The recent judgment in Post Danmark II (C-23/14, 6 October 2015) is further proof of a growing divergence in the assessment of abuse of dominance cases between competition authorities and regulators on the one hand and the courts on the other. Whilst the case concerned rebate schemes its findings also apply more generally to exclusionary abuses.
In Post Danmark II, the Court of Justice of the EU (CJEU) held, largely following the opinion of its Advocate General, that it is not a full defence against an abuse of dominance allegation to establish that the claimant was not as efficient a competitor as the dominant undertaking (the AEC test). Whilst it is true that competition law does not protect less efficient competitors but only the competitive process (i.e. the origin of the AEC test), the court takes the view that in certain circumstances a less efficient competitor could provide necessary competition particular in the sector in which Post Danmark operated. This means that the AEC test is particularly vulnerable in the regulated industries with strong incumbents such as water, electricity and telecoms.
This does not mean that the AEC has become irrelevant. As the court observes it is still appropriate to apply in ‘standard cases’. Nevertheless, to my mind it shows a growing divergence between the European Commission’s (and other authorities’) approach to abuse of dominance cases which is more economics based and those of the courts which is more rule based. The fact that the court also stressed in Post Danmark II that the European Commission’s Article 102 guidelines are not binding on national courts and authorities underlines that point.
What does that mean post-Post Danmark II? Competition authorities (at least the European Commission and the UK’s CMA) will not take on cases that fail an economic assessment as per their guidelines. Yet, in such circumstances they cannot close a case on a no grounds for action basis as this would leave it open to an appeal based on the case laws (see, for example the UK CMA’s case closure on a pharmaceutical rebate scheme). By contrast, the courts are unlikely to change their course and give more weight to economic assessment in cases. This should not come as a surprise: Post Danmark II mirrors the approach in Michelin II. The economic assessment therefore seems confined to case prioritisation, not substance.
Yet, for the parties this is a bit of a fudge. Cases being closed on administrative priority because the authorities fail to follow court judgments raises some obvious concerns. For a complainant this will mean that the courts, particularly the civil courts, are likely to be a more fruitful route to solve an abuse of dominance issue than the authorities. For defendants it means that establishing that the complainant fails the AEC test is not the end of the story. It will be only part of the analysis.