU:C:1979:36, para 89. 153 Tetra Pak II (n 27). 154 Microsoft Decision (n 98), paras 526–40; see also Burgess (n 137), paras 380–81. 155 Case T-83/91 Tetra Pak International v Commission [1994] ECR II-755, paras 118–21, upheld on appeal to the Court of Justice Tetra Pak II (n 27), paras 28–29. 156 Microsoft Decision (n 98), paras 529–33, 541. 157 Competition Law and Data (10 May 2016) <https://www.bundeskartellamt.de> accessed 27 November 2017; see further Daniel Rubinfeld and Michal Gal, ‘Access Barriers to Big Data’ <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2830586> accessed 27 November 2017. 158 Magnus Franklin and Lewis Crofts, ‘EU Watchdog Set to Steer Privacy’s Role in Competition Policy’ 20 June 2016 <www.mlex.com> accessed 25 October 2017. 159 Case T-65/89 BPB Industries and British Gypsum v Commission [1993] ECR II-389. 160 Huawei (n 77) is another example of an abuse committed in the non-dominated market for implementing a standard in order to protect the SEP-holder’s position in its dominated market. 161 Sot. Lélos (n 134). 162 ibid, para 67. 163 ibid, para 68; cf the second abuse found in AstraZeneca (n 1), which meant that AZ was not allowed to withdraw its drug, at least not by deregistering the marketing authorisation for that drug. 164 ibid, paras 69–70 and case-law cited. 165 As noted in the introduction, if the rule of law is a national measure, the Member State may infringe art 4(3) TEU in conjunction with art 102 TFEU. 166 Microsoft Appeal (n 98), para 1344. 167 See the important clarification provided by the Court of Justice as to the need to assess the effects of exclusivity rebates when (as seems very likely) a dominant firm adduces evidence that its conduct did not have a foreclosure effect: Case C-413/14 P Intel v Commission EU:C:2017:632, paras 137–38. 168 Subject, of course, to the point about dominant firms not arrogating the task of public authorities to themselves, on which see Case T-30/89 Hilti v Commission [1991] ECR II-1439, paras 118–19. © The Author 2017. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com

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Journal of Antitrust EnforcementOxford University Press

Published: Apr 1, 2018

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