The European Commission has published the long-awaited new draft Guidelines on the application of Article 102. The document provides clarification on the application of price-cost tests to determine whether a price-based conduct is abusive. Will the Commission change tack on the use of economic analysis of pricing abuses?
On 1 August 2024, the European Commission launched the public consultation on draft Guidelines on exclusionary abuses of dominance (hereinafter ‘draft Guidelines’). The draft Guidelines aim at setting out a potential analytical framework applicable to certain types of exclusionary conduct by dominant firms. The Commission announced the initiative to draft Guidelines last year in March 2023, together with an amending communication with changes to its guidance paper on enforcement priorities in applying Article 82 and the publication of the competition policy brief titled “a dynamic and workable effects-based approach to abuse of dominance”. At that time, the amendments and the policy brief had sparked many commentators to raise the concern that the Commission would depart from an effect-based approach by, for example, deviating from or reducing the use of an economic price-cost test – and specifically the as-efficient competitor “AEC” test – to assess the likelihood of exclusionary effects.
At that time, we considered the application of the AEC test and concluded that it maintains an important role (at least in the context of postal operators). The use of the AEC test as part of the compliance work of dominant firms allows for ex-ante certainty in their pricing decisions and encourages competition with efficient entrants.
In this Article we focus on how the price-cost (AEC) test is set out in the draft Guidelines and present our initial impressions on whether the Commission is seeking to bring changes to the economic assessments of exclusionary abuses.
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