This chapter – which can be found here – argues that a number of European Commission and European court decisions bring to the forefront a legal test that has so far merited limited attention—the concept of choice, understood as the possibility, and the right, for customers to choose freely both the products/services best suited to their needs, and the economic partners they want to deal with.
This legal test is analysed in this essay, which is divided into three parts:
- Part II examines cases where this new test is said to emerge more clearly. These are mainly Art. 102 TFEU cases – and the most important one is, arguably, a case regarding predatory pricing of internet services by France Telecom. France Telecom argued that recoupment was necessary for pricing below costs to be anticompetitive. The European Court of Justice dismissed this argument. Even if consumers would benefit from lower prices on aggregate, this would not eliminate all competitive harm: inasmuch as lower prices lead to the elimination of one or several competitors, the choices that are available to consumers in the relevant market are reduced. A second relevant case is Microsoft, where it was held that the lack of interoperability of an operating system locked in customers and diminished their choices. Lastly, the author mentions Intel, where the Commission held that Intel’s exclusionary practices had a direct and immediate negative impact on those customers who would have preferred higher price and quality choice.
- Part III argues that this approach can claim some basis in earlier cases. It is held that already in Hoffman La Roche and United Brands the: ‘Commission and the Court defined the notion of abuse, in the context of dominance, as encompassing behavior meant to hamper or remove the freedom of choice of purchasers, and to deprive or restrict purchasers’ possible choices.’ Furthermore, in cases such as Michelin I and II, Napier Brown and Tetra Pak: ‘The Commission and the Court concluded that an abuse had been committed as these rebates created a situation where the opportunity for purchasers to choose their products was unduly restricted.’
- In Part IV, the substantive implications of this new approach are discussed in greater detail. As regards abuses, infringements have been found when: ‘the dominant firm is attempting to diminish and, possibly, to eliminate the ability of customers to switch to other suppliers when they are not satisfied with the products or services provided by the dominant firm.’ This is particularly important when the dominant company seeks to foreclose the contestable part of the market. The Commission’s practice over the years has been to disparage arguments that certain business practices are not exclusionary, and that increases in market share are instead the result of the dominant company’s superior product: ‘by pointing to elements (…) indicating that the success met by the firm was due, rather, to its behavior, which could be considered abusive.’
While in some decisions – such as the France Telecom case – choice is the only consideration mentioned to justify intervention, this is far from being common. In most cases, choice is coupled with other factors, but no indication is provided as to which has priority and/or how they relate in practice. This approach parallels a trend, pervasive in the case law, of mentioning both effects on competitors and competition, on the one hand, and effect on customers, on the other, as the main reasons for antitrust authorities to act – without explaining whether these elements need to both be present for an infringement to be found, or whether each of them stands, by itself, as a sufficient justification for intervention.
An important question is, thus, whether the various considerations present in the case law can be prioritised. The author argues that choice amounts to the most important consideration, given its pervasiveness and a number of cases where it amounted to a self-standing theory of harm. A good example of this is France Telecom, where the courts seemed to prioritise choice over efficiency as a theory of harm.
Comment: I will let others comments on whether restriction of choice can amount to a valid legal test under EU competition law. Assuming it does, I think the approach adopted in this article begs the question of how to set the threshold regarding which restrictions of consumer choice amount to infringements of competition law. After all, if a business is so competitive that it drives a competitor out of the market, this will reduce consumer choice without infringing competition law. Thus, the question is whether the conduct that reduces choice is illegal, which brings us back to the question of what is the legal test to identify anticompetitive conduct.
This difficulty is shared by efforts to identify the applicable test for competition law infringements under an ordo-liberal framework, such as the competitive process test: such efforts require a normative standard to give meaning to a coherent legal formula. Efficiency as output is able to provide such a standard. Consumer choice, even more than the ordo-liberal focus on the competitive process, not so much.