demo version - academic society for competition law · eu competition law; maurice e. stucke draws...

ChoiCe – A New StANdArd for CompetitioN LAw ANALySiS? a GO TO TABLE OF CONTENTS

GO TO TABLE OF CONTENTS

DEMO VERSIONFREE ACCESS TO 3 ARTICLES

Choice — A New Standard for

Competition Law Analysis?

EditorsPaul Nihoul

Nicolas CharbitElisa Ramundo

Associate EditorDuy D. Pham

© Concurrences Review, 2016


ChoiCe – A New StANdArd for CompetitioN LAw ANALySiS?ii GO TO TABLE OF CONTENTS

All rights reserved. No photocopying: copyright licenses do not apply. The information provided in this publication is general and may not apply in a specific situation. Legal advice should always be sought before taking any legal action based on the information provided. The publisher accepts no responsibility for any acts or omissions contained herein. Enquiries concerning reproduction should be sent to the Institute of Competition Law, at the address below.

Copyright © 2016 by Institute of Competition Law 60 Broad Street, Suite 3502, NY 10004 www.concurrences.com [email protected]

Printed in the United States of America First Printing, 2016

Publisher’s Cataloging-in-Publication (Provided by Quality Books, Inc.)

Choice—a new standard for competition law analysis?

Editors, Paul Nihoul, Nicolas Charbit, Elisa Ramundo. pages cm LCCN 2016939447 ISBN 978-1-939007-51-3 ISBN 978-1-939007-54-4 ISBN 978-1-939007-55-1

1. Antitrust law. 2. Antitrust law—Europe. 3. Antitrust law—United States. 4. European Union. 5. Consumer behavior. 6. Consumers—Attitudes. 7. Consumption (Economics)

I. Nihoul, Paul, editor. II. Charbit, Nicolas, editor. III. Ramundo, Elisa, editor.

K3850.C485 2016 343.07’21

QBI16-600070

Cover and book design: Yves Buliard, www.yvesbuliard.frLayout implementation: Darlene Swanson, www.van-garde.com

ChoiCe – A New StANdArd for CompetitioN LAw ANALySiS? iii GO TO TABLE OF CONTENTS

Editors’ Note

In this book, ten prominent authors offer eleven contributions that provide their varying perspectives on the subject of consumer choice: Paul Nihoul discusses how freedom of choice has emerged as a crucial concept in the application of EU competition law; Neil W. Averitt and Robert H. Lande provide a detailed argument that enforcement agencies should adopt consumer choice as a new paradigm for antitrust; Peter Behrens lays out the historical origin of consumer choice as a concept grounded in German ordoliberalism; Robert H. Lande, in another contribution, provides an updated argument for why the US antitrust agencies should adopt consumer choice as the new model for antitrust enforcement; Elisabeth de Ghellinck discusses how economists approach the idea of consumer choice; Joshua D. Wright and Douglas H. Ginsburg draw on economics to argue that an economic welfare standard should remain the governing paradigm in antitrust enforcement rather than consumer choice; Steven Anderman discusses how the concepts of consumer welfare and consumer choice are used in EU competition law to reconcile it with intellectual property law; Neil W. Averitt and Robert H. Lande, in another contribution, argue that consumer choice can be used as a principle for understanding and unifying competition and consumer protection laws; Neil W. Averitt, in another contribute, provides practical guidance on how consumer choice can be used to improve competition and consumer protection laws at the enforce-ment and remedial stages; J. Thomas Rosch discusses whether, or the extent to which, consumer choice can be used to facilitate convergence between US antitrust law and EU competition law; Maurice E. Stucke draws on insights from behavioral economics to highlight when more choice is better for consumers and when it is not.

This volume offers readers an exhaustive and multifaceted discussion of the crucial concept of consumer choice and its relevance for modern competition law.

The editors would like to give their sincere thanks to the ten authors for their hours of labor dedicated to this unique collection of articles.

Paul Nihoul

Nicolas charbit

Elisa ramuNdo

ChoiCe – A New StANdArd for CompetitioN LAw ANALySiS? v GO TO TABLE OF CONTENTS

Table of Contents

Editors’ Note .............................................................................................. iii

Paul Nihoul, Nicolas charbit & Elisa ramuNdo

PART I: Consumer choice in EU and national competition law

“Freedom of choice”: the emergence of a powerful concept in European competition law ...........................................................................9Paul Nihoul

Using the “consumer choice” approach to antitrust law ..........................41

NEil W. avEritt & robErt h. laNdE

The consumer choice paradigm in German ordoliberalism and its impact on EU competition law ................................................................ 123

PEtEr bEhrENs

Consumer choice as the best way to re-center the mission of competition law ..................................................................... 153

robErt h. laNdE

PART II: Consumer choice — different perspectives

Consumer choice: an economic perspective ........................................... 167

ElisabEth dE GhElliNck

The goals of antitrust: welfare trumps choice ......................................... 185

Joshua d. WriGht & douGlas h. GiNsburG

ChoiCe – A New StANdArd for CompetitioN LAw ANALySiS?vi GO TO TABLE OF CONTENTS

Consumer welfare and consumer choice in the reconciliation of the conflicts between competition law and IPRs .......................................... 205

stEvEN aNdErmaN

Consumer choice: the practical reason for both antitrust and consumer protection law ......................................................................... 229

NEil W. avEritt & robErt h. laNdE

How “consumer choice” can unify the fields of competition and consumer protection law ......................................................................... 253

NEil W. avEritt

Can consumer choice promote trans-Atlantic convergence of competition law and policy? ................................................................... 265

J. thomas rosch

When more is better and when less is more: behavioral antitrust and choice ....................................................................................................... 283

mauricE E. stuckE

ChoiCe – A New StANdArd for CompetitioN LAw ANALySiS? vii GO TO TABLE OF CONTENTS

ContributorsSteven AndermanUniversity of Essex

Neil W. AverittFTC:Watch

Peter BehrensUniversity of Hamburg

Elisabeth de GhellinckUniversity of Louvain-la-Neuve

Douglas H. GinsburgUnited States Court of Appeals for the District of Columbia Circuit

Robert H. LandeUniversity of Baltimore

Paul NihoulUniversity of Louvain

J. Thomas RoschUS Federal Trade Commission

Maurice E. StuckeUniversity of Tennessee

Joshua D. WrightGeorge Mason University School of Law

ChoiCe – A New StANdArd for CompetitioN LAw ANALySiS? 9 GO TO TABLE OF CONTENTS

“Freedom of choice”: the emergence of a powerful

concept in European competition law*

Paul Nihoul

[email protected]

Professor of Antitrust Law, University of Louvain

President, Academic Society for Competition Law

I. IntroductionIs Europe engaging on a path that will lead to the transformation of its competition policy?

In the last few years, the European Commission has adopted landmark decisions bringing to the foreground a concept that had so far gained limited attention—the concept of choice, that is, the possibility, and the right, for customers to choose freely the products/services best corresponding to their needs, and the economic partners they want to deal with.

* This article first appeared, with minor differences, in Concurrences, n°3-2012, pp. 55-70. It is reproduced with the authorization of the Publisher.

ChoiCe – A New StANdArd for CompetitioN LAw ANALySiS?10 GO TO TABLE OF CONTENTS

“Freedom of choice”: the emergence of a powerful concept in European competition law

This new approach has not been limited to decisions issued by the Commission but has also been adopted by the European courts, i.e., the General Court (GC) and the European Court of Justice (ECJ), which, within the European Union (EU), have the highest authority to interpret European law, including the rules of competition.

The consequence of this development may be the radical transformation of the justi-fications used by European institutions to explain their decision to intervene, or not, in given cases.

This new approach is analyzed in this essay, which is divided into three parts. In Part II, the essay examines cases where the emerging trend appears with the highest clarity. In Part III, it considers whether that trend remains exceptional or whether it can claim some basis in earlier cases and can be established in all the relevant provisions dealing with competition law. In Part IV, the new approach is discussed as regard to its substance.

II. An emerging trend

1. Leading case: France TélécomIn Europe, the rules of competition are enshrined in the Treaties of the European Union that were concluded by the Member States and that organize the modalities of coex-istence between the Member States. As in the United States, these rules are formulated in general terms—thus permitting interpretation by the European Commission which, in many regards, designs the policy carried out in the name of competition, under the guidance and supervision of the European courts.

This situation signals the importance of the case law when it comes to analyzing what competition policy is about in the European Union. Traditionally, this case law is divided into three categories depending on the type of behavior adopted by companies and challenged by authorities. One category concerns monopolization—called “abuse of dominance” in Europe, although the two concepts do not entirely correspond with each other. Another category concerns anticompetitive agreements. And the last category concerns mergers or on operations amounting to concentrations, that is, consolidation of businesses.

As regard to the concept of choice, the most developed body of case law has been adopted in the application of Article 102 of the Treaty on the Functioning of the


Paul Nihoul

European Union (TFEU),1 which prohibits dominant firms from abusing their position in markets. According to case law, Article 102 TFEU applies where a market is domi-nated2 by a firm, and that firm abuses that dominant position. Among the cases adopted in application of this provision, the most important one, in the context of this paper, is likely France Télécom3.

That case started with an investigation by the European Commission into practices adopted by the incumbent French telecommunications operator France Télécom (FT)4. FT was found to dominate the market for internet access services and was selling such services at a loss. The question arose whether and, if so, to what extent the prices charged by FT could be deemed predatory.

To be found predatory, prices charged by dominant firms must be below costs. In technical terms, they must be, at least, below total costs. Thus, the cost of producing all units must be higher than the revenues obtained when selling those units. When considered per unit, this implies that the cost incurred to produce any output unit must be higher than the price charged for that unit.

Furthermore, these below cost prices must be part of a plan aimed at eliminating competitors and/or competition. The existence of such a plan can be established through a variety of means: emails, declarations, internal documents, recordings, etc. Sometimes, gathering evidence is not easy and can be cumbersome. To facilitate the task of inves-tigators, the ECJ has held that a prima facie case exists where a dominant firm sells at a loss. In technical terms, it introduced a threshold based on marginal cost. In technical terms, the Court introduced a threshold based on marginal cost. Under that case law, prices are presumed to be predatory where they are under marginal costs 5. In such a situation, there is no need of further evidence on the existence of a plan to eliminate competition. For the Court, it is hardly conceivable that a firm may sell units at such low prices—prices lower, even, than just the costs incurred to produce the additional

1 Consolidated Version of the Treaty on the Functioning of the European Union, [2008] O.J. C115/13, <http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12008E101:EN:HTML> (last visited 29 Jan. 2016).

2 According to the classical definition, that concept refers to the ability of a firm to behave independently of competitors, and of consumers. Under case law, that ability results from the economic power that the firm has been able to build up through all sorts of means: access to international capital markets, large array of products offered to consumers, superior organization, etc. In some instances, a dominant position can be held by several firms acting in common. The application of the concept of collective dominance, however, has remained exceptional.

3 Case C-202/07 P, France Télécom v. Commission, [2009] E.C.R. I-2369.

4 It has given rise to the three kinds of instruments that can be obtained in a procedure applying European competi-tion law at the European level: a decision by the European Commission, a judgment by the Court of first instance (CFI), now the GC, and a ruling by the ECJ. The case has thus provided an opportunity to all bodies intervening in the application of European competition law.

5 There is no certainty as to whether this presumption can be reversed.



units concerned, without covering any element pertaining to fixed costs6. For the Court, the motivation for such prices cannot be anything other than a desire to drive compet-itors out of business 7.

For its defense, FT raised several objections—one of which was that an infringement should only be found if the dominant firm had the prospect of recouping, after compe-tition was eliminated, the revenues that were foregone while selling at a loss. This condition, the firm argued, was pervasive, although not explicitly mentioned, in European competition law. Furthermore, this condition was required, in the United States, for this sort of practice to be held illegal8.

The argument was rejected, successively, by the European Commission, by the CFI, and by the ECJ. Among the decisions issued by these institutions, the one with the most relevance here is the ruling issued by the latter9.

That argument was dismissed for various reasons, among which was the concern for consumer choice. For the Court, the prospect of cost recoupment is not essential for the practice to be found abusive. Supposing that the firm would not able to recover its losses, and would continue to charge low prices, this would not take away another source of harm that consumers would undergo: with the elimination of one or several competitors, the choices that are available to consumers in the relevant market would be reduced. As a result, the Court held that:

[T]he lack of any possibility of recoupment of losses is not sufficient to prevent the undertaking concerned reinforcing its dominant position, in particular, following the withdrawal from the market of one or a number of its competitors, so that the degree of competition existing on the market, already weakened precisely because of the presence of the undertaking concerned, is further

6 Why would a firm sell an additional product at a price that is lower than the cost incurred to produce that additional product? In selling below marginal cost, the firm does not only renounce to cover all of its fixed costs. It accepts that the mere cost of producing the additional unit will not be paid for either. This, for the Court, cannot be explained otherwise than by a desire to eliminate competition. In my interpretation, the Court was probably seeking to differentiate situations on the basis of the level of loss sustained by the dominant firm. Sustaining a small loss is not the same as incurring a large one. It can be considered, legitimately, in my opinion, that a big loss probably implies that the firm is seeking other purposes than to sell goods or services. A difficulty, however, in trying to distinguish situations is to determine the moment when a loss can be deemed substantial. The distinction between average and marginal costs provided a sort of expedient threshold.

7 In France Télécom, the European Commission demonstrated that the prices charged by FT for the sale of internet access services were, at times, below average costs. That demonstration was accompanied by documents and declarations establishing that, in the analysis made by the Commission, an elimination plan indeed existed. In some instances, the prices were even below marginal costs. In conformity with the case law, the Commission deemed these practices illegal, during these periods, without seeking further evidence.

8 Under US law, predatory pricing is prohibited if, and to the extent, when engaging in such pricing practices, the firm had the ability of recouping the losses made by selling below cost.

9 As a reminder, the ECJ holds the ultimate authority to interpret European law including the rules on competition.


Paul Nihoul

reduced and customers suffer loss as a result of the limitation of the choices available to them10.

2. Landmark decision: MicrosoftThe France Télécom ruling is important because it indicates that, under competition law, a reduction in the opportunities for exercising choice might be more important than low prices. But it is far from being the only decision in which the focus on choice appears prevalently. Another milestone in the emergence of choice as a possible standard is Microsoft11. The decision issued in that case by the Commission preceded France Télécom by a few months. It is possible that Microsoft may actually have provided the background against which the France Télécom ruling would be issued12.

In substance, the case13 raised two issues. First, is it permissible for a dominant firm to withhold information necessary to ensure the interoperability of products? Second, should a dominant firm be allowed to bundle products—thus prohibiting customers from purchasing one of these products without the other? These questions are discussed in the following paragraphs, with a focus on consumer choice.

2.1 Work group servers: interoperability informationIn the case, Microsoft was challenged, inter alia, for withholding information regarding its work group server software. Networks often have several servers. Similar to personal computers (PCs) and electronic devices generally, such equipment would not work without software. In the relevant market, Microsoft was refusing to provide informa-

10 Case C-202/07 P, France Télécom v. Commission, para. 112. Interestingly, no similar statement appeared in the decision adopted by the Commission nor the judgment issued by the General Court. In these latter two instances, the word “choice” is not even mentioned. In answer to an argument raised by the dominant operator, the Commis-sion stated that the possibility of cost recoupment after the elimination of competition was not a condition to be fulfilled for the application of the prohibition. Alternatively, the Commission argued that, should that condition be introduced, it would be satisfied in the case as, in its analysis, recoupment was indeed possible, and even probable. As far as it is concerned, the CFI did not even consider the second part of the analysis made by the Commission. It simply dismissed the argument by stating that loss recoupment did not have to be established. (CFI, 227-28) (Commission, 332-67).

11 Commission Decision COMP/C-3/37.792 — Microsoft, [2007] O.J. L 32/23.

12 Microsoft is an impressive decision by the degree of sophistication displayed in the reasoning developed by the Commission. For that reason, it must be considered, for our discussion, as an important element in the construction of the position adopted by the European institutions in the interpretation of Article 102 TFEU. That degree of sophistication is due, probably, in part, to the identity and the wealth of the company that was targeted. Microsoft is a jewel of the US economy. At the time of the case, it had the biggest capitalization worldwide. Hundreds of lawyers worked full-time on the case for the company for several years, whereas the Commission could only assign a few officials—most of them involved in parallel cases at the same time. The decision issued in Microsoft is also impressive by the scope of the fine that was imposed on the firm: 497 millions euro—by far the largest ever, at that time, to be imposed on a single firm (even if the record was later to be broken by the one imposed on Intel).

13 The case gave rise to a decision by the European Commission, stating that the firm infringed Article 102 TFEU. The case went to the CFI, which upheld the decision. No appeal was lodged, with the consequence that the ECJ did not have a chance to express its views on the case.



tion that would have made it possible for other software products to interact with servers equipped with the software designed by Microsoft.

This issue was deemed important because Microsoft dominated the market. In European law, dominance refers to rare situations where firms build up considerable economic power allowing them to behave independently of consumers and/or competitors, that is, without having to fear that customers might substitute different products, or that competitors might engage in strategies allowing them to gain substantial market share14. In the present case at issue, most servers were equipped with software developed by Microsoft. In such a context, work group managers would not purchase server software that would not be compatible or interoperable with the one made by Microsoft, which, chances are, they had already acquired, and installed on their server(s).

Interoperability was thus of great importance and, combined with the refusal by Microsoft to provide essential interoperability information, the situation placed clients in front of the following dilemma: purchase competing products and face technical flaws as these products would not work properly in a Microsoft dominated environment; or opt for a flawless service by engaging in a homogenous Microsoft based environment, but then renouncing any possibility of looking for software that would possibly better correspond to their needs, if this were necessary or desirable15.

The latter alternative, the Commission stated, is not one competition policy should accept. With competition policy, enforcement agencies should strive to make sure that customers can choose the products they consider as best to fit their needs. Intervention is necessary wherever these possibilities are impaired or threatened because of behavior adopted by a dominant firm.

“Due to the lack of interoperability that competing work group server operating system products can achieve with the Windows domain architecture, an increasing number of consumers are locked into a homogeneous Windows solution at the level of work group server operating systems” (emphasis added)16. “Microsoft’s refusal to supply has the consequence of stifling innovation in the impacted market and of diminishing consumers’ choices by locking them into a homogeneous Microsoft solution. As such, it is

14 For instance, a firm would be deemed dominant, under that definition, if, and to the extent, it would be in a position to raise prices substantially, without being concerned about losing a significant number of clients—the latter being locked into a form of dependency vis-à-vis the firm, and the competitors being incapable of challenging the dominant firm by, for instance, maintaining clients.

15 Commission Decision COMP/C-3/37.792 — Microsoft, para. 706 (“When confronted with a ‘choice’ between putting up with interoperability problems that render their business processes cumbersome, inefficient and costly, and embracing a homogeneous Windows solution for their work group network, customers will tend to opt for the latter proposition. Once they have standardised on Windows, they are unlikely to report interoperability problems between their client PCs and the work group servers. While this shows that there is interoperability between Windows client PCs and Windows work group servers, it does not prove the absence of abusive conduct or harm to customers. In fact, it screens out the antecedent conduct which had anti-competitively undermined customer choice in the first place and had made the standardisation on Windows a preferred option” (emphasis added).

16 Commission Decision COMP/C-3/37.792 — Microsoft, para. 694.


Paul Nihoul

. . . inconsistent with the provisions of Article [102](b) of the Treaty” (emphasis added)17.

2.2 Multimedia software: tying practicesAnother issue examined by the Commission in the case was the integration of Micro-soft’s multimedia software, WMP18, into its PC operating system Windows. As is widely known, the share detained by Microsoft in the latter market was overwhelming (more than 90% worldwide).19 Windows was pre-installed on computers. Microsoft had also developed multimedia software, which it had included in Windows—thereby ensuring the availability of the software on all PCs equipped with Windows and making it superfluous for consumers to download or otherwise acquire other multimedia player software.

This strategy prompted the quick decline of the US firm RealNetworks, which had initially encountered success with its then original streaming video software. The share obtained by RealNetworks in the market vanished while that obtained by Microsoft was growing exponentially. According to the analysis made by the Commission, that exponential growth was due to two elements. First, consumers did not seek to acquire other multimedia software but used the one pre-installed on their computers and integrated into Windows. Second, as customers were increasingly using WMP func-tionality, content providers tended to use that system to encode content—thereby reinforcing the trend by limiting content that could be provided by RealNetworks and other competitors.

For the Commission and the European courts, Microsoft’s practices amounted, again, to an abuse: although it was a bit different from the one examined in the first half of the case, the strategy created the same result, i.e., a situation where choice was reduced to an unacceptable level. First, consumers did not have any real chance to use other multimedia software as one was already pre-installed. Second, other software manu-facturers could not develop competing products that could then be offered to consumers. Content providers were concentrating their encoding activities on the standard devel-oped in WMP. They were not using other standards proposed by competing manufac-turers. This, in turn, implied that competitors could not develop alternatives, among which consumers would then have a possibility to choose. Consequently, the Commis-sion concluded that: “[I]t constitutes an abuse when an undertaking in a dominant position directly or indirectly ties its customer by a supply obligation since this deprives

17 Ibid., para. 782.

18 Windows Multimedia Player.

19 See Commission Decision COMP/C-3/37.792 — Microsoft, para. 431.



the customer of the ability to choose freely his sources of supply and denies other producers access to the market” (emphasis added)20.

3. Most detailed analysis: IntelFrance Télécom and Microsoft are thus important elements in the discussion carried out here. But the most useful case to date is undoubtedly Intel21—a case that gave rise to a decision containing the fullest analysis, thus far, on the relevance of choice in the reasoning developed by the European institutions in the interpretation of Article 102 TFEU22.

In that case, the US chip manufacturer Intel dominated the market for x86 Central Processing Units (chips or CPUs) used in computers. The firm was engaging in prac-tices aimed at hindering activities carried out by its main competitor AMD23 with the goal of driving it out of business. Of these practices, one took the form of naked restrictions24. Such restrictions consisted of payments made by Intel to computer manufacturers so that they would not sell equipment containing chips made by AMD. The other practice consisted of conditional rebates. These rebates were payments made to customers on the condition that they will place all or nearly all their orders with Intel—and not with AMD or other competitors.

On both accounts, Intel was found in violation of Article 102 TFEU, and the Commis-sion ordered the payment of the biggest fine ever imposed on a single company25.

3.1 Payments to hinder AMD’s activitiesFor each of these practice, the Commission provided a thorough analysis as to why, in its view, under competition policy, choice must be protected in markets. On naked restrictions, the Commission concluded that, as a result of the payments made by Intel, AMD had not been in a position to commercialize products that were in demand. This


21 Case COMP/C-3/37.990 — Intel.

22 The case gave rise to a decision by the European Commission and an annulment procedure is pending before the General Court—with the possibility of an appeal to the ECJ. As the courts have had no opportunity to rule yet, the case does not provide an overview of the positions adopted by the three bodies involved in the enforcement of European competition law at the European level. This does not take away from the importance of the case for the discussion carried out here.

23 Advanced Micro Devices, Inc.

24 The market was defined as covering, worldwide, X86 chips for computers. Intel was found to be dominant as it held, on average, about 80% of the relevant market. See Case COMP/C-3/37.990 — Intel, para. 852.

25 Intel was fined 1,060,000,000 euros. For Microsoft, the fine imposed originally under Article 102 TFEU was 497,000,000 euros. The latter company faced other penalties in the course of the implementation of the decision.


Paul Nihoul

resulted in harm for consumers, who were deprived of opportunities to make choices in the relevant market.

“[E]ach OEM referred to in this section was planning the introduction of a specific AMD-based product. Such products either existed or technical development or preparations for introduction to the market were well advanced. This was due to the fact that there was consumer demand for such AMD-based products”26. “In each case, Intel paid the OEMs to delay, cancel or otherwise restrict the commercialization of the planned AMD-based products. In each case, Intel’s conduct had a material effect on the OEMs’ decision-making in that they delayed, cancelled or otherwise restricted their commercialization of the AMD-based computers”27. “As a consequence, AMD-based products for which there was a customer demand did not reach the market, or did not reach it at the time or in the way they would have in the absence of Intel’s conduct. As a result, customers were deprived of a choice which they would have otherwise had”28.

3.2 Conditional rebatesThe second type of practice adopted by Intel was assessed by the Commission along the same lines. For the Commission, the rebates granted by Intel were designed to lure computer manufacturers away from purchasing competing chips. The practice resulted in AMD’s inability to place its products in computers. The computer manufacturers were not harmed directly and substantially, as they receive Intel’s payments29. But AMD was harmed—and so were ultimate consumers because they were deprived of opportunities to exercise choice in a context where demand existed for AMD-based equipment.

“Intel was able to use the tool of conditional rebates that were capable of inducing loyalty and thereby limiting consumer choice and foreclosing the access of competitors to the market”30. “As a result of Intel’s rebates and payments, end-customers were artificially prevented from choosing other products on the merits (price and quality of the respective x86 CPUs), since Intel’s conduct prevented the competitors’ product from being offered with certain individual OEMs and with MSH. In this case, this

26 Case COMP/C-3/37.990 — Intel, para. 1677.

27 Ibid., para. 1678.

28 Ibid., para. 1679.

29 Using AMD chips might have developed further computer markets, to the benefit of computer manufacturers. Through its rebates, Intel did not attempt to compensate for any loss in revenue that computer manufacturers could possibly undergo through not developing AMD-based equipment. The rebates were designed, according to the Commission, so as to just provide the necessary incentive for these manufacturers to be satisfied with the immediate payment they received, even if they had to forego, for that reason, the possibility to develop other sorts of products in demand.




excluded, limited or delayed AMD x86 CPUs in the market. As such, Intel’s exclu-sionary practices had a direct and immediate negative impact on those customers who would have had a wider price and quality choice if they had also been offered the product of their favorite OEM and/or retailer with x86 CPUs from Intel’s competitors”31.

III. The scope of the new approach

1. Foundational casesThe attention paid to the three cases discussed in the previous sections of this paper should not be interpreted as an indication that the European institutions were silent, earlier, on choice in the enforcement of competition law. Arguably, the concept does not always appear as prominently in decisions and judgments. But it has always been there. For instance, it was present, and considered as an essential element, in the three cases where the European approach to abuses by dominant firms was developed.

Indeed, choice was given a prominent position in the first case involving Article 102 TFEU: Hoffmann La Roche32, where the dominant firm—a Swiss pharmaceutical company—had provided clients rebates which, as in Intel, ensured that purchasers would not buy products from competitors. In their decisions, 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.

“The conduct of Roche . . . constitutes an abuse of a dominant position, because by its nature it hampers the freedom of choice . . .33 and restricts competition between bulk vitamin manufacturers in the common market”34. “The fact of agreeing with purchasers that they will buy all or a very large proportion of their requirements from only one source by its very nature removes all freedom of choice from purchasers”35. “Obligations . . . to obtain supplies exclusively from a particular undertaking . . . are

31 Ibid., 1602.

32 Commission Decision 76/642/EEC — Vitamins (Hoffmann-La Roche), [1976] O.J. L 223/27.

33 In that excerpt, the Commission also notes that the behavior adopted by Roche hampers the equality of treatment of purchasers. This echoes Article 102 TFEU, under which dominant firms may not impose different terms to partners located in similar conditions.

34 Commission Decision 76/642/EEC — Vitamins (Hoffmann-La Roche), para. 22.

35 Ibid., para. 24.


Paul Nihoul

incompatible with the objective of undistorted competition . . . because . . . they are not based on an economic transaction which justifies this burden or benefit but are designed to deprive the purchaser of or restrict his possible choices of sources of supply and to deny other producers access to the market”36.

The concept of choice appeared with the same prominence in the second case where Article 102 was applied—United Brands37, which featured a dominant firm preventing the sale of bananas to other Member States and refusing to sell its products to distributors that sold bananas from competitors. For the Commission, this last practice amounted to an abuse by virtue of the effect produced on the freedom of purchasers—who could not freely choose what they saw as corresponding to their needs as they would otherwise lose the commercial relationship with the main supplier, which was essential to them:

A buyer must be allowed the freedom to decide what are his business interests, to choose the products he will sell, even if they are in competition with each other; in effect to determine his own sales policy. When dealing with a supplier in a dominant position, such buyer may well find it worthwhile to sell several competing products, including those of the dominant firm, and to advertise them, but to an extent which he must remain free to decide for himself38.

The same prominence is also given to the concept of choice in the third case applying Article 102–Michelin I39, which was a case where the dominant firm similarly used rebates to tie purchasers. 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.

“[Michelin’s] commercial conduct constitutes an abuse of a dominant position. It restricts dealers’ freedom of choice and results in inequality of treatment as between tyre dealers. The access of other tyre producers to the market is also restricted”40. “In deciding whether Michelin NV abused its dominant position in applying its discount system it is . . . necessary . . . to investigate whether, in providing an advantage not based on any economic service justifying it, the discount tends to remove or restrict the buyer’s freedom to choose his sources of supply, to bar competitors from access

36 Case 85/76, Hoffmann-La Roche v. Commission, [1979] E.C.R. 461, para. 90. See also paras. 103, 106.

37 Commission Decision 76/353, Chiquita (United Brands), [1976] O.J. L 95/1.

38 Ibid., s. II, para. 3.

39 Commission Decision 81/969/EEC, Bandengroothandel Frieschebrug BV/NV Nederlandsche Banden-Industrie Michelin (Michelin I), [1981] O.J. L 353.

40 Ibid., para. 37.



to the market, to apply dissimilar conditions to equivalent transactions with other trading parties or to strengthen the dominant position by distorting competition”41.

“Such a situation is calculated to prevent dealers from being able to select freely at any time in the light of the market situation the most favourable of the offers made by the various competitors and to change supplier without suffering any appreciable economic disadvantage. It thus limits the dealer’s choice of supplier and makes access to the market more difficult for competitors. Neither the wish to sell more nor the wish to spread production more evenly can justify such a restriction of the customer’s freedom or choice and independence. The position of dependence in which dealers find themselves and which is created by the discount system in question, is not there-fore based on any countervailing advantage which may be economically justified”42.

2. Subsequent case lawThe variations in the language used in these cases as regard to the importance of choice have been remarkably limited. But some of them—specifically, the most important ones—are worth mentioning. In Napier Brown43, the dominant sugar manufacturer in the British market, British Sugar, was attempting to tie purchasers to its products through various types of price-related strategies. The Commission found that:

Such an offer44, which has the effect of requiring certain existing [British Sugar] customers to “tie-in” other companies to purchase exclusively from [British Sugar] in order to receive a reduced price for retail sugar, is . . . designed to deprive the purchasers in question of, or restrict their possible choices of, sources of supply and furthermore deny other producers . . . access to the market (emphasis added)45.

In Tetra Pak II46, the dominant firm dominated various markets relating to liquid packaging, including the cartons where the liquid is poured, the machines involved in the packaging process as well as related services such as service and repair. It was using various practices to eliminate competition. For instance, clients purchasing packaging machines were compelled to use the repair and maintenance services

41 Case 322/81, NV Nederlandse Banden-Industrie Michelin v. Commission, [1983] E.C.R. 3461, para. 73.

42 Ibid., para. 85.

43 Commission Decision 88/519/EEC, Napier Brown v. British Sugar, [1988] O.J. L284.

44 The offer in question involved rebates.

45 Commission Decision 88/519/EEC, Napier Brown v. British Sugar, para 74.

46 Commission Decision 92/163/EEC, Tetra Pak II, [1992] O.J. 1992, L 72/1.


Paul Nihoul

provided by the firm for these machines. The behavior was found abusive as it prevented clients from making their own choices.

“[A] requirement that the customer obtain maintenance and repair services exclusively from Tetra Pak closes the door to any competitor on the maintenance and repair services market. It also binds the customer completely to Tetra Pak, not allowing him any freedom to make his own choice” (emphasis added)47. “The Commission wonders why, if the claim that only Tetra Pak cartons may, for technical reasons, be used on Tetra Pak machines is true, this group sees the need to make such use the subject of a contractual obligation. If there is genuinely no technical alternative, such an obligation is unnecessary. However, if such an alternative does exist, the choice should be left to the user, and any obligation to purchase solely from an undertaking which is in a position such as that occupied by Tetra Pak should be prohibited” (emphasis added)48.

In Michelin II49, new proceedings were initiated against the Michelin for, again, rebate related practices. The Commission and the CFI50 used the language introduced in Hoffman and the earlier Michelin case51. In its ruling, the CFI added:

Because it was loyalty-inducing, the quantity rebate system tended to prevent dealers from being able to select freely at any time, in the light of the market situation, the most advantageous of the offers made by various competitors and to change supplier without suffering any appreciable economic disad-vantage. The rebate system thus limited the dealers’ choice of supplier and made access to the market more difficult for competitors, while the position of dependence in which the dealers found themselves, and which was created by the discount system in question, was not therefore based on any counter-vailing advantage which might be economically justified (emphasis added)52.

Most recently, proceedings were initiated against the German telecommunications operator Deutsche Telekom for price squeeze practices53. In its ruling, the ECJ referred to the ruling issued in France Télécom that was discussed in an earlier section of this paper. For the Court, these prices were abusive since, in the absence of competitors, they would result in consumers not being allowed to choose their supplier.



49 Commission Decision 2002/405/EC, Michelin II, [2002] O.J. L 143/1.

50 Case T-203/01, Michelin v. Commission (Michelin II), [2003] E.C.R. II-4071. There was no appeal to the ECJ.

51 See ibid., para. 60 (quoting Hoffmann and Michelin I).

52 Case T-203/01, Michelin v. Commission (Michelin II), para. 110. See also Commission Decision 2002/405/EC, Michelin II, para. 331.

53 Commission Decision 2003/707/EC, Deutsche Telekom AG, [2003] O.J. L 263/9; Case T-271/03, Deutsche Telekom v. Commission, [2008] E.C.R. II-477; Case C-280/08 P, Deutsche Telekom AG v. Commission, [2010] E.C.R. I-9555.



“Article [102 TFEU] prohibits a dominant undertaking from . . . adopting pricing practices which have an exclusionary effect on its equally efficient actual or potential competitors, that is to say practices which are capable of making market entry very difficult or impossible for such competitors, and of making it more difficult or impos-sible for its co-contractors to choose between various sources of supply or commercial partners, thereby strengthening its dominant position by using methods other than those which come within the scope of competition on the merits” (emphasis added)54. “[T]he margin squeeze also has the effect that consumers suffer detriment as a result of the limitation of the choices available to them and, therefore, of the prospect of a longer-term reduction of retail prices as a result of competition exerted by competitors who are at least as efficient in that market” (emphasis added)55.

3. Beyond words: choice as a mechanismAs appears from these cases, choice has thus been given a relatively prominent status in the application of Article 102 TFEU since the beginning of European integration. But not all decisions or rulings issued in application of the provision contain explicit references to the concept. For instance, in 2006 the Commission adopted the decision in Tomra.56 The decision does not refer even once to the concept of choice—even though it was adopted after Microsoft, where the concept was used extensively, and only a limited time before Intel, which to date contains the fullest analysis of the function that choice plays in European competition policy.

Tomra concerned practices used by a firm found dominant in the market for recycling machines (liquid containers) in various Member States. Customers were retail outlets installing recycling facilities on their premises to collect bottles or cans used by final consumers. According to the Commission, Tomra infringed Article 102 by imposing, on its clients, either exclusivity or quasi-exclusivity obligations.

In the case, the Commission followed a reasoned three step-analysis—which correspond to the three main issues to be addressed in an application of Article 10257.


55 Ibid., para 182.

56 Case COMP/E-1/38.113 – Prokent-Tomra, [2008] O.J. C219/12.

57 In addition to these steps, agencies and courts applying the provision must determine whether the entity involved in the proceedings constitutes an undertaking for the application of the rules of competition. They must verify that the internal market is affected—this being a condition to apply European competition law in addition to, or instead of, national competition rules. The dominant position must be held on a substantial part of the common market. And the possibility of an objective justification must be evaluated, if the practices at stake are found to be prima facie abusive. This last condition is examined later in this paper.


Paul Nihoul

Among these steps, the first is the definition of the relevant market. In Tomra, the Commission basically sought to determine what machines would be regarded as substitutable by customers. In doing so, the Commission was trying to determine whether, and to what extent, a significant ratio of customers would choose one instead of another if the price underwent a small but significant non-transitory increase in price (SSNIP test)58.

In the second step, after defining the relevant market, the Commission sought to deter-mine in Tomra whether the firm involved in the proceeding dominated the market. Under case law, dominance refers to a situation where a firm has the ability to carry out its business activities in the relevant market, to a significant extent, independently from possible reactions by consumers and/or competitors due its business decisions. Suppose that the firm would decide to raise its prices. An examination of dominance would consist of trying to determine whether, and to what extent, customers would be ready to react by choosing another supplier that is pricing the same product lower. This would entail an analysis of the possibility for competitors to increase their output to serve customers disappointed by the offers made by the firm involved59.

The last step in the reasoning developed in Tomra was whether the behavior adopted by the dominant firm could be deemed abusive. On that point, the Commission concen-trated on the ratio of transactions which, among those carried out in the relevant market, could be deemed “contestable”.

The concept refers to a division made by economists among transactions carried out in dominated markets. For economists, some of these transactions are “non-contestable”. This means that, for these transactions, customers have no choice but to deal with the dominant firm. For a variety of possible reasons, they could not choose another supplier in the event they are not be satisfied with the firm. This may be due, for instance, to capacity constraints weighing on competitors and preventing them from increasing output to serve dissatisfied customers even if they wanted to. Such transactions are labelled non-contestable since, for these constrained suppliers, competitors are not able to challenge the position of the dominant firm as a viable supplier.

For the other transactions, which are called “contestable”, some choice is still possible. Customers may decide to seek supplies from the dominant firm—or they may prefer

58 The definition of the relevant market also involves the determination of the substitutability of products in the eyes of producers or suppliers. In this context, the question is whether firms involved in adjacent activities would consider choosing as a possible sector the market as defined on the basis of demand substitutability. The same question is raised for the definition of the geographic market, both as regard to customers and suppliers.

59 As appears from the case law, the existence of a dominant position may result from a variety of reasons—all based on the circumstances of each case. One reason could be that competitors lack the capacity to serve dissatisfied customers because they are not in a position to raise their output. Another could be that they do not have the information necessary to identify unsatisfied customers. Competitors could also not have access to a distribution channel allowing them to serve more customers. (For example, in Microsoft, RealNetworks could not reach customers because of the integration of WMP into Windows.)



dealing with other suppliers. The consequence is that competition can still be said to exist as regard to these transactions.

In Tomra, it clearly appears that, when seeking to determine whether the behavior adopted by the dominant firm amounted to an abuse, the Commission concentrated on the contestable part of the market. The Commission, however, was not challenging, in itself, the dominant position held by the firm. Indeed, under case law, dominance is not prohibited per se. The attention of the Commission was rather focused on the contestable transactions. Clearly, the Commission’s purpose was to prevent the domi-nant firm, through its behavior, from pre-empting competition in the contestable part of the market where competition remained effective—i.e., where customers still had a choice between suppliers.

This discussion demonstrates that, in each and every step followed by the Commission, choice was indeed present, even if the word does not appear explicitly in the decision. In defining the relevant market, the Commission analyzed the choices made by customers60. When assessing market power, it tried to assess the opportunities for choice that were offered to customers, thus attempting to determine whether the firm had become for them an unavoidable partner. When analyzing behavior, it sought to identify whether customers were still free to choose other suppliers for the contestable part of the market.

4. Merger control and anticompetitive agreements

The cases examined thus far arose in the context of Article 102 TFEU—thus raising the question: is the importance of choice limited to that provision or is the analysis also valid in regard to the other rules composing European competition law?

In substance, these rules can be divided into two categories. Some apply to undertak-ings. They indicate what behavior firms must avoid in markets so as not to inhibit competition. The other ones concern public authorities. They stipulate what these authorities cannot do in markets—with the main message that, in most circumstances, public authorities cannot grant undertakings financial or regulatory advantages that would distort the position of firms in markets, jeopardize the competitive process, and unduly create inequalities among market participants.

60 The Commission also analyzed the economic decisions contemplated by manufacturers, in the context of supply substitutability.


Paul Nihoul

In this paper, we are not concerned with the latter category of rules—those which apply to public authorities. Such rules indeed rest on a logic, and on principles, which are specific. My focus here is on the rules applicable to undertakings. These rules have among them a common feature: they all involve intervention on the part of enforcers because market power has been acquired in a relevant market. In Article 101 TFEU, market power is addressed through the prohibition of anticompetitive agreements concluded by undertakings. The purpose is to avoid the adoption of such agreements because the consequence would be the market would not function properly. In the context of merger regulation, the main idea is to ensure that the firms combining their activities will not create, through their concentration, a situation where, as a result of the acquisition or reinforcement of market power, markets will likely cease to function adequately.

As appears from this brief presentation, these rules have a common concern, which is the effect that market power can have on markets; the object being examined under these various provisions depends on the circumstances where the issue is raised.

It thus comes as a no surprise that the application of these two sets of provisions (merger control and the prohibition of anticompetitive agreements) are submitted to the same three steps that have been examined in connection with Article 101 TFEU.

Take merger control. To apply the rules regarding the concentration of undertakings, enforcers seek to define the relevant market(s). To that effect, they analyze choices actually or potentially made by customers between products that could perform the same type of function. Enforcers will also assess the strength that parties have in the market(s) so defined, relative to the possible force and vigor displayed by other market participants. Then, they will examine the effect that the merger might have in the relevant markets. If the effect is that market power would be acquired, or reinforced, the conclusion will be that the deal cannot go through.

In the context of this paper, I am more concerned with the third step of the Commission’s competition analysis, since my purpose is to determine in what circumstances a specific behavior cannot be adopted as a result of competition law. The third step is also present—along with the two other ones—in the application of Article 101 TFEU. After defining market(s) and possibly assessing the existence of market power, European enforcers analyze, in the context of Article 101, the effect that the agreements have in the relevant markets.

And again, choice related considerations appear central in these determinations. In substance, the Commission and the European courts examine, in this context, whether the agreements would negatively affect consumers’ choices, if they are allowed to exist. The word may not always appear, but the substance of the analysis of the enforcers leaves no doubt. Here also, a prohibition will be expressed if, as a result of such



agreements, customers would lose, to an unacceptable degree, their ability to switch to other suppliers—thus losing their ability to choose their economic partner.

IV. Analysis of the new approach

1. “Switching” The discussion on the main steps involved in the application of Article 102 tends to indicate that, even where the word does not appear, choice is present as a mechanism in all Article 102 cases. The possibility for customers to choose products indeed lies at the heart of market definition. It is central in the determination of whether a firm holds a dominant position. And it is inherent to the notion of abuse where, when deciding whether a behavior is abusive, the European institutions seek to ensure that competition—or choice—subsists in the part of the market that can still be deemed contestable.

To be more precise, one should state that the central feature in the steps leading to the application of Article 102 is the possibility of “switching”—the possibility for customers to turn to one or several other suppliers, or partners, when it is not satisfied with the performance displayed by the dominant firm.

Indeed, when defining the relevant market in the context of Article 102 TFEU, the Commission and the European courts assess whether, in reaction to a small but significant non-transitory increase in price, customers would switch from product A to product B—in which case the latter would be regarded as substitutable with the former61.

In the market so defined, they would then seek to determine whether, and to what extent, customers would still have the ability of switching from one supplier to another—more specifically, from the firm under investigation to another supplier. Should that possibility not exist any longer, the conclusion would be that the market is being dominated.

61 Similarly, the Commission and the European courts wonder whether producers would switch their facilities from the production of C to the production of B if prices increased in the market for the latter product in the manner described. And, again, they follow the same approach when it comes to defining the geographic market—asking to what extent customers would indifferently purchase in location Z or W, and whether producers established elsewhere would be able to start selling their products in these locations in reaction to such a price increase.


Paul Nihoul

Dominance having been established, the Commission and European courts would examine whether, and to what extent, through its behavior, the firm has attempted to hinder the ability of customers to switch to the contestable part of the market. If the firm’s behavior does hinder switching, the conclusion would be that an abuse has been committed62.

2. All economic partnersChoice is thus important in decisions and rulings adopted in the implementation of competition policy within the European Union—but whose choice are we talking about? With regard to the determination of the people or entities affected by possible abuses, there appears to be a certain ambiguity in the jurisprudence as well as, more generally, in European competition law as a whole.

This ambiguity arises from the variation in the terminology used by the Commission and the European courts in their decisions. Arguably, these variations may be due, to a certain extent, to the circumstances of each case. For instance, it makes sense—partly at least—to describe the impact on consumer choice of the integration of WMP in Windows by Microsoft. People affected by the integration are, indeed, to a large extent final consumers—i.e., individuals who use their PC in a private setting as opposed to a business environment63. By contrast, using the word “consumer” may be less adequate when discussing the effect of a possible abuse on opportunities for choice of the five most important worldwide computer manufacturers—who cannot really be described as individuals purchasing goods for their personal use64. Yet, that word was used by the Commission to refer to these businesses in various passages of the decision adopted in Intel.

So, ultimately, who is concerned by that choice mechanism? In other words, who is protected by the Commission and the European courts when it comes to assessing behavior adopted by dominant firms? The answer would appear to be straightforward:

62 For instance, in Tomra, it was found that, through obligations and financial incentives, the firm was seeking to impose on its customers an obligation to place with it all their orders or an overwhelming part of them. The same pattern took place in Intel where, through rebates and naked payments, the firm sought to avoid the possibility that the main computer manufacturers would place orders with AMD. In Microsoft, the Commission and the CFI found that, by refusing interoperability information, the firm was seeking to undermine the possibility for customers to choose competing server software. The same conclusion was reached as regard to WMP where, as a result of the integration of its multimedia software in Windows, Microsoft was rendering meaningless any alternative that competitors could come up with.

63 Even in that situation, the word “consumers” may not be entirely appropriate. Personal computers are not only used by private individuals—they are also used by businesses. To reflect that variety of possible users, “customers” might have been more appropriate.

64 Traditionally, the term “consumer” is used, in European law, as designating individuals (as opposed to entities) acting in a private (as opposed to business) capacity. See e.g. N. Reich, H-W Micklitz, P. Rott, European Consumer Law, Intersentia, pp. 1-36 and s. 9.3.



in the context of Article 102 TFEU, any type of economic actor involved in choices concerning products or services offered by a dominant firm or by other businesses.

In the context of this paper, the purpose is not to criticize these variations in terminology. For our discussion, I only note that the use of words by the Commission and the European courts in these cases do not appear to result from a careful assessment of the meaning or connotation that could be conveyed. “Consumers”, “customers”, ”clients”, “users”, “buyers”, “purchasers”—to name a few—tend to be used interchangeably in decisions and rulings65.

To some extent, the variation in terminology serves the demonstration proposed here, as it indeed suggests that the identity of the persons or entities involved is immaterial. From this uncertainty as to what category of users is concerned, one can probably infer that the essential point, in that regard, is not who is affected—but what.

What is impacted, as a matter of fact, is choice—whoever may be involved. Whatever their status or the category they belong to, 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. As appears from the case law, dominant firms seek to impede choice as a step towards eliminating competitors and competition. And they seek to eliminate competitors and competition to diminish, again, the power that customers would otherwise have in competitive markets to turn to other suppliers.

65 For a more complete analysis, see P. Nihoul, “The Status of Consumers in European Liberalization Directives”, Yearbook on Consumer Law, 2009, pp. 67-106. See also, by the same author, “Is Competition Law Part of Consumer Law?”, in Josef Drexl, Warren Grimes, Clifford Jones, Rudolph Peritz and Edward Paine (ed.), More Common Ground for International Competition Law, Edward Elgar, Northampton, 2011, pp. 46-59. The only setting where some importance is granted to terminology in the field of competition law would appear to be when the Commis-sion devises communications meant for the public. In my book La Concurrence et le droit, I have proposed a division into three categories the information produced by the Commission in the field of competition law. The first category would consist of documents (internet pages, etc.) prepared for the public, and intended to explain why competition policy is important for citizens. In these communications, the emphasis is on advantages expected from competition for individuals, that is, final consumers. The second category would be made of decisions adopted by the Commission in concrete, specific cases. In these decisions, one can rarely detect any form of specific attention paid to the situation of final consumers. The attention is instead on concepts, the existence of which governs the application of the provision (abuse of dominance, relevant market, etc.). Between these categories, a middle ground would contain more general, but technical information—guidelines, discussion papers, regulations, etc. These documents announce policies to be carried out in specific sectors, or regarding specific types of behavior and situations. As such, they also focus on concepts like those mentioned above. At the same time, they are more general than decisions and can be read by a more general audience, without going so far as being meant for the public. Thus, it may happen that, in this last category of instruments, some attention may be devoted to publicizing the advantages for citizens derived from competition.


Paul Nihoul

3. Why did they not switchIndependent of who they are, customers66 are scrutinized when it comes to assessing behavior adopted by dominant undertakings on the contestable part of the market. In decisions and rulings, one can notice an increasing attention being placed, by the Commission and the European courts, on the specific moment when, although they could still choose products provided by other suppliers, these customers ultimately turn to the dominant firm and, as a result, increase its dominant position in the relevant market.

Interestingly, dominant firms claimed, in all the cases examined above, that their increase in market share was due to business superiority. Indeed, there would be no legitimate justification for an authority to intervene, on the basis of Article 102 TFEU, against an undertaking for the mere reason that its products are excellent, and preferred by customers.

But in the last few years, this claim has been extensively challenged. Typically, the dominant firm would provide surveys and analysis aimed at demonstrating its superi-ority—to which the Commission would respond by pointing to elements, in these studies, indicating that the success met by the firm was due, rather, to its behavior, which could be considered abusive.

For instance, in Tomra, the Commission, provided statistics demonstrating that the market share held by the dominant firm decreased during the periods when the domi-nant firm did not impose on its customers exclusivity or quasi-exclusivity constraints, customers turned to competitors. Meaning, for a variety of possible reasons67, customers switched to other suppliers when they were not prevented from doing so.

Similarly, in Microsoft, the Commission provided rankings prepared by specialized reviews about the performance of multimedia software. In most of these rankings, the product designed by RealNetworks was considered as being of a higher quality. This higher quality, however, did not prevent the market share held by RealNetworks from declining steadily while the share held by Microsoft was dramatically soaring. The Commission concluded that the discrepancy between the preference declared by users and the economic decisions ultimately made by them to purchase WMP could only be

66 This word is used, throughout the paper, to refer to those acquiring goods or services from dominant firms. Arguably, competition also protects economic actors located upstream in the supply chain (suppliers) against abusive practices adopted by dominant buyers. This topic is beyond the scope of this paper.

67 As was the case for the reasons explaining the acquisition of a dominant position by a firm, the reasons explaining that customers may prefer other suppliers may be diverse—and are often specific to the circumstances of each case. In Intel, for instance, the computer manufacturers mentioned various advantages of the chips made by AMD as a reason explaining that they were contemplating switching to that firm away from the dominant firm for a part of their supply.



due to the difficulties, orchestrated by the dominant firm, for customers to turn to the products made by competitors68.

In the same case, the Commission referred to a survey carried out by a consulting company and provided by Microsoft to establish the superiority of its products. But, contrary to its expectation, the survey was interpreted by the Commission as indicating that all meaningful differences between the products could be explained by the following problem considered crucial by the Commission: customers would not chose competing products because there was no guarantee that such products would interoperate with software designed by Microsoft—software that had become the standard in the market. Thus, for the Commission, the success encountered by Microsoft was not due, neces-sarily, to the superiority of its products, but rather to the fact that, contrary to business traditions in the sector, it was refusing to provide information essential to ensure interoperability on its networks69.

4. The decisive reasonBut among all the cases recently handled in Europe dealing with Article 102 TFEU, Intel provides the best illustrations of the focus increasingly placed by the Commission on the reason why, for the contestable part of the transactions carried out in the relevant market, customers ultimately opted for the dominant firm in a context where, absent the behavior adopted by the firm, they would have opted for competing products.

In the decision, the Commission successively reviewed the business decision taken by the major computer manufacturers to deal with the dominant firm for that part of their transactions. In the following paragraph, I analyze the review conducted by the Commis-sion.

In its decision, the Commission provided evidence that, during the period under investigation, Dell was actively considering purchasing part of its supplies from AMD. For Dell, such a decision would make sense from a business perspective. The chips made by AMD presented various advantages, in terms of price and quality.

“Dell, which at the time was 100% Intel-exclusive, was actively considering switching a share of its x86 CPU supplies to AMD, whose products it recognised had improved and which in its view offered certain price and performance advantages”70. “However, given the conditional MCP rebates . . . Dell remained exclusively loyal to Intel”71. “[T]

68 Commission Decision COMP/C-3/37.792—Microsoft, paras. 647–65, 699.

69 Ibid., paras. 948-51.




Paul Nihoul

he Intel rebates were aimed at influencing that choice and actually were one of the factors behind Dell’s choice, and more precisely ‘an important part’”72. “[As a result of conditional rebates,] customers which, on the basis only of competition on the merits, may have awarded a part of their purchases to a competing supplier, may prefer to source all or nearly all of their inputs from the dominant company in order to obtain the benefit of the discount”73.

According to the Commission, the same scenario unfolded with Hewlett Packard (HP)—at that time the second largest manufacturer worldwide in terms of computer sales. As appears from the Commission’s decision, there was evidence that, during the period under consideration, HP was preparing to integrate AMD chips into some products as a result of demand expressed by final consumers. It however did not, ultimately, because Intel provided rebates conditional upon HP not dealing with Intel’s competitor. According to the Commission, the rebates were specifically calculated to annihilate the business advantage that HP would have obtained by placing AMD chips into some of its products.

“HP was the first large OEM to offer . . . a business desktop with an AMD x86 CPU. The launch of that product by HP derived from a demand from US IT managers for an AMD-based desktop from a top tier OEM. According to an HP internal memo, 343 US IT managers had petitioned for an AMD based desktop from a top tier OEM. In addition, AMD-based corporate desktops had already won several big tenders . . . HP also published a press release in which it stated that it had received ‘inquiries from large companies about Athlon based machines’ and that HP ‘didn’t rule out the possi-bility that HP might use Hammer [the next generation of AMD x86 CPUs] too in some machines.’ . . . The press release . . . stated that HP considered that AMD’s new architecture for PCs and servers . . . had ‘very interesting performance and cost attri-butes’ and was considered to be ‘a disruptive product to Intel’”74. “However, despite its plans for a significant deployment of AMD-based corporate desktops, HP ended up shipping only limited amounts of such products, representing less than 5% of the x86 CPUs purchased by HP for that segment”75.

In its decision, the Commission also described the situation of Media-Saturn-Holding (MSH)—another major computer manufacturer. In its review, the Commission noted that the manufacturer had been actively seeking to purchase products from AMD. Such a strategy made a sense given the lower prices charged by that firm. It also sought to produce computers based on non-Intel chips to explore the possibility that some







diversity might be requested by markets. For these reasons, it repeatedly negotiated with Intel to see whether it would be willing to maintain its rebates if some chips were bought from AMD. But the request was not accepted as Intel was demanding exclusivity. For that reason, MSH did not purchase AMD chips:

“In MSH’s perception, certain AMD-based products constituted a competitive and attractive alternative to comparable Intel products, in particular with regard to specific price ranges . . . Against that background, MSH has repeatedly strived to negotiate an exception from its exclusivity agreement with Intel for cases in which ‘a certain AMD processor is clearly and verifiably more competitive and cheaper’, . . . or at least ‘for the sales of specific brand products equipped with AMD processors . . . ’ However, these endeavours were eventually unsuccessful”76.

“MSH has ‘repeatedly reviewed its purchasing strategy’ and thus reconsidered its exclusive relationship with Intel in view of the resulting lack of product variety and the apparent lack of competitiveness of Intel x86 CPUs in the entry price ranges. As a result, MSH has repeatedly entered into negotiations with AMD ‘to explore whether, under terms potentially offered by AMD, terminating the exclusive sales of Intel equipped computers would be commercially sensible for MSH’”77. “However, it was clear to MSH that a change in its supplier strategy would lead at least to a substantial and disproportionate reduction of total payments from Intel, although there was some uncertainty as regards the amount of payments MSH would lose if it switched even minor parts of its demand to AMD . . . Against that background, MSH ‘has to date always considered that the commercial offers made by AMD would not be attractive enough to MSH from a commercial point of view’, . . . and has, in fact, stayed 100% loyal to Intel”78.

The last situation reviewed here is that of the computer manufacturer Lenovo. As indicated in the decision, the firm was convinced that the chips provided by AMD had to be purchased. They provided the perfect material for the submarket targeted by that manufacturer: they were cheaper than the corresponding products proposed by Intel; and the manufacturer found it advantageous, from a business point of view, to have a certain diversity in its sources of supply—rather than depend on just one supplier. Despite these various reasons, which made a lot of sense from a business point of view, the manufacturer dropped its intention to purchase AMD chips—and remained 100 % Intel during the period considered.





Paul Nihoul

“Lenovo . . . had numerous business reasons to introduce AMD-based notebooks in parallel with its already existing Intel based notebooks. Most importantly, Lenovo experienced growing market demand for AMD x86 CPUs . . . Lenovo’s intention to introduce AMD-based products was particularly driven by the fact that . . . ‘AMD has widespread penetration’; . . . ‘AMD Has the highest penetration in the market Lenovo is targeting for growth’; ‘AMD gaining momentum in Notebooks’; ‘AMD Gaining Momentum in the Enterprise; AMD technologies are competitive; Lenovo sales teams are asking for an AMD alternative’; ‘AMD CPU Prices Are Significantly Below Intel; ASP Gap growing due to Intel ASP increasing while AMD ASP is decreasing’; ‘AMD Gaining [geographical area] Market Share EXPECTATIONS: Large CPU cost gap will continue to drive AMD share; [Lenovo notebook product] will increase mobile share’ . . . AMD CPUs were also cheaper in segments critical to Lenovo. In some executives’ views, ‘the combination of price and performance favoured at times AMD over Intel’”79. “In addition to AMD’s competitiveness and growing demand for AMD-based notebooks, Lenovo recognised that pursuing a dual-source strategy for notebooks, as it already did for its desktops, would result in more advantageous business relationships and commercial terms with both AMD and Intel, and would also secure supplies in times of shortages”80.

5. Several considerationsIn some decisions analyzed here, choice is the only consideration mentioned to justify intervention81. But this is far from being common. In many cases, choice is joined by other considerations—and no indication as to which has priority and/or how they possibly integrate.

In Microsoft, the Commission mentioned two considerations to support its finding that an abuse had been committed: the restriction of choice opportunities for customers and the negative effect produced on innovation by the practices at stake82.

In Deutsche Telekom, the ECJ ruled that, by squeezing competitors out of the market, the dominant German telecommunications operator had unduly restricted customer


80 Ibid., para 986.

81 See, e.g., Case C-202/07 P, France Télécom v. Commission, para. 112 (“[C]ustomers suffer loss as a result of the limitation of choices available to them”); Case COMP/C-3/37.990 — Intel, para. 1679 (“[C]ustomers were deprived of a choice which they would have otherwise had”). Commission Decision 76/353, Chiquita (United Brands), [1976] O.J. L 95/1, s. II, para. 3 (“[A] buyer must be allowed the freedom to decide”). Commission Decision 92/163/EEC, Tetra Pak II, para. 109 ([T]he conduct does not allow customers any “any freedom to make his own choice” and “the choice should be left to the user”). Case C-280/08 P, Deutsche Telekom AG v. Commission, para. 182 (“[C]onsumers suffer detriment as a result of the limitation of the choices available to them”).

82 Commission Decision COMP/C-3/37.792 — Microsoft, para. 782 (“Microsoft’s refusal to supply has the consequence of stifling innovation . . . and of diminishing consumers’ choices”).



choice. In the same ruling, it signaled, however, that low prices are an integral objec-tive to be pursued under competition policy—leaving readers uncertain as to how these considerations would be balanced (traditionally, low prices are associated with economies of scale which, in many sectors, require some consolidation—and thus, possibly, resulting in less choice for customers).

In Michelin I, the ECJ stressed that conditional rebates prevent customers from choosing their suppliers freely. But it also explained that such rebates caused customers to be treated unequally83. As a result, some dealers were receiving higher rebates than others, even though they were selling the same number of Michelin tires. The ECJ concluded that firms were treated unequally, in contravention of Article 102 TFEU. It also ruled that, as competitors left the tire manufacturing market, the choices open to customers in that market was unduly reduced.

To these considerations must be added others mentioned by the Commission in its Guidance Paper announcing priorities for the enforcement, in the future, of Article 102 TFEU.84 As appears from the document, the focus will be on the most serious infringe-ments—being defined as those causing the greatest harm to consumers. For the Commission, consumers may suffer three types of harm as a result of anticompetitive conduct. First, prices may be higher than they ought to be—and would be if the market was effectively competitive. Second, quality may be lower than one would anticipate in a truly competitive environment. Third, opportunities for choices may be restricted for consumers—compared to those which would be open to them in the absence of infringement.

“[T]he Commission will focus on those types of conduct that are most harmful to consumers. Consumers benefit from competition through lower prices, better quality and a wider choice of new or improved goods and services”85.

In the Guidance Paper, the Commission however goes further by stating that, in fact, the infringements causing the greatest harm to consumers are those that foreclose competitors. This would appear to indicate that, in the interpretation provided by the Commission, the practices adopted by dominant firms must be considered, in the first instance, as to the effect they produce on competitors. Consumers are considered second, to the extent that intervention would only be warranted, in cases of difficulties caused to competitors, when a negative effect is produced on consumers.

83 Case 322/81, NV Nederlandse Banden-Industrie Michelin v. Commission, [1983] E.C.R. 3461, para. 73.

84 OJ 2009, C 45/02, “Guidance on the Commission’s enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings”, <http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:52009XC0224%2801%29> (last visited 29 Jan. 2016) (Guidance Paper).

85 Ibid., para. 5.


Paul Nihoul

“The aim of the Commission’s enforcement activity . . . is to ensure that dominant undertakings do not impair effective competition by foreclosing their competitors in an anti-competitive way, thus having an adverse impact on consumer welfare, whether in the form of higher price levels than would have otherwise prevailed or in some other form such as limiting quality or reducing consumer choice”86.

This position would seem to remarkably echo a trend pervasive in the jurisprudence, which mentions, on the one hand, the effect on competitors, or competition, and, on the other hand, the effect on customers, as the main reasons for antitrust authorities to act on the basis of competition policy—without explaining necessarily how they articulate these considerations or whether each of them stands, by itself, as a sufficient justification to support action. Below are examples of these considerations being discussed in several decisions.

Effect on competition. Hoffmann-La Roche “hampers the freedom of choice . . . and restricts competition”87.

Effect on competitors. Hoffmann-La Roche was seeking “to deprive the purchaser of or restrict his possible choices . . . and to deny other producers access to the market”88. Microsoft “deprives the customer of the ability to choose freely . . . and denies other producers access to the market”89. Michelin “limits the dealers’ choice of supplier and makes access to the markets more difficult for competitors”90. British Sugar was seeking to “deprive the purchasers . . . of, or restrict their possible choices . . . and furthermore deny other producers . . . access to the market”91.

6. Can these considerations be ranked?As the European antitrust approach seems based on various considerations, a question is whether the various considerations can be prioritized—in other words, whether an order of priority can be established among them. In the context of this paper, the issue would be whether, and to what extent, choice comes out of case law as being the most important consideration—or whether other considerations are considered more important.

86 Ibid., para. 19.

87 Case 85/76, Hoffmann-La Roche v. Commission, para. 90.

88 Ibid.


90 Case 322/81, NV Nederlandse Banden-Industrie Michelin v. Commission, para. 85 (quoted in Case T-203/01, Michelin v. Commission (Michelin II), para. 110).

91 Commission Decision 88/519/EEC, Napier Brown v. British Sugar, para. 74.



An argument supporting a claim of priority could be based on the line of decisions and rulings adopted in the last few years that provide greater emphasis on choice. The trend started in 2004, when the Commission adopted its decision in Microsoft. In the first part of this paper, I explained why that decision is important for European competition law—especially when considered in light of the history of cases adopted in application of Article 102 TFEU. So, it can be considered relevant for our discussion to highlight the fact that, in the decision, the Commission placed a great emphasis on the effect produced on customer choice by the practices adopted by the dominant firm.

The year after (2005), that decision was followed by the ruling issued by the ECJ in France Télécom. Earlier, I asserted that the ruling can be regarded as important with respect to the jurisprudence of the Court. In that ruling, the ECJ indeed mentioned choice explicitly, and unequivocally, as being the one reason for which, ultimately, the prices charged by the dominant firm were to be regarded as abusive—independent of the issue of whether the dominant firm could recoup losses afterwards.

More recently, the Commission adopted the Intel decision—which, as I discussed, contains the fullest analysis, to date, on the subject matter. In that decision, the Commis-sion devotes a considerable portion of its analysis to demonstrate that the behavior adopted by Intel distorted business decisions that customers would have made other-wise.

Another argument suggesting a form of primacy could be the pervasive nature of choice as a consideration leading to infringements decisions and rulings. In the sections above, it has observed that choice has always been an important consideration—appearing in foundational cases and being mentioned in the most recent cases. It was also asserted that, in addition to being always present, choice was also everywhere, since it is inherent in the three major steps followed by the Commission and the European courts when applying Article 102 TFEU.

The pervasive nature of the concept cannot be found with a similar intensity in the other considerations mentioned by the Commission or European courts. For instance, innovation is essential—there is no doubt about it. But it is not at stake, arguably, in all circumstances. Some antitrust cases concern sectors with mature technology, where the room for innovation is limited. Similarly, the importance of treating equally all commercial partners is not established in all cases involving the application of European competition law. In various situations, the obligation to treat equally firms that are placed in similar circumstances is complied with. Nonetheless, intervention may be necessary on the basis of competition policy to ensure the persistence of a sufficient degree of choice in markets.


Paul Nihoul

7. Choice vs. efficiencyAs far as ranking is concerned, a final argument could be based on the ruling issued in France Télécom and already mentioned in this section. As a reminder, the case concerned predatory prices allegedly charged by the French telecommunications operator. To support its position, the operator was claiming that, when charging these prices, it could not have recouped the losses it was then incurring. Entry barriers were indeed low in the market—implying that the firm would not be able to raise tariffs later as high tariffs would have attracted other firms, which would have pushed the tariffs down again.

In their reply to that argument, the Commission and the CFI stated that, in their view, the possibility of loss recoupment was not a condition in the application of the prohi-bition—with the Commission going further and, on basis of economic analysis, providing evidence that, contrary to the claim made by the operator, the possibility of loss recoupment existed when the predatory prices were charged.

In the appeal, the ECJ did not go into the economic analysis but rather confirmed that possible loss recoupment is not a condition for the prohibition of the abuse. Suppose that prices remain low and, thus, losses cannot be recouped. As regard to prices, that situation would be, economically, to the benefit of customers. But another sort of damage ought to be considered: the Court noted that the reduction suffered by customers in the opportunities for choice as a result of the exit of competitors was a harm to consumers.

The ruling is important because it appears to prioritize choice above efficiency. In European competition law, the latter concept is, traditionally, about hard numbers. It is interpreted as implying, under the efficiency doctrine, that law enforcers should not act against practices giving rise to cost savings passed on to customers. As proposed by that doctrine, lower prices should be preferred in all circumstances. Consequently, prima facie anticompetitive agreements and prima facie abuses of dominant positions should not give rise to proceedings where, if not prosecuted, they would result in lower prices.

The reference made to choice in France Télécom appears to alter that order of prefer-ence. The ruling suggests that action was warranted even though prices may have remained low—as low indeed as those charged by the operator selling at a loss. As the ECJ observed, there was a possibility that the intervention carried out by the Commis-sion may have resulted in higher tariffs in the relevant market. But, for the ECJ, such a possibility should not imply that the operator should be allowed to sell at a loss.



When charged by dominant firms, below cost prices may cause competitors to exit the market—resulting in less choice for customers92.

8. Competition should not be eliminatedEfficiency claims are generally raised in the second part of antitrust investigations—when conduct is deemed prima facie anticompetitive and the question arises whether it could be justified93. The examination of efficiencies in the second part of investiga-tions indicate that courts and agencies would be prepared to accept a reduction in the degree of competition existing in the relevant market94 and, consequently, a reduction in the degree of choice available to customers in that market, if the reduction comes with cost savings that result lower prices. As Intel claimed during the investigation directed against it, “consumers cannot be worse off if they are buying a product at a lower price”.95

But that argument raises a systemic difficulty in European competition law. Arguably, objective justifications are admitted under Article 102 TFEU—as they are under Article 101 TFEU and in the context of merger control. However, the Commission and the European courts have proven difficult to convince. To a large extent, the possibility of an efficiency justification has remained theoretical96.

This is because, under European competition law, firms arguing that their prima facie anticompetitive conduct should be accepted must present arguments along the following lines. On the one hand, they must establish that the conduct in question was meant to realize an objective that can be deemed legitimate under European law97. On the other hand, they must also demonstrate that the means98 used to attain that objective were acceptable too. For that part of the exercise, three tests apply. Test 1: the firm must establish that the conduct was of a nature that allowed the realization of the objective

92 That position adopted by the ECJ has not remained isolated. In Intel, the dominant firm was also claiming efficiency gains that passed onto customers. But the argument was rejected for lack of evidence. And the Commission echoed France Télécom by noting that low prices are not everything that matters for the enforcement of the provision. Choice is also important. As the Commission then stated, “[efficiency] in itself does not address the argument that product variety has suffered”. Case COMP/C-3/37.990 — Intel, para. 1612.

93 If it is justified, the conduct is accepted and the firm is not found to have infringed.

94 The conduct was found to be prima facie anticompetitive.


96 Among all decisions adopted in the implementation of Article 102 TFEU, only one ruling issued by the ECJ involved an admission by the Court that, in the case at issue, the dominant firm should be allowed to resort to the practice that was originally deemed unacceptable by the Commission, and by the CFI.

97 This part of the reasoning is not the most difficult for the firm, as it is always possible to pretend that the purpose considered was a value considered as being important in European law. Such values can be identified easily on the basis of case law and legislation.

98 That is, the conduct being investigated.


Paul Nihoul

at stake. In other words, the conduct was useful to realizing that objective. Test 2: the firm must show that no as efficient, less anticompetitive conduct could be used to achieve the same result. In other words, the behavior was necessary or even indispens-able because the firm could not reach the same result using other conduct that would hinder competition to a lesser degree. Test 3: the firm must demonstrate that its conduct would not eliminate competition in a substantial part of the internal market99.

In this final test, the question is whether a prima facie anticompetitive conduct can be accepted when it restricts competition to an extent that amounts to elimination or quasi-elimination of competition. At that stage, the assessment is on what should be preferred. A promise of lower prices as a result, mainly, of economies of scale coming from an increase in the market share held by the dominant firm? Or the protection of the remaining—but limited—degree of competition?

In European law, the preference is clear—it goes to competition. Throughout their decisions, rulings, and documents, European antitrust authorities insist that, in their view, the main source of economic efficiency is the pressure exercised by the possibility for customers to switch to other suppliers where they are not satisfied with the products or services provided by their current provider. Why would they adopt a different attitude when confronted with dominated markets, where one firm has been able to free itself from that constraint—and is using the dependence of customers to provide them with products and terms and conditions that they would not accept if they were free to choose their partner(s)?

Ultimately, the dilemma referred to above is between two forms of constraints. One is the constraint resulting from the pressure placed on firms by the possibility for customers to switch to other suppliers where they are not satisfied. The other is the one exercised by dominant firms on customers when they restrict opportunities for choice open to customers through the adoption of abusive behavior. In the latter constraint, behavior deemed abusive creates situations where customers are compelled to accept the products or services provided by the dominant firm when they cannot renounce altogether purchasing in the relevant market.

For European antitrust authorities, efficiency, by nature, cannot come from an environ-ment where competition has ceased, or could cease, to exist. As a market based economy, the EU rests on the idea that results are better when economic activities are carried out in competition—that is, in a context where unsatisfied customers can switch. Where that switch or choice mechanism is threatened or eliminated, firms cannot be

99 These conditions are based on case law. They are expressed explicitly in Article 101(3) TFEU, as regard to prime facie anticompetitive agreements that the parties would seek to justify. In European law, the conditions also apply in other contexts—for instance as regard to the conditions under which one can admit national measures that, otherwise, would fall under a prohibition to introduce restrictions to the free movement of goods, services, workers, and capital.



expected to improve performance on a constant and systematic basis in hope of retaining customers and possibly attracting more.

This vision involves a distribution of roles, in the economy, between markets and authorities (including judges). In European competition law, the issue of whether a situation will lead to more efficiency should not be decided by firms in legal or judicial proceedings. For the Commission and the European courts, that issue should not be resolved by judges or civil servants. It should dealt with by the markets themselves—knowing that the latter only function properly, in the European vision, where compe-tition remains in the market100.

“Under Community competition law an undistorted competition process constitutes a value in itself as it generates efficiencies and creates a climate conducive to innovation”101. “[I]t is not for the Commission to make absolute judgments on the technical performance of the products at stake, or relative judgments on the[ir] comparative performance”102. “[Customers] are the best-placed to come to the soundest judgment as regards their supply needs, and the most appropriate products to fulfill those needs”.103

100 The question then is to determine what degree of competition should remain. In the context of Article 102 TFEU, the answer is that the market should still be contestable, when proceedings are initiated, and should remain effec-tively competitive.


102 Case COMP/C-3/37.990 — Intel , para. 1698.

103 Ibid.


How “consumer choice” can unify the fields of competition and

consumer protection law

NEil W. avEritt

[email protected]

Opinion Columnist, FTC:WATCH

Former Attorney, Office of Policy and Coordination, US Federal Trade Commission

I. IntroductionThe field of commercial regulation is suffering an existential crisis. Mesmerized by the business community’s invocation of “efficiency”, it has permitted ever-larger aggregations of corporate power and the development of practices ever more hostile to consumer interests. To counteract these trends, commercial regulation needs to have something more than just particular ad hoc policies. It needs a broad philosophical vision that can be developed and relied upon as an alternative to the Chicago School’s emphasis on efficiency.


How “consumer choice” can unify the fields of competition and consumer protection law

“Consumer choice” presents just that kind of comprehensive alternative vision. The concept has become familiar chiefly in the context of competition law1. It is actually applicable in a far broader context, however. It is a way to make sense of commercial regulation as a whole—both competition and consumer protection law—by asking what fundamental purpose all these laws are intended to serve.

The best answer is that all these laws are intended to support a market economy that will respond to consumer preferences—i.e., to consumer choice. Once this fundamental purpose is recognized, a cascade of clarifying insights follows almost automatically. A market economy requires two things: an array of options, and the ability to choose effectively among them. These two functions define the proper missions of competition and consumer protection enforcement, respectively. And then once we understand the functional relation-ship between these two bodies of law, that awareness will lead to further practical insights about how to apply each of them and how to allocate cases between them, when it may be more effective to pursue a particular case under the other legal theory, and when it may be useful to draw a remedy from the other side of the statute2.

This thesis is discussed below under the following six topics: (II) What is the relation-ship between competition and consumer protection law? Does the relationship permit a single unified theory of consumer choice? (III) How does consumer protection law fit within this general framework? (IV) How can the unified choice concept help create more relevant theories of liability for both antitrust and consumer protection law? (V) How can the choice concepts lead to better remedies? (VI) How might it provide a foundation for privacy protections? (VII) How might it bring other practical benefits for national enforcement programs?

1 See Averitt and Lande, “Using the ‘Consumer Choice’ Approach to Antitrust Law”, (2007) 74 Antitrust L.J. 175, <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1121459> (last visited 2 Feb. 2016).

2 For an elaboration of this thesis, see Averitt and Lande, “Consumer Sovereignty: A Unified Theory of Antitrust and Consumer Protection Law”, (1997) 65 Antitrust L.J. 713, <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1134798> (last visited 2 Feb. 2016).


Neil W. Averitt

II. The single theory of consumer choice

Even casual reflection shows that competition and consumer protection laws are both in some way addressed to the exercise of “choice”. Both are aware of and seek to protect the variety of consumer preferences—recognizing, for example, that consumers do not generally pursue a single goal of minimum prices, but rather a more complex mixture of goals that include variety, individualism, and innovation as well. The jurisprudential question is whether there is a sufficiently close relationship between these functions to permit a disciplined theory that includes them both.

That kind of single theory is in fact possible. Antitrust and consumer protection are both part of a single effort to protect a market economy that will be responsive to the full range of consumer demands. That common goal keeps the two bodies of law closely related to each other in both functional and economic terms3.

In functional terms, competition and consumer protection laws work together to provide the conditions that a market economy requires. A market economy requires two basic things to function: an array of options in the marketplace, and the ability on the part of purchasers to go into that marketplace and select freely and effectively from among the options. These two basic functions define the proper tasks of competition and consumer protection laws. Competition law can be understood as protecting a reason-ably sufficient range of options, ensuring that they are not diminished by artificial conduct such as price-fixing or anticompetitive mergers. Consumer protection law then comes into play and ensures that buyers can select from among those options with reasonable freedom and effectiveness, with their choices unharmed by such artificial distortions as coercion or deception.

Competition and consumer protection laws can also be viewed in remedial-economic terms as protecting against the two types of market failure that pose the greatest threats to the exercise of consumer choice. The potential market failures are of two general kinds. Some exist in the external commercial environment that surrounds consumers, resulting in failures of the market to provide particular kinds of information or options. These failures can be thought of as taking place “outside the head” of the consumer. No consumer, no matter how shrewd or careful, can create options where they do not exist, and so protections against this kind of market failure have become a responsibility of public enforcement agencies through competition policy. Other kinds of market

3 In the United States, the Federal Trade Commission enforces laws on both competition and consumer protection, which further facilitates an integrated interpretation of the two.



failures exist “inside the head” of consumers. They involve conduct that makes it harder for consumers to assess and choose wisely. In theory a sufficiently determined consumer could compensate for this difficulty by investing more time inquiring and evaluating. That can be difficult, however, and so it does not always happen; and, moreover, there is no just basis for saddling the consumer with the burdens of guarding against other people’s willful deceptions. For these reasons, these second kinds of market failures are also addressed by public enforcement in the form of consumer protection policy.

In short, whether viewed affirmatively from the standpoint of a positive function, or negatively from the standpoint of correcting market failures, there is a close relation-ship between competition and consumer protection enforcement. Each is responsible for carrying out one half of the larger enterprise of protecting consumer choice, and each contributes to that common doctrine4.

III. How does consumer protection law fit within this

framework?Consumer protection law fits comfortably within this framework, and draws improved definition from it.

Consumer protection law protects consumers in the exercise of their decisions in the marketplace. It is through these individual decisions that consumers express the complex tradeoffs among price, convenience, and numerous intangible attributes that give their own valuation to a product. These decisions also give consumers the ability to avoid undesirable purchases. Consumer protection enforcement seeks to prevent seller behavior that is intended to thwart this process of free selection. Thus, while antitrust enforcement involves government agencies in safeguarding the competitive environ-ment on a market-wide basis, consumer protection law helps empower buyers to protect themselves individually, purchase-by-purchase.

More than anything else, consumer protection law focuses on the problem of deception. If consumers make their choices on the basis of false information their decisions will

4 See US Federal Trade Commission, Companion Statement to Policy Statement on the Commission’s Consumer Unfairness Jurisdiction, reprinted in 4 Trade Reg. Rep. (CCH), para. 13,203 at p. 20,9093 (1980), <http://www.ftc.gov/bcp/policystmt/ad-unfair.htm> (last visited 2 Feb. 2015) (FTC, Unfairness Policy Statement) (elaborating on the relationships among various parts of the agency statute).


Neil W. Averitt

inevitably be sub-optimal. Harmful deception may take a number of different forms. It may involve express falsehoods (“Our medicine will grow hair”). Or it may involve a false implication (“Do you hate growing bald? Then buy our medicine”). Or it may involve a false implication through silence (Saying nothing in response to the question, “Is it safe to assume that your hair-growth product is scientifically proven?”).

Sellers can also harm the quality of consumer decision making through other, more specialized mechanisms. Sometimes a seller may withhold from purchasers the key pieces of information that are needed for informed comparison-shopping. For example, the sellers of home insulation may fail to provide the R-values of their products—the numerical measures of insulation effectiveness that are needed in order to make a meaningful comparison between competing brands5. Or in the starkest kind of affront to the exercise of consumer choice, a seller may sometimes engage in physical coercion of a purchaser’s decision. Improperly coerced sales can occur even in this day and age. One manufacturer of home furnaces, for example, sent salesmen to perform free inspec-tions. The salespeople took homeowners’ furnaces apart for examination, announced that they had found a problem, explained that their ethical standards would not allow them to reassemble a potentially dangerous product, left the homeowner without a source of heating, and then offered to sell the homeowner new parts or services6.

In the United States, consumer protection violations are prohibited under the Federal Trade Commission (FTC) Act, relying on different provisions depending on the specific nature of the conduct. The FTC Act prohibits “unfair or deceptive acts or practices”7. The core consumer protection offense—deception—is thus specifically covered by the Act. The agency has defined actionable deception as “a representation, omission, or practice that is likely to mislead the consumer”8. The other forms of harm to consumer decision-making are prohibited through the residual provisions of the Act, which go on to prohibit “unfair practices”. The agency has issued a policy statement defining these practices, in more general terms, as “seller behavior that unreasonably creates or takes advantage of an obstacle to the free exercise of consumer decision making”9.

Thus consumer protection law will prohibit any form of seller conduct that is likely to materially impede the exercise of consumer choice among the options in the market.

5 See Labeling and Advertising of Home Insulation, 16 C.F.R., s. 460 (1981); cf. Automotive Fuel Ratings, Certifi-cation and Posting (the “Octane Rating Rule”), 16 C.F.R., s. 306 (1981).

6 See Holland Furnace Co. v. FTC, 55 FTC 55 (1958), aff. 295 F.2d 302 (7th Cir. 1961). See also Arthur Murray Studio v. FTC, 458 F.2d 622 (5th Cir. 1972) (intense in-person sales pitches to elderly customers).

7 15 U.S.C. s. 45(a)(1).

8 US Federal Trade Commission, FTC Policy Statement on Deceptive Acts and Practices, 4 Trade Reg. Rep. (CCH), s. 13,205 (1983), <http://www.ftc.gov/bcp/policystmt/ad-decept.htm> (last visited 2 Feb. 2016).

9 FTC, Unfairness Policy Statement (n. 4).

http://www.ftc.gov/bcp/policystmt/ad-decept.htm



IV. Help in selecting the most effective basis for litigation

This brings us to a key point—probably the most important point made in this chapter. The architecture of consumer choice does more than just provide a theoretical structure for the law. It also has immense practical implications for the successful conduct of litigation. It clearly defines the two functions of competition and consumer protection enforcement, draws a clear line between them, and makes it possible to assign cases cleanly to one enforcement program or the other. This ensures that cases will be litigated under the most appropriate legal authority, with the fewest irrelevant elements of proof demanded, and with a clear identification of the points that do need to be proved.

By calling attention to both bodies of law simultaneously, in other words, choice theory encourages agencies to consider the full range of their options, and to be alert to the possibility of reframing a case in different, more effective terms.

This marks a real change from prior practice, and allows enforcement agencies to avoid pitfalls that caused them to lose cases in the past.

This approach would have been useful, for example, in the FTC’s recent cases involving the deception of standard-setting organizations. In systems where the products of different manufacturers need to be able to work together—such as systems of audio equipment or of computer components—an industry wide trade association will often set out the technical specifications for the interfaces between components. To ensure that the standard-setting process works smoothly, the association generally expects that the interface specifications not use any patented technology, or, if some part of it is patented, that the patent owner agree to make that part available to all firms on reasonable and non-discriminatory terms. Sometimes, however, an industry member will game this system. It will sit silent, not declare its patents, wait until the industry is locked into a standard that uses its technology, and then demand large royalties.

The FTC recently brought the Rambus case to challenge such conduct10. The challenge was sound on the policy merits. The conduct was exploitive and it rewarded the patent holder on the basis of a hold-up rather than on the merits of its patents. However, a narrow vision of the legal theory doomed the FTC case from the start. Because the facts involved business-to-business conduct, the case was brought by the agency’s Bureau of Competition, and it was reflexively put into competition law terms. The agency alleged that Rambus had engaged in monopolization by means of deception.

10 Rambus v. FTC, 522 F.3d 456 (D.C. Cir. 2008).


Neil W. Averitt

The court rejected that argument, however, because it could not see how the conduct could involve the act of “monopolizing” if it did not lead to any change in the industry structure.

The case would have been easy, however, if it had been expressed instead as a simple matter of deception11. Rambus had deceived the standard-setting organization, through silence and negative implications, in a way that affected the organization’s decision on what technical rights to acquire for use in its standards. Thus Rambus had harmed the organization’s decision-making abilities. That act of deception was a completed offense at that point, without any need to show market power. By adding the further allegation of monopolization the FTC had merely made its life more difficult. An awareness of the overall choice theory would have pointed the Commission toward a more promising complaint in consumer protection terms.

A precondition to using this approach is recognizing that a business corporation can be a “consumer”. This will require changing some habits of mind. Consumer protection law has traditionally focused on protecting individual natural persons. In principle, however, the agency’s task is to protect market processes in general, and to protect purchasers of whatever kind, rather than favoring one or another particular type of purchaser. Resource constraints will generally suggest letting corporations handle their own legal disputes, of course, and so cases to protect deceived corporations are likely to be relatively rare. If public action seems warranted on the merits, however, agencies should not avoid the task merely because of the identity of the parties involved12.

Once businesses are recognized as consumers deserving of protection, then enforcement agencies will begin to find other types of business-to-business conduct that might be usefully reclassified as consumer protection matters. Another potentially important form of this conduct is the coerced purchase of a license. If a purchase is coerced by the threat of bad-faith litigation, then the wrongful effect is felt “inside the head” of the purchaser and constrains his or her decision-making ability. This requires only the extortionist’s ability to inflict costs that are greater than the costs of settlement, rather than requiring actual market power. Such a matter is more like the consumer protection violation involving coerced furnace sales than it is like a traditional antitrust theory.

11 There is always room for debate about the actual facts of a case, of course, but at least the legal theory would have been straightforward.

12 The FTC’s Bureau of Consumer Protection has taken some first steps toward this policy. It will sometimes treat at least small sole-proprietorships as if they were consumers. See, e.g., FTC v. National Supply & Distribution Center, CV–99-12828 HLH (AJWx) (5 Feb. 2016) (false assertion of a prior business relationship when selling photocopier toner to small businesses); McGregor v. Chierico, 206 F.3d 1378, 1380-81, 1388 n.11 (11th Cir. 2000) (deceptive methods to persuade businesses to pay for unordered toner).



This kind of consumer protection approach may provide a handle on the issue of patent trolls, which has largely resisted attempts to challenge it on competition grounds.

Cases can also be reframed in the other direction. Conduct that has traditionally been thought of as a consumer protection violation might sometimes be profitably approached in competition terms instead. This approach may be particularly useful in challenging protectionist, self-interested regulations promulgated by state licensing boards.

Some years ago the FTC sought to challenge the restrictions on optometry practices that were imposed by state statutes and licensing boards. These included limitations on the commercial or business aspects of a practice, such as bans on practice under a trade name or in a retail setting. The Commission initially took the view that boards imposing these restrictions were guilty of an unfair consumer practice, and said that the Commission’s interpretive rule stating this conclusion could be cited in defense against any state disciplinary proceeding13. An appellate court found, however, that the Commission’s consumer protection authority did not authorize it to override state regulatory actions in this way14.

An approach under competition law would probably have led to a better outcome. For one thing, the theory of the case would have been more aptly and persuasively stated, because restrictions on the commercial format of optometry practices will tend to restrict the variety and types of retail experience that are available in the marketplace—thus invoking antitrust’s core concern with protecting the range of options available to consumers. And once a challenge has been framed in competition terms, we can begin to see a path toward overcoming the state action defense. Several limitations on the state action doctrine have been worked out over the years in the context of compe-tition cases. For one thing, state administrative actions are exempt from the antitrust laws only if they are supported by a clearly articulated legislative policy15. And if the case involves financially-interested market participants—a description that would fit many of the state boards that are made up primarily of members of the regulated profession itself—then any self-interested actions taken by such boards will have to be reviewed and approved by a neutral authority elsewhere in the state government before they are immune16. For all these tactical reasons an antitrust theory would have given the enforcement agency a greater prospect of success.

13 See Ophthalmic Practice Rules, 54 Fed. Reg. 10, 285 (1989).

14 See California Board of Optometry v. FTC, 910 F.2d 976 (D.C. Cir. 1990).

15 See California Retail Liquor Dealers Ass’n v. Midcal Aluminum, 445 U.S. 97 (1980).

16 See North Carolina State Board of Dental Examiners v. FTC, 135 S.Ct. 1101, 547 U.S. ___ (2015); cf. Town of Hallie v. City of Eau Claire, 471 U.S. 34 (1985).


Neil W. Averitt

V. Suggesting additional forms of remedy

The choice model will also lead to the selection of more effective remedies, by reminding enforcement agencies to consider the full range of remedial options that are available.

Enforcement agencies generally frame their remedies in the same terms as the violation they are designed to correct. Thus an antitrust violation, which restricts the range of options available to consumers, is corrected by an order increasing that range. If a corporate acquisition, for example, improperly reduced the options in a market, then a remedial order might call for the acquired firm to be reconstituted and divested. Similarly, a consumer protection violation, which harms the decision-making abilities of consumers, might be corrected by an order intended to help these abilities work more effectively. If false advertising has misled consumers, then it might be addressed by an order requiring that the advertising be halted, and sometimes that certain affirma-tive disclosures be made.

Sometimes, however, the most effective order may use particular remedies that are borrowed from the other side of an agency’s jurisdiction.

Thus competition remedies might sometimes be framed in terms that will also support consumers’ ability to make choices. This has already been done in some specialized situations. For example, the antitrust agencies have often challenged horizontal agree-ments that were reached under the auspices of a trade association, and that limited the flow of information to consumers in a way that made comparison shopping more difficult. The corrective orders removed these terms, and thereby put an end to the offending horizontal agreement. In doing so, however, the orders also enhanced the flow of price and product information, and thus clearly worked to strengthen consumers’ decision-making abilities17.

This kind of cross-theory approach might be kept in mind when devising remedies for other competition problems as well. For example, it has been suggested that one harmful effect of resale price maintenance (RPM) may be that it gives the salespeople in retail stores a perverse incentive to steer customers toward inferior products that are subject

17 See, e.g., National Society of Professional Engineers v. United States, 435 U.S. 679 (1978) (agreement not to engage in competitive bidding); Detroit Auto Dealers’ Ass’n v. FTC, 955 F.2d 457 (6th Cir. 1992) (agreement to limit the business hours available for comparative shopping).



to RPM in order to obtain a higher profit18. Traditional antitrust remedies—such as forbidding future vertical agreements on price—are readily circumvented through nominally unilateral refusals to deal. A consumer protection remedy, however, would recognize that the real issue is the existence of systematic incentives to deceive consumers. If the appropriate facts were shown in a particular case, then an agency might usefully focus a remedy on these issues.

Consumer protection remedies might also profit from this kind of innovative approach. There the enforcement agencies might become alert to the possibility that the most useful remedy might be one that aims to increase the number of options in the market-place—the traditional concern of antitrust cases. This approach has already been followed in a few matters. For example, the FTC’s R-Value Rule was primarily addressed to ensuring that more information was available to support comparison-shopping on home insulation. However, the Commission also hoped, quite consciously, that this process would eventually lead to the availability of more and better insulation options19. Similarly, the Franchise Rule was primarily intended to provide clear and systematic information for the benefit of would-be entrepreneurs who were considering the purchase of a franchise. Again, however, the Commission also hoped that the flow of this kind of information would lead to more substantive competition in franchise opportunities, and eventually to the development of a better range of business oppor-tunities from which potential franchisees could find one that best suit their needs.

Because the choice model covers both competition and consumer protection matters, it would keep all these kinds of cross-theory effects more clearly in sight, and would make it more likely that the agencies would consider all the possibilities when they begin to think about remedies.

18 See Grimes, “Spiff, Polish and Consumer Demand Quality: Vertical Price Restraints Revisited”, (1992) 80(4) Calif. L. Rev. 815.

19 See Statement of Basis and Purpose, Labeling and Advertising of Home Insulation, 44 Fed. Reg. 50,218, at para. 50,223 (1979) (stating in part that information failures “diminish comparison shopping, and create unwarranted competitive parity or advantage for inferior products. Thus, a market that functions in this way not only harms consumers but also lessens fair and open competition”.).


Neil W. Averitt

VI. A foundation for privacy and data security

The concept of consumer choice may also be helpful in providing a doctrinal founda-tion for an important consumer protection program.

The protection of privacy and data security has become an important and popular part of the FTC’s work. However, the legal basis for this popular program is surprisingly shaky. Firms that allow personal information to escape might be charged with decep-tion, but only if they had made some previous commitment to keep the information secure. Or they might be charged with an “unfair act or practice” under the FTC Act. Thus far, however, the FTC has asserted its unfairness theory in these cases only in terms of a general power to assess the net costs and benefits of a practice20. It is far from clear that the courts will allow the agency to claim that much undefined discre-tionary power.

A better approach would be to apply the consumer unfairness theory here in terms of consumer choice instead. In other words, consumers should have some choice as to where and how their personal information is shared. To be sure, this approach will not answer all questions. Choice in this sense is not quite the same thing as choice in the context of an initial purchase decision. Still, it is narrower than a general power to do interest balancing. The concept of choice in a general sense will at least start the inquiry on the right foot, and will provide a solid starting point for future doctrinal development.

VII. Other managerial benefits Finally, the choice model can provide a number of practical managerial and adminis-trative benefits. Two of these may be particularly relevant for enforcement agencies outside the United States that regulate commerce.

First, the choice model provides a basis for concluding that it is useful to put both competition and consumer protection functions into a single agency. If legislatures are considering this issue in a particular country, then this model provides arguments to the proponents of a single authority. If a country already has separate agencies, then the model suggests that it would be useful for them to find ways of coordinating their activities and their doctrines. The resulting coordination would not only lead to more

20 See In re LabMD Inc., Docket No. 9357 (complaint issued 29 Aug. 2013).



effective public administration, as discussed above, but also to more public support, which is a crucial asset for enforcement agencies. Consumer choice is a simple, intuitive goal, which can be readily communicated to the press, the legislature, and the public-at-large. It can help to build broad public support for the agency’s work, in a way that a program expressed in economic terms would have great difficulty doing.

Second, the choice model may provide a mutually acceptable midpoint at which both American and European approaches to commercial regulation can converge. Consumer choice is not as narrow and business-friendly as the Chicago School’s close focus on short-term productive efficiency, but it is not cut off from all economic learning either. The focus is on the preconditions to a market economy, not on some measure of ultimate social justice. At the same time, consumer choice is not as unstructured as an inquiry into “abuse of dominance”, but neither is it entirely unconcerned about the ways in which dominant firms may seek to cement their positions. The choice model should be broadly acceptable on both sides of the Atlantic.

VIII. Conclusion The theory of consumer choice is broader than it is commonly assumed to be. It reaches beyond its familiar roots in competition policy, and provides a way to see both compe-tition and consumer protection laws as two essential components in a single, wider venture of protecting a consumer-focused market economy. Competition policy protects options; and consumer protection policy protects the ability to select among options. And from that single, fundamental insight a whole stream of practical conclusions will follow, affecting a range of issues from the categorization of cases, to the selection of legal theories, and to the design of remedies.

Even more important, this broader vision will state a general philosophy of commer-cial regulation, which can be developed as a credible alternative to the Chicago School and its cramped focus on short-term productive efficiency.


Can consumer choice promote trans-Atlantic

convergence of competition law and

policy?*

J. thomas rosch†

Former Commissioner, US Federal Trade Commission

I have been asked to address whether the concept of “consumer choice” can serve as a standard that promotes “convergence” between US antitrust law and EU competition law. To my way of thinking, this question calls for a three-part answer. First, we must ask ourselves whether we can ever achieve total convergence between the two jurisdic-tions—with or without a consumer choice standard—and whether it is even necessary or desirable to do so. Second, if we are to talk about consumer choice as a standard for moving the two jurisdictions towards convergence, then we must have a working definition of consumer choice on which we can all agree, because even our views on this concept may differ as between the United States and the European Union (EU).

* This article has been posted on the US FTC website and it is available here: https://www.ftc.gov/public-state-ments/2012/06/can-consumer-choice-promote-trans-atlantic-convergence-competition-law-and

† The views stated here are my own and do not necessarily reflect the views of the Commission or other Commissioners. I am grateful to my attorney advisor, Henry Su, for his invaluable assistance in preparing this paper.


Can consumer choice promote trans-Atlantic convergence of competition law and policy?

Third, assuming we have arrived at a mutually agreeable, working definition of consumer choice, we need to understand how behavioral economics may affect the robustness of consumer choice as a standard for antitrust and competition law.

I.I understand that many of our colleagues in the antitrust and competition bar would like to see “convergence” in the law enforcement approaches of the US and EU competition agencies1. While that may be a worthy aspiration for antitrust enforcers, regulators, and policymakers, my own view has long been that total convergence is not possible for several reasons2. Let me review those reasons with you.

A.First, we start off with the fact that the operative statutes are differently worded. For example, Section 1 of the Sherman Act outlaws “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations”3. Although US case law has made clear that Section 1 forbids only unreasonable restraints of trade4, the standard for determining

1 See, e.g., Abbott, “Competition Policy and Its Convergence as Key Drivers of Economic Development”, (2009) 28 Miss. C. L. Rev. 37; Delrahim, “Remark: The Long and Winding Road: Convergence in the Application of Antitrust to Intellectual Property”, (2004) 13 Geo. Mason L. Rev. 259; Gotts et al., “Nature vs. Nurture and Reaching the Age of Reason: The U.S./E.U. Treatment of Transatlantic Mergers”, (2005) 61 N.Y.U. Ann. Surv. Am. L. 453; Kovacic, “Competition Policy in the European Union and the United States: Convergence or Divergence in the Future Treatment of Dominant Firms?”, (2008) 4 Competition L. Int’l 8; Parisi, “Comment: International Regula-tion of Mergers: More Convergence, Less Conflict”, (2005) 61 N.Y.U. Ann. Surv. Am. L. 509.

2 See “Interview with J. Thomas Rosch, Commissioner, Federal Trade Commission”, (2009 Spring) Antitrust 32, 45, <http://www.ftc.gov/speeches/rosch/090126abainterview.pdf> (last visited 29 Jan. 2016) (Rosch Interview); Rosch, Commissioner, US Federal Trade Commission, “Has the Pendulum Swing Too Far? Some Reflections on U.S. and EC Jurisprudence” (Remarks Presented at the Bates White Fourth Annual Antitrust Conference, Washington, D.C., 25 June 2007), 13-14, <http://www.ftc.gov/speeches/rosch/070625pendulum.pdf> (last visited 29 Jan. 2016); Rosch, Commissioner, US Federal Trade Commission, “The Three Cs: Convergence, Comity, and Coordination” (Remarks Before the 14th Annual International Competition Law Forum, St. Gallen University, Switzerland, 10 May 2007), 2, <http://www.ftc.gov/speeches/rosch/070510stgallen.pdf> (last visited 29 Jan. 2016). See also Lowe, Director General, Directorate General for Competition, European Commission (Remarks on Unilateral Conduct Presented at the Federal Trade Commission and US Department of Justice Joint Hearings on Section 2 of the Sherman Act, Washington, D.C., 11 Sept. 2006), 8, <http://ec.europa.eu/competition/speeches/text/sp2006_019_en.pdf> (last visited 29 Jan. 2016) (“We are all in search for the right policy. Let there not only be global competi-tion for the best practices, but also global cooperation and discussion to improve our rules. In the end I don’t think we should expect too much divergence in view of the broad consensus on many basic principles. However, we should probably not expect total convergence either”).

3 15 U.S.C. § 1 (2010).

4 See, e.g., NCAA v. Bd. of Regents of the Univ. of Okla., 468 U.S. 85, 98 n.17 (1984) (“[A]s we have repeatedly recognized, the Sherman Act was intended only to prohibit only unreasonable restraints of trade”); Bd. of Trade of Chicago v. United States, 246 U.S. 231, 238 (1918) (“The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition”).


J. Thomas Rosch

unreasonableness has been left to the appellate courts to develop over time. And there are 13 of those courts, including the US Supreme Court5.

By contrast, Article 101 of the Treaty on the Functioning of the European Union (TFEU) is more specific in both its proscription and its exceptions. The article outlaws “all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market”, and it specifically enumerates five categories of restraints that are viewed as violating its strictures6. At the same time, however, Article 101 may be declared inapplicable to agreements, decisions, and concerted practices that meet certain specified criteria, which include “contribut[ing] to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit”.7 In contrast to Section 1 of the Sherman Act, Article 101 TFEU thus explicitly recognizes that some restraints of trade may be permissible if they benefit consumers by improving output or promoting innovation.

Section 2 of the Sherman Act likewise differs from Article 102 TFEU in its wording. Whereas Section 2 outlaws monopolization, attempts to monopolize, and conspiracies to monopolize “any part of the trade or commerce among the several States, or with foreign nations”8, Article 102 more broadly prohibits “[a]ny abuse of . . . a dominant position within the internal market or a substantial part of it”, and it identifies four categories of potential abuse, which include “limiting production, markets or technical development to the prejudice of consumers”9.

In a similar fashion to Article 101’s consideration whether a challenged restraint may benefit consumers in the form of increased output or innovation, Article 102 explicitly considers whether a challenged conduct or practice will harm consumers in the form of decreased output or innovation—as opposed to simply increasing prices. By contrast, the Sherman Act contains no such language, and instead leaves it up to the 13 appellate courts to develop the relevant legal standards. This distinction between statutory language

5 I am excluding the United States Court of Appeals for the Federal Circuit, which usually applies the antitrust law developed by the court of appeals for the regional circuit applicable to the case being heard. See, e.g., Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1068 (Fed. Cir. 1998).

6 Consolidated Version of the Treaty on the Functioning of the European Union, [2008] OJ C115/13, art. 101(1), <http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12008E101:EN:HTML> (last visited 29 Jan. 2016) (TFEU).

7 Ibid., art. 101(3).

8 15 U.S.C. § 2 (2010).

9 TEFU, art. 102.



and a veritable cacophony of judicial decisions10, I would submit, may result in a more receptive attitude in Europe than in the United States towards arguments about benefits or harms based on consumer choice.

B.Another potential obstacle to achieving total convergence is the fact that the United States and Europe have different economic and political histories and cultures. In particular, there are two schools of thought that have influenced and shaped European competition law and policy in ways unlike what we have experienced here in the United States.

First, there is the ordoliberal thought of the Freiburg School, which emerged in Germany after the Second World War. According to historian David Gerber, ordoliberalism, like classic liberalism, believes “that competition is necessary for economic well-being and that economic freedom is an essential concomitant of political freedom”, and the flow of economic resources should be directed by private decision-making rather than by government decision-making11. But ordoliberalism goes one step further than classic liberalism with its view that excessive governmental power is not the only threat to individual economic and political freedom; powerful economic institutions can also misuse their private economic power to trample over individual freedom12.

Accordingly, ordoliberalists envision a European state in which the structure and characteristics of the economic system would be constitutionally intertwined with its political and legal systems13. Under the ordoliberal vision, competition law plays a central role of creating and maintaining the conditions of “complete competition”—“that is, competition in which no firm in a market has power to coerce other firms in that market”14. In other words, competition law broadly views private economic power as

10 I have commented on the judicial cacophony before. See Rosch, Commissioner, US Federal Trade Commission, “Does the EU Need a System of Private Competition Remedies to Supplement Public Law Enforcement?” (Remarks Before the 2011 LIDC Congress, Oxford, England, 23 Sept. 2011), 19 <http://www.ftc.gov/speeches/rosch/110923privatecomp.pdf> (last visited 29 Jan. 2016); Rosch, Commissioner, US Federal Trade Commission, “The Path You Need Not Travel: Observations on Why Canada Can Do Without Section 5” (Remarks Before the Canadian Competition Forum, Toronto, Canada, 4 Feb. 2010), 10, <http://www.ftc.gov/speeches/rosch/100204roschcanadaspeech.pdf> (last visited 29 Jan. 2016).

11 Gerber, “Constitutionalizing the Economy: German Neo-liberalism, Competition Law and the ‘New’ Europe”, (1994) 42 Am. J. Com. L. 25, 36.

12 Ibid. at 36-37.

13 Ibid. at 44-45.

14 Ibid. at 43, 50-51. As Professor Gerber explains in a footnote, the German word for this concept—vollständiger Wettbewerb—is generally translated as “perfect competition” but he uses “complete competition” instead to distinguish the ordoliberal concept from the concept with the same name used in neoclassic price theory. Ibid. at 43 n.86.


J. Thomas Rosch

inherently the enemy of the competitive process15. This perspective is markedly different from US antitrust law, which has tended to view the potential harm wrought by economic power more narrowly, in neoclassical, microeconomic terms of static, short-term effects on price and output16.

Second, there is the neo-mercantilist thought that has evolved from the history and culture of mercantilism among many Member States17. As a recent paper examining the competing economic doctrines at work in European competition policy puts it, “neo-mercantilists have never developed a genuine doctrine for competition policy as such”18. Instead, they have favored “industrial policy and the direct intervention of the state in the economy as a substitute for competition”19. Out of this perspective flow various forms of state action such as subsidies, national champions, and price controls, all of which are aimed at government organization and planning of specific industries and economic sectors20.

Like ordoliberalism, neo-mercantilism markedly differs from anything we have expe-rienced in the United States in a long time. Both schools of thought envision a much more active role for the state—either as the creator of a perfectly competitive market or as a substitute or supplement to the market—than what we have envisioned under the neoclassical economics approach of the US antitrust laws21. Furthermore, the decades-old conflict between ordoliberalism and neo-mercantilism has driven the EU towards an enforcement approach that emphasizes uniformity within the European Economic Area (EEA)—that is, the notion of a Single Market22—to a degree that we do not see here in the US (for example, in the European Commission’s (EC’s) approach generally to resale price maintenance and other vertical restraints that affect the flow of goods and services). The EU’s concerns of creating and maintaining a Single Market may well mean a different conception of consumer choice than what we have here in the United States.

15 Ibid. at 51.

16 Ibid. at 51, 82.

17 For my prior remarks on this school of thought, see Rosch Interview (n. 2) at 32, 45.

18 Montalban et al., “EU Competition Policy Revisited: Economic Doctrines Within European Political Work” (Groupe de Recherche en Economie Théorique et Appliquée, Working Paper No. 2011-33), <http://cahiersdugretha.u-bordeaux4.fr/2011/2011-33.pdf> (last visited 29 Jan. 2016).

19 Ibid.

20 Ibid.

21 See ibid. at 12 (Table 1 sets forth the various doctrines of competition policy at work in Europe and the respective roles for government).

22 Ibid. at 28.



C.Another difference is that we in the United States have adopted neoclassical Chicago School economics, with its singular emphasis on rational behavior, allocative efficiency, and price theory23, to a degree that the EU has not. Notably, Chicago School economics gained acceptance in the US courts and antitrust enforcement agencies far earlier (in the 1970s)24 than it did in the corresponding institutions of the EU (in the late 1990s)25. So, if nothing else, there is the difference that a couple decades can make in how much a school of thought becomes entrenched in enforcement policy. Also, in the EU, Chicago School economics has had to compete with other strands of neoliberal economic thought (for example, ordoliberalism and Austrian school ultraliberalism) for ascendance.

One might ask whether—despite the relative lateness with which Chicago School economics has come to influence the thinking of competition authorities within the EU—convergence has now been made more likely as a result. On that question, Lars-Hendrik Röller, a former Chief Economist with the Directorate General for Competition, has expressed the view that even with the use of economics, total convergence (i.e., identical enforcement outcomes) is probably still not possible26. Importantly, the EU and the United States have different legal systems (administrative vs. judicial), different markets, differences in prior beliefs about matters like market dynamics and the benefits of competition, and different political environments27.

I tend to agree. To be sure, economics can promote what we call “soft” convergence, that is, the adoption of common procedures and methodologies for conducting antitrust analysis28. But economists are human too, and they therefore approach antitrust analysis with their own preconceptions, biases, and belief systems. So it may be unrealistic for us to expect “hard” convergence, that is, congruence in our enforcement decisions and outcomes.

23 See, e.g., Gibbons, “Antitrust, Law & Economics, and Politics”, (1987) 50 Law & Contemp. Probs. 217, 218 (“The Chicago School regards price theory to be as inexorable in operation as Newton’s laws. As a consequence, they contend that the market will inevitably produce efficiency and wealth enhancement”).

24 See, e.g., Hovenkamp, “Antitrust Policy After Chicago”, (1985) 84 Mich. L. Rev. 213, 223 (describing the process by which Chicago School economics took hold of antitrust analysis as a change in theory—to view efficiency goals to the exclusion of distributive goals—rather than the adoption of an “economic” approach to antitrust problems).

25 See, e.g., Montalban et al. (n. 18) at 33 (describing an intra-neoliberal conflict during the period between 1997-2003, from which Chicago School economic doctrine has largely triumphed over ordoliberalism).

26 Röller, Chief Economist, Directorate General for Competition, European Commission, “Antitrust Economics – Catalyst for Convergence?”, Presentation at the George Mason Law Review Symposium on “Hot Topics in EU Antitrust Law”, Washington, D.C., 20 Sept. 2005), 10, <http://ec.europa.eu/competition/speeches/text/sp2005_017_en.pdf> (last visited 29 Jan. 2016).

27 Ibid. at 5.

28 Ibid. at 3, 4, 9.


J. Thomas Rosch

In summary, I have my doubts as to whether a consumer choice standard can bring the two jurisdictions into closer alignment and harmony with respect to doctrine and policy than we already are. For example, I have noted the extent to which there seems to have been some trans-Atlantic convergence on (1) the basic theoretical principle underlying the analysis of single-firm or unilateral conduct—that the goal of outlawing monopo-lization or abuse of dominance is to promote “consumer welfare”, and (2) on the analytical vocabulary of predation and exclusion—for example, the concept of “profit sacrifice”29. At the same time, however, the degree of movement towards convergence in the area of single-firm conduct has not matched what we have seen with respect to the areas of horizontal merger and cartel enforcement30.

I have observed in the past that the two jurisdictions seem to differ in their respective definitions of “consumer welfare”; the EC, which has taken more of a post-Chicago School perspective, equates consumer welfare with the effects on consumers in the relevant output market, whereas Professor Bork in the United States tends to use a broader definition that encompasses the welfare of all consumers in society31. Although the US Supreme Court now seems to have embraced a view of consumer welfare that focuses on the output market (and thus, end-user welfare) instead of Professor Bork’s view of consumer welfare32, the two jurisdictions still differ in their views in areas

29 Rosch, Commissioner, US Federal Trade Commission, “Reflections on the DG Competition Discussion Paper on the Application of Article 82 to Exclusionary Abuses” (Remarks Before the 13th Annual International Competition Law Forum, St. Gallen University, Switzerland, 11 May 2006), 1-2, <http://www.ftc.gov/speeches/rosch/060511RoschStGallenRemarks.pdf> (last visited 29 Jan. 2016). See OJ (C 45) 7, Communication from the Commission – Guidance on the Commission’s Enforcement Priorities in Applying Article 82 of the EC Treaty to Abusive Exclusionary Conduct by Dominant Undertakings, para. 19, <http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2009:045:0007:0020:EN:PDF (last visited 29 Jan. 2016) (Article 82 Guidance) (couching the harm to competition caused by dominant undertakings in terms of the “adverse impact on consumer welfare, whether in the form of higher price levels than would have otherwise prevailed or in some other form such as limiting quality or reducing consumer choice”); ibid. at para. 63 (defining a dominant undertaking’s predatory conduct “by delib-erately incurring losses or foregoing profits in the short term” as a “sacrifice”).

30 Rosch, Commissioner, US Federal Trade Commission, “The Challenge of Non-Horizontal Merger Enforcement” (Remarks at the Fordham Competition Law Institute’s 34th Annual Conference on International Antitrust Law & Policy, New York City, 27-28 Sept. 2007), 4, <http://www.ftc.gov/speeches/rosch/070927-28non-horizontalmerger.pdf> (last visited 29 Jan. 2016) (“European and American horizontal merger enforcement is largely in lock-step—there is real convergence in the principles governing the assessment of mergers between competitors”.) (emphasis original).

31 Rosch, Commissioner, US Federal Trade Commissioner, “I Say Monopoly, You Say Dominance: The Continuing Divide on the Treatment of Dominant Firms, Is It the Economics?” (Remarks at the International Bar Association Antitrust Section Conference, Florence, Italy, 8 Sept. 2007), 15–16, <http://www.ftc.gov/speeches/rosch/070908isaymonopolyiba.pdf> (last visited 29 Jan. 2016); Rosch, Commissioner, US Federal Trade Commis-sion, “Monopsony and the Meaning of ‘Consumer Welfare’: A Closer Look at Weyerhaeuser” (Speech Given at the 2006 Milton Handler Annual Antitrust Review, New York, NY, 7 Dec. 2006), 2–3 n.4, <http://www.ftc.gov/speeches/rosch/061207miltonhandlerremarks.pdf> (last visited 29 Jan. 2016) (citing Bork, The Antitrust Paradox: a Policy at War with Itself (1978), 66, and observing that the Supreme Court’s position on the definition of consumer welfare has been “opaque”).

32 Weyerhaeuser Co. v. Ross–Simmons Hardwood Lumber Co., 549 U.S. 312, 324 (2007) (explaining that failed predatory-pricing and predatory-bidding schemes may benefit consumers because the two schemes, in their predatory stage prior to recoupment, produce lower aggregate prices and increased manufacturing output, respec-tively, both of which benefit consumers in the output market); see also NCAA v. Bd. of Regents of the Univ. of Okla., 465 U.S. 85, 107 (1984) (observing that the Sherman Act was designed to be a “consumer welfare prescription” and holding that “[a] restraint that has the effect of reducing the importance of consumer preference in setting price and output is not consistent with this fundamental goal of antitrust law”); Rosch, Commissioner, US Federal Trade



such as bundled discounts, loyalty discounts, tying, refusals to deal, exclusive dealing, predatory pricing, and price squeezes33. I therefore think that we simply must respect the differences that exist34.

II.That does not mean that we should give up on consumer choice as a dimension of competition. It does mean, however, that we should try at most to minimize the differ-ences between the two law enforcement regimes that may expand or contract the concept of consumer choice. In other words, it behooves us to have a common understanding of what we mean when we talk about consumer choice as a standard of antitrust and competition law. Let me describe our recent experience in the United States with refer-ence to the cases that the US Federal Trade Commission (FTC) has brought.

A.For example, in my view, price has never been the be-all and end-all of US competition theory, no matter how much the Chicago School would like to treat it as such. As far back as Indiana Federation of Dentists35, the US Supreme Court said that a reduction in output was an example of an anticompetitive effect that would “obviate the need for an inquiry into market power.”36 In other words, one way to understand consumer choice may be to view it as a strand of consumer welfare that is promoted whenever we enforce the antitrust laws against unreasonable restraints on output.

For me, then, the issue has always has been to determine the ways in which output may be reduced. One of those ways is to reduce the number of rivals in a marketplace. That is why I have suggested that the homily that the US antitrust laws protect competition,

Commission, “The Common Law of Section 2: Is It Still Alive and Well?” (Speech Given at the 11th Annual George Mason Law Review Antitrust Symposium, Washington, D.C., 31 Oct. 2007), 3-4, <http://www.ftc.gov/speeches/rosch/071031gmlr.pdf> (observing that the Supreme Court’s definition of consumer welfare in Weyerhaeuser “may facilitate convergence respecting the treatment of facially predatory conduct by dominant firms in the two regimes”).

33 Ibid. at 2; Hay and McMahon, “The Diverging Approach to Price Squeezes in the United States and Europe” (Cornell Law Sch. Research Paper No. 12-07) (discussing the diverging US and EC approaches to price squeezes in Pacific Bell Telephone Co. v. linkLINE Communications Inc., 129 S. Ct. 1109 (2009), and Case C-280/08 P, Deutsche Telekom v. Commission, [2010] ECR I-9555, and Case C-52/09, Konkurrensverket v. TeliaSonera Sverige AB, [2011] ECRI-527), <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1997384> (last visited 29 Jan. 2016).

34 Jim Venit has similarly observed that we should acknowledge “that we are the products of our histories and cultures and that these condition our predispositions and beliefs”. Venit, “Cooperation, Initiative and Regulation – A Cross Cultural Inquiry”, in Ehlermann and Marquis (eds.), European Competition Law Annual 2007: A Reformed Approach to Article 82 EC (Portland, OR, 2008).

35 FTC v. Ind. Fed’n of Dentists, 476 U.S. 447 (1986).

36 Ibid. at 460–61.


J. Thomas Rosch

not competitors37, is too simplistic. As I pointed out in my Intel concurrence, sometimes the elimination of competitors is one way to shrink competition; the best example of that is where the relevant market is highly concentrated38, but it may not be the only example39.

Specifically, in the FTC’s Intel case I expressed the concern that in a highly concentrated market, such as that for central processing units (CPUs) or graphics processing units (GPUs), in which there are only two or three competitors, a dominant firm’s engagement in an exclusionary and unjustified course of conduct designed to hurt its only rivals hurts competition too40. Furthermore, even if the challenged course of conduct does not result in higher prices, antitrust law—and in particular, Section 5 of the Federal Trade Commission Act—still has application because a price increase is not the only cognizable form of consumer injury, even though it may be the easiest to quantify41. Importantly, the challenged course of conduct may injure consumers (and this includes customers of CPUs and GPUs) by reducing alternatives and thereby limiting their choices42.

Thus, challenging attacks on rivals may be one way of enhancing consumer choice, which I think the EC has recognized in the 2009 guidance document describing its enforcement priorities with respect to abusive exclusionary conduct under Article 82 (now Article 102 TFEU)43. Indeed, the EC’s view of the harm caused by abusive, exclusionary conduct would seem to accord with the ordoliberalist vision of “complete

37 See, e.g., Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 224 (1993) (“It is axiomatic that the antitrust laws were passed for ‘the protection of competition, not competitors.’” (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962)).

38 Concurring & Dissenting Stmt. of J. Thomas Rosch, Intel Corp., No. 9341, at 1 (FTC Dec. 16, 2009) (“Under those unique circumstances, the oft-repeated admonition that the Sherman and Clayton Acts protect competition, not competitors, and the federal courts’ attendant disinclination to protect competitors in cases brought under those statutes, do not fit well.”), <http://www.ftc.gov/os/adjpro/d9341/ 091216intelstatement.pdf> (last visited 29 Jan. 2016). See also Spirit Airlines, Inc. v. Northwest Airlines, Inc., 431 F.3d 917, 951 (6th Cir. 2005) (“To be sure, the antitrust laws are for ‘the protection of competition, not competitors.’ Brooke Group, 509 U.S. at 224. Yet, in a concentrated market with very high barriers to entry, competition will not exist without competitors.”).

39 For example, related to the loss of rivals is the loss of product variety, which is specifically addressed in our 2010 Horizontal Merger Guidelines. The Guidelines include a hypothetical in which acquiring Firm A, post-merger, continues selling its high-end product at a premium price but discontinues the sale of the mid-range product of acquired Firm B, which had catered to more price-sensitive customers. Even though there may be other firms offering low-end products, and even though Firm A may not find it profitable to raise the price of its high-end product (owing to the price sensitivity of Firm B’s customers), there may still be loss of competition and harm to consumer choice flowing from the market withdrawal of B’s mid-range product. US Department of Justice and Federal Trade Commission, Horizontal Merger Guidelines (2010), para. 6.4, <http://ftc.gov/os/2010/08/100819hmg.pdf> (last visited 29 Jan. 2016).

40 Concurring & Dissenting Stmt. of J. Thomas Rosch, Intel Corp., No. 9341, at 1.

41 Ibid. at 2.

42 Ibid.

43 Article 82 Guidance (n. 29). Specifically, in paragraph 5 of the Guidance document, the EC explains that it will focus on the types of conduct most harmful to consumers, which would include depriving consumers of the benefits of “a wider choice of new or improved goods and services”. Ibid. at para. 5. In paragraph 6, the EC goes on to explain that the emphasis of its enforcement activity against abusive exclusionary conduct is on “safeguarding the competitive process in the internal market”, which practically speaking, means ensuring that a dominant undertaking does not exclude its rivals by means other “than competing on the merits of the products or services they provide”. Ibid. at para. 6.



competition”, which is concerned, as I noted earlier, with ensuring that market participants do not acquire private economic power that may be used to coerce or disadvantage their rivals44. But whereas the EC might be concerned more broadly with any distortions of competition in the internal market, the US agencies are probably going to be focused on agreement or conduct that is likely to eliminate or foreclose a rival from the market45. So there still might not be total convergence, even under a consumer choice standard.

B.Another way to expand consumer choice may be to eliminate rules of per se illegality that basically leave consumers with only one choice, as the US Supreme Court did in Leegin by overturning Dr. Miles46. By getting rid of Dr. Miles, the Court not only let consumers buy the lowest cost product, but also gave them the choice of doing that, or paying more and obtaining frills such as pre- or after-sale services. For example, some consumers may prefer, when shopping for a product like a wedding dress or a set of golf clubs, to pay more to have point-of-sale services that will custom-fit the product for each customer47. Other consumers, however, may not need or care for the point-of-sale services, and choose instead to shop for dresses or clubs at discount retailers that do not offer such services or fancy showroom displays.

In the Nine West case, the FTC agreed in light of Leegin to reexamine its 2000 consent decree with Nine West Group that had enforced a ban on the use of resale price maintenance (RPM)48. We granted Nine West’s petition to reopen and modify the consent order based on changed conditions of law in respect to RPM agreements after Leegin49. We concluded that Nine West should be permitted to engage in RPM agree-ments because it lacked market power and was itself the impetus behind the use of RPM50. Specifically, Nine West asserted that it wanted to use RPM agreements “to

44 See (nn. 13-15) and accompanying text.

45 See Article 82 Guidance (n. 29), para. 69 (“The Commission does not consider that it is necessary to show that competitors have exited the market in order to show that there has been anti-competitive foreclosure”.).

46 Leegin Creative Leather Prods. Inc. v. PSKS, Inc., 551 U.S. 877, 907 (2007) (“Vertical price restraints are to be judged according to the rule of reason”. (overruling Dr. Miles Med. Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911))).

47 See Froeb, “Consult an Economist Before Buying a Wedding Dress”, Managerial Econ. (5 Dec. 2011), <http://managerialecon.blogspot.com/2011/12/consult-economists-before-buying.html> (last visited 29 Jan. 2016) (commenting on point-of-sale services provided by full-service retailers and methods of preventing free-riding by discount retailers).

48 Nine West Grp. Inc., No. C-3937, 2008 FTC LEXIS 53, 6 May 2008, <http://www.ftc.gov/os/caselist/9810386/080506order.pdf> (last visited 29 Jan. 2016) (reconsidering its prior order at 2000 FTC LEXIS 48, 11 Apr. 2000, <http://www.ftc.gov/os/2000/04/ ninewest.do.htm> (last visited 29 Jan. 2016)).

49 Nine West Grp. Inc., No. C-3937, at *3.

50 Ibid. at *25–26, *29.


J. Thomas Rosch

increase the services offered by retailers that sell Nine West products”51. We saw no reason to deny Nine West an opportunity to do so, although we did conclude that it would be appropriate to monitor the effects of such use on prices and output, and we therefore imposed certain reporting obligations on Nine West to facilitate that moni-toring52.

I am not an expert on EU law. But as I understand it, the 2010 Vertical Restraint Guidelines still treat RPM as a hardcore restriction that is presumed to be unlawful under Article 101(1)53. The Guidelines consequently place the onus on respondents to plead and prove an efficiency defense under Article 101(3)54 (that is, demonstrating that the challenged restraint “contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit”)55. That approach strikes me as limiting consumer choice because it may deter some businesses from experimenting with RPM, out of a concern that they will not be able to prove its beneficial effects to the EC without a track record of its use.

More generally, the treatment of vertical restraints may be one arena in which the United States and the EU will continue to see things differently, even from the stand-point of consumer choice. Ever since the 1977 Sylvania decision56, we in the US have steadily relaxed our antitrust scrutiny of vertical restraints because we view such restraints, both nonprice and price, often to be part and parcel of different methods of marketing, distributing, and selling products and services to consumers. Reflecting a predominantly Chicago School approach, we have tended to let the market decide which methods are more efficient or more valuable to consumers, and we have tended not to impose our own judgments—through enforcement decisions—about which methods should be preferred over others. By contrast, the EC, with its concern for creating and preserving a single market, may not share the same view.

51 Ibid. at *26.

52 Ibid. at *28–29.

53 Guidelines on Vertical Restraints (EC) of 19 May 2010, 2010 OJ (C 130) 1, paras. 47-48, <http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2010:130:0001:0046:EN:PDF> (last visited 29 Jan. 2016).

54 Ibid. at para. 223.

55 TFEU, art. 101(3).

56 Continental TV, Inc. v. GTE Sylvania, Inc., 433 U.S. 36 (1977).



C.A third example of expanding consumer choice that we have seen in the United States concerns situations in which a trade or profession seeks to prevent consumers from getting access to a lower-cost alternative. Two recent FTC decisions illustrate this fact pattern.

The first decision, Realcomp II Limited, involved the so-called multiple listing service (MLS), which has come to be an integral element of the US real estate industry relating to the sale of homes57. The MLS is a closed database system that contains detailed information about the homes for sale in a given local, residential real estate market, including the number and types of rooms for each property, its square footage, the identity of the listing broker for that property and the services being provided by that broker, and what the compensation would be for any broker who provides a successful buyer58. The full content of the database is accessible only to real estate brokers who are members of the MLS but limited content is made available to members of the public through “data feeds” sent to publicly accessible websites such as Realtor.com59.

In the United States, the so-called traditional brokerage model for selling homes involves the seller of a home paying a six-percent commission to his or her broker, who in exchange provides a menu of services to the seller to promote the sale of his or her home. The seller’s broker, however, generally agrees to split the commission with any broker who provides a successful buyer. Some brokers, however, have departed from this traditional model and chosen to discount their fees (for example, a lower percentage commission or even a flat fee), in order to attract home sellers who do not want the full menu of brokerage services60.

The FTC’s case concerned Realcomp’s alleged adoption of policies that (1) prohibited discount broker listings from being fed from Realcomp’s MLS to public websites, and (2) limited the exposure of these listings on the closed MLS database61. The FTC found that Realcomp’s policies violated the rule of reason by “narrowing consumer choice” or “hindering the competitive process” engendered by the discount brokerage option62. We noted that those policies, to be successful, did not have to drive discount brokers

57 Realcomp II, Ltd., No. 9320, 2009 FTC LEXIS 250, 30 Oct. 2009, petition for review denied, 635 F.3d 815 (6th Cir.), cert. denied, 132 S. Ct. 400 (2011).

58 Ibid. at *4.

59 Ibid. at *5. As the FTC opinion explains, the type of listing agreement used in the traditional brokerage model is referred to as an “exclusive right to sell” (ERTS) agreement. Ibid. at *12–13.

60 Ibid. at *6. As the FTC opinion explains, a type of listing agreement that reflects the discount brokerage option is known as an “exclusive agency” (EA) agreement. Ibid. at *13–14.

61 Ibid. at *7.

62 Ibid. at *111.


J. Thomas Rosch

out of the market entirely; rather, they only had to detect and punish enough discounters to bring them back to the traditional brokerage model with its higher fees63.

Realcomp petitioned the US Court of Appeals for the Sixth Circuit to review our decision for error. The Sixth Circuit denied the petition, agreeing with our findings that Realcomp’s policies harmed competition, inter alia, by severely restricting consumers’ access to discount brokerage listings, which were not available on the most popular, public websites64. The Sixth Circuit also agreed with us that it was not neces-sary to show price effects in a case where “Realcomp does not regulate rates of commission, offers of compensation, or other price terms”; instead, it was sufficient to “examine the effect of Realcomp’s restrictions on consumer choice, specifically, the reduction in competitive brokerage options available to home sellers”65. In other words, the harm to competition flowing from Realcomp’s policies could be measured as a reduction in output, couched in terms of “the share of [discount brokerage] listings in the Realcomp MLS, the exposure of these listings to consumers, and the relationship of these outcomes to the Realcomp website policy”66.

The second FTC decision, North Carolina Board of Dental Examiners, involved the provision of teeth whitening services to the public67. In that case, the North Carolina Board of Dental Examiners sought to prevent non-dentists from offering teeth whitening services at locations such as mall kiosks, spas, retail stores, and salons, for a fraction of the price charged by dentists and often with greater convenience68. Threatened by the new competition, some dentists complained to the State Board under the guise that non-dentists failed to mention to consumers any public health and safety concerns associated with their services, and the Board took matters into its own hands by issuing cease-and-desist letters against the non-dentists, as well as their suppliers of equipment and products, and mall owners and operators69.

In contrast to Realcomp, there was an obvious price effect flowing from the exclusion of non-dentist providers, who were offering teeth-whitening services at significantly lower prices, although we held that precise quantification of the price increase was not necessary70. Yet, like Realcomp, the actions of the State Board also had the effect of

63 Ibid. at *111 n.43.

64 Realcomp II, Ltd. v. FTC, 635 F.3d 815, 829 (6th Cir.), cert. denied, 132 S. Ct. 400 (2011).

65 Ibid.

66 Ibid.

67 N.C. Bd. of Dental Examiners, No. 9343, 2011 FTC LEXIS 290, 7 Dec. 2011, petition for review filed, No. 12-1172 (4th Cir. Feb. 10, 2012).

68 Ibid. at *2.

69 Ibid. at *3.

70 Ibid. at *88–89.



depriving consumers of the choice of going to a mall, salon, or spa for teeth-whitening services, and the convenience of obtaining same-day service, which was generally not available at dentist offices unless they offered walk-in service71. We rejected the State Board’s health-and-safety rationale for excluding non-dentists, consistent with the holdings of the US Supreme Court in Indiana Federation of Dentists

72 and National Society of Professional Engineers73.

Realcomp and North Carolina Dental can be distinguished from Intel, discussed above in Section II.A, as attempts by an incumbent firm, or group of firms, to hinder or even quash nascent, albeit unproven, competition.74 Put another way, expanding consumer choice is not just about ensuring that rivals who are already offering consumers an alternative in the market do not become the target of exclusionary conduct, but also about ensuring that new entrants have a fair chance to present their alternatives to consumers. In the latter situation, US antitrust case law has relaxed the quantum of proof of anticompetitive effects because those effects may be difficult to quantify and, in any event, may be small in magnitude.

III.I have now described three recent examples from the FTC’s enforcement work in which we have viewed the reduction of consumer choice as a type of harm to competition. If we are truly to expand consumer choice, however, any remedy that we fashion as antitrust enforcers should take into account how consumers actually make choices. This means that we should not ignore the recent contributions of behavioral economics (BE) to understanding how consumer decisions actually get made. They may account for the “givens” concerning consumer behavior in the European case law that were described earlier (especially since BE development in Europe is light years ahead of BE in the United States today). Let me provide three examples from the literature.

71 Ibid. at *89–90.

72 FTC v. Ind. Fed’n of Dentists, 476 U.S. 447, 463 (1986) (rejecting the argument “that an unrestrained market in which consumers are given access to the information they believe to be relevant to their choices will lead them to make unwise and even dangerous choices”).

73 Nat’l Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679, 695 (1977) (holding that “petitioner’s attempt to [justify its restraint under the Rule of Reason] on the basis of the potential threat that competition poses to the public safety and the ethics of its profession is nothing less than a frontal assault on the basic policy of the Sherman Act”). The EC has taken basically the same approach. See Article 82 Guidance (n. 29) at para. 29 (“It is not the task of a dominant undertaking to take steps on its own initiative to exclude products which it regards, rightly or wrongly, as dangerous or inferior to its own product”) (footnote omitted).

74 See N.C. Dental, 2011 FTC LEXIS 290, at *89 (citing United States v. Microsoft Corp., 253 F.3d 34, 79 (DC Cir. 2001)); Realcomp II, Ltd., No. 9320, 2009 FTC LEXIS 250, at *125-26, 30 Oct. 2009 (quoting Microsoft, 253 F.3d at 79), petition for review denied, 635 F.3d 815 (6th Cir.), cert. denied, 132 S. Ct. 400 (2011).


J. Thomas Rosch

A.My first example from the BE literature has been referred to as “choice overload” or “hyperchoice”75. This concept relates to the fact that consumers are able to process only limited amounts of information in making a choice, and therefore too many choices (or too much information about the available choices) may overwhelm a consumer and be counterproductive to competition on the merits. In other words, a menu of choices may produce what Nobel Laureate Daniel Kahneman calls “cognitive strain”, which is our minds’ way of telling us that the decision we are being asked to make is requiring extra effort from our processing faculties76. For example, the choices presented may involve too many variables to compare and contrast, as in the case of products that have different options, add-ons, and accessories. Consumers may well throw up their hands and simply pick the product that is the best known or the most popular.

In my enforcement examples, I do not think we were looking at a potential problem of choice overload. But we should be mindful of this concern. From the standpoint of competition law and policy, it may be more important that consumers have a choice than that they have a certain number of choices77. If consumers become overwhelmed by the choices they have and encounter difficulties in making a decision, then we have to wonder whether competition on the merits is really all that robust.

75 See, e.g., Bennett et al., “What Does Behavioral Economics Mean for Competition Policy?”, (2010) 6 Competition Pol’y 111, 112 n.3; D. Mick et al., “Choose, Choose, Choose, Choose, Choose, Choose, Choose: Emerging and Prospective Research on the Deleterious Effects of Living in Consumer Hyperchoice”, (2004) 52 J. Bus. Ethics 207; Sunstein, “Empirically Informed Regulation”, (2011) 78 U. Chi. L. Rev. 1349, 1404.

76 Kahneman, Thinking, Fast and Slow (New York, 2011), 59. See also Ayal, “Harmful Freedom of Choice: Lessons from the Cellphone Market”, (2011) 74 Law & Contemp. Probs. 91, 96 (“One of the interesting aspects of choice overload is that consumers are generally unaware that variety may work to their detriment, and may be unaware of the effects of cognitive overload-despite their actions”.).

77 Averitt and Lande refer to hyperchoice as “diminishing returns to variety”. They observe that the importance of product variety to a consumer choice standard “does not mean simply that more choices are better, however . . . [A]lthough it might seem counterintuitive, there is evidence that too much choice can be detrimental to consumers. Research shows that additional choice tends to lead to increased satisfaction only up to a point.” Averitt and Lande, “Using the ‘Consumer Choice’ Approach to Antitrust Law”, (2007) 74 Antitrust L.J. 175, 192.



B.Another example from the BE literature has been referred to as “default bias” or “status quo bias”78. The concept is a simple one: even when consumers are presented with a choice of options, they often stick with what has been made the default instead of evaluating all of the options equally and choosing among them79.

Why do consumers behave this way? One explanation is that choosing something other than the default is viewed as a deviation from the norm or the status quo, and that deviation may be associated with negative emotions such as regret or doubt80. For example, software that comes pre-installed on a computer is generally perceived as compatible with the computer’s operating system and performance specifications. Accordingly, switching to a competing software program may leave a consumer with doubt or uncer-tainty as to whether that program will be just as compatible with the operating system and will perform just as well. A consumer may not want to take the risk.

In this regard, the EU’s acceptance of a browser choice remedy from Microsoft in December 2009 provides fodder for discussion81. The browser choice screen82, which places Micro-soft’s Internet Explorer alongside 11 other, competing browsers—including Google’s Chrome, Apple’s Safari, Mozilla’s Firefox, and Opera—is intended to give personal computer users “an effective and unbiased choice between Internet Explorer and competing web browsers”83. According to the EC, “This should ensure competition on the merits and allow consumers to benefit from technical developments and innovation both on the web browser market and on related markets, such as web-based applications.”84

78 See, e.g., Bennett et al. (n. 75) at 112 n.4; DellaVigna, “Psychology and Economics: Evidence from the Field”, (2009) 4 J. Econ. Lit. 315, 322 n.21; Kahneman, “Maps of Bounded Rationality”, (2003) 93 Am. Econ. Rev. 1449, 1459; Reeves and Stucke, “Behavioral Antitrust”, (2011) 86 Ind. L.J. 1527, 1534 n.57; Stucke, “Money, Is That What I Want? Competition Policy and the Role of Behavioral Economics”, (2010) 50 Santa Clara L. Rev. 893, 962 n.379.

79 For this reason, the FTC has long frowned on “negative option” plans that do not clearly and conspicuously disclose all of the elements—both positive and negative—of staying with the plan. See 16 C.F.R. § 425.1 (2012).

80 Kahneman (n. 76) at 348; see also Ayal (n. 76) at 97-98 n.17 (“Empirical studies show that in a large variety of circumstances, individuals prefer to stick to the default option they were offered, probably in order to avoid examination of the different options and the risk of future remorse”.); Sunstein (n. 75) at 1424 (“One reason is that inertia can be a powerful force; people may procrastinate or decline to make the effort to rethink the default option. Another reason is that the default rule might be taken to carry an implied endorsement by those who have chosen it; people may not depart from the default rule on the ground that it might have been selected because it is helpful or appropriate”).

81 Press Release, European Commission, “Antitrust: Commission Accepts Microsoft Commitments to Give Users Browser Choice” (16 Dec. 2009), <http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/1941&format=HTML&aged=0&language=EN&guiLanguage=en> (last visited 29 Jan. 2016). See generally “Delivering for consumers: Web browser choice for European consumers”, European Commission, <http://ec.europa.eu/competi-tion/consumers/web_browsers_choice_en.html> (last visited 29 Jan. 2016).

82 See “Select Your Web Browser”, BROWSERCHOICE.EU, <http://www.browserchoice.eu/BrowserChoice/browserchoice_en.htm> (last visited 29 Jan. 2016).

83 European Commission (n. 81).

84 Ibid.


J. Thomas Rosch

Although the browser choice screen seems to address the related problem of “placement bias” by putting Internet Explorer randomly on a horizontal menu with 11 other, competing browsers85, I wonder whether it effectively addresses the default bias that arises from the fact that Internet Explorer has still been pre-installed as the default browser. Will consumers take the time to evaluate all of the competing browsers and make an intelligent switch86? Or might it be more effective from the standpoint of competition—as the commitments also provide—for original equipment manufacturers (OEMs) to pre-install a different browser on their products as the default option87?

The power of default bias cannot be underestimated, particularly if it is implemented by a firm with a dominant or near-dominant share of the relevant market. Just last week, Microsoft announced that version 10 of its Internet Explorer, which will launch as part of Windows 8, would feature the option of sending a “Do Not Track” signal to websites as the default setting88.

This announcement has angered members of the advertising industry, who feel that Microsoft’s unilateral decision “may ultimately narrow the scope of consumer choices, undercut thriving business models, and reduce the availability and diversity of the Internet products and services that millions of American consumers currently enjoy at no charge.”89 Microsoft has responded by asserting that its so-called “privacy-by-default state for online behavioral advertising is the right approach” because consumers will be “empowered to make an informed choice”90. In my view, at the heart of this brewing controversy is the phenomenon of default bias—will consumers make an informed choice and change the setting on their browsers to reflect their actual preferences for

85 This refers to the tendency of consumers to choose the product that has been placed first on the list. Bennett et al. (n. 75) at 112 n.4.

86 With 12 browsers on the menu, one has to wonder whether there might also be a choice overload problem. Granted, European consumers are a more diverse group than US consumers, which explains why it was necessary to select and feature 12 of the most popular browsers.

87 European Commission (n. 81) (“The commitments also provide that computer manufacturers will be able to install competing web browsers, set those as default and turn Internet Explorer off”). See also Press Release, European Commission, “Antitrust: Commission Welcomes Microsoft’s Roll-Out of Web Browser Choice” (2 Mar. 2010), <http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/216> (last visited 29 Jan. 2016) (“In compliance with the December commitments, computer manufacturers are now able to install competing browsers on Windows PCs instead of, or in addition to, Internet Explorer. Microsoft further committed not to retaliate against PC manu-facturers who pre-install a non-Microsoft web browser on the PCs they ship and make it the default web browser”).

88 See Glueck, “More Privacy by Default: Do Not Track in Internet Explorer 10”, MICROSOFT.EU (1 June 2012), <http://www.microsoft.eu/digital-policy/posts/more-privacy-by-default-do-not-track-in-internet-explorer-10.aspx> (last visited 29 Jan. 2016); Hatchamovitch, “Windows Release Preview: The Sixth IE10 Platform Preview”, MSDN Blog (31 May 2012), <http://blogs.msdn.com/b/ie/archive/2012/05/31/windows-release-preview-the-sixth-ie10-platform-preview.aspx> (last visited 29 Jan. 2016).

89 Sasso, “Advertisers Fume After Microsoft Makes ‘Do No Track’ the Default in Internet Explorer”, HILLICON VALLEY (1 June 2012), <http://thehill.com/blogs/hillicon-valley/technology/230469-advertisers-fume-as-internet-explorer-becomes-do-not-track-by-default> (last visited 29 Jan. 2016) (quoting Stu Ingis, counsel for the Digital Advertising Alliance).

90 Lynch, “Advancing Consumer Trust and Privacy: Internet Explorer in Windows 8”, Microsoft on the Issues (31 May 2012), <http://blogs.technet.com/b/microsoft_on_the_issues/archive/2012/05/31/advancing-consumer-trust-and-privacy-internet-explorer-in-windows-8.aspx> (last visited 29 Jan. 2016).



more personalized content, as Microsoft claims, or will they leave their browsers on the default “Do Not Track” setting?

Stay tuned as this saga unfolds.

C.A third and final example from the BE literature has been referred to as “optimism bias”91. This term describes the tendency of consumers to be overly optimistic when making various decisions for themselves, including over-estimating how much they will use a good, or underestimating how much it will cost them92. In the choice setting, this type of bias may cause consumers to choose a more expensive option than a cheaper, no-frills alternative because they may think that they will actually derive more benefit from the former or they may underestimate how much the more expensive option really is.

As Professor Stucke observes in a discussion paper recently submitted to the Organisa-tion for Economic Co-operation and Development (OECD), sellers may try to exploit this phenomenon, for example, by eliminating discounts instead of just increasing the advertised price, or by using various forms of “drip” price increases93. This reality suggests that even though sellers may overtly present consumers with a menu of competing choices, they may secretly be counting on the fact that at least some consumers will be unable to evaluate with predictable accuracy which option, with its combination of features and costs, is best suited for their needs. Such an outcome would not reflect true competition on the merits.

Like choice overload and default bias, the phenomenon of optimism bias should cause us to examine more closely how competition actually unfolds in the marketplace, even with the presence of “choice”, and whether we can structure a remedy or a set of commitments in such a way as to ensure that the options presented to a consumer are actually given fair and equal consideration. I do not think we as enforcers ever want to nudge or steer a consumer towards a particular option. But choice is illusory, it seems to me, if consumers in fact ignore the options presented and stick with what is the most popular, the default, or what seems like the cheapest when it may in fact not be.

91 Bennett et al. (n. 75) at 112 n.5; Reeves and Stucke (n. 78) at 1557.

92 Kahneman (n. 76) at 252 (describing how people “make decisions based on delusional optimism rather than on a rational weighting of gains, losses, and probabilities. They overestimate benefits and underestimate costs”).

93 Stucke, “The Implications of Behavioral Antitrust” (Note presented at OECD Hearing on Competition and Behav-ioural Economics, 25 July 2012), para. 51, <http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/COMP/WD%282012%2912&docLanguage=En> (last visited 29 Jan. 2016) (“So the optimistic consumers choose credit cards with lower annual fees (but higher financing fees and penalties) over better suited products (e.g., credit cards with higher annual fees but lower interest rates and late payment penalties)”.). See also Gabaix and Laibson, “Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets”, (2006) 121 Q.J. Econ. 505, 526 (discussing how over-optimism about credit card usage leads to consumer myopia about the cost of a credit card add-on fee).


Concurrences BooksGLOBAL ANTITRUST ECONOMICS: CURRENT ISSUES

IN ANTITRUST AND LAW & ECONOMICS Douglas H. Ginsburg - Joshua D. Wright • March 2016

ANTITRUST IN EMERGING AND DEVELOPING COUNTRIES - SECOND EDITION

Eleanor Fox, Harry First • May 2016

IAN S. FORRESTER QC LL.D. A SCOT WITHOUT BORDERS LIBER AMICORUM (VOL. II)

Sir. David Edward, Jacquelyn MacLennon, Assimakis Komninos • December 2015

IAN S. FORRESTER QC LL.D. A SCOT WITHOUT BORDERS LIBER AMICORUM (VOL. I)

Sir. David Edward, Jacquelyn MacLennon, Assimakis Komninos • September 2015

COMPETITION DIGEST – A SYNTHESIS OF EU AND NATIONAL LEADING CASESNicolas Charbit - Elisa Ramundo • December 2015

ANTITRUST IN EMERGING AND DEVELOPING COUNTRIESEleanor Fox - Harry First • October 2015

WILLIAM E. KOVACIC: AN ANTITRUST TRIBUTE LIBER AMICORUM (VOL. II)

Nicolas Charbit - Elisa Ramundo • September 2014

COMPETITION LAW ON THE GLOBAL STAGE: DAVID GERBER’S GLOBAL COMPETITION LAW IN

PERSPECTIVENicolas Charbit, Elisa Ramundo • January 2014


DAY TO DAY COMPETITION LAW: A PRACTICAL GUIDE FOR BUSINESSES

Patrick Hubert, Olivier Lecroart, Marie Leppard • March 2014

WILLIAM E. KOVACIC: AN ANTITRUST TRIBUTE LIBER AMICORUM (VOL. I)

Nicolas Charbit - Elisa Ramundo • January 2013

All books are published in print and electronic format.

CONTENTS More than 15,000 articles, print and/or online. Quarterly issues provide current coverage with contributions from the EU or national or foreign countries thanks to more than 1,200 authors in Europe and abroad. Approximately 25 % of the contributions are published in English, 75 % in French, as the official language of the General Court of justice of the EU; all contributions have English abstracts.

FORMAT In order to balance academic contributions with opinions or legal practice notes, Concurrences provides its insight and analysis in a number of formats: Forewords: Opinions by leading academics or enforcersInterviews: Interviews of antitrust expertsOn-Topics: 4 to 6 short papers on hot issuesLaw & Economics: Short papers written by economists for a legal audienceArticles: Long academic papersCase Summaries: Case commentary on EU and French case lawLegal Practice: Short papers for in-house counselsInternational: Medium size papers on international policiesBooks Review: Summaries of recent antitrust booksArticles Review: Summaries of leading articles published in 45 antitrust journals

BOARDS The Scientific Committee is headed by Laurence Idot, Professor at Panthéon Assas University. The International Committee is headed by Frederic Jenny, OECD Competition Comitteee Chairman. Boards members include Bruno Lasserre, Mario Monti, Howard Shelanski, Richard Whish, Wouter Wils, etc.

ONLINE VERSION Concurrences website provides all articles published since its inception, in addition to selected articles published online only in the electronic supplement.

WRITE FOR CONCURRENCESConcurrences welcome spontaneous contributions. Except in rare circumstances, the journal accepts only unpublished articles, whatever the form and nature of the contribution. The Editorial Board checks the form of the proposals, and then submits these to the Scientific Committee. Selection of the papers is conditional to a peer review by at least two members of the Committee. Within a month, the Committee assesses whether the draft article can be published and notifies the author.

-

---

--

-

-

-

-

Concurrences ReviewConcurrences is a print and online quarterly peer reviewed journal dedicated to EU and national competitions laws. It has been launched in 2004 as the flagship of the Institute of Competition Law in order to provide a forum for academics, practitioners and enforcers. The Institute’s influence and expertise has garnered interviews with such figures as Christine Lagarde, Bill Kovacic, François Hollande and Margarethe Vestager.

e-Competitions Bulletin CASE LAW DATABASEe-Competitions is the only online resource that provides consistent coverage of antitrust cases from 55 jurisdictions, organized into a searchable database structure. e-Competitions concentrates on cases summaries taking into account that in the context of a continuing growing number of sources there is a need for factual information, i.e., case law.

12,000 case summaries 2,600 authors 55 countries covered 24,000 subscribers

SOPHISTICATED EDITORIAL AND IT ENRICHMENTe-Competitions is structured as a database. The editors make a sophisticated technical and legal work on all articles by tagging these with key words, drafting abstracts and writing html code to increase Google ranking. There is a team of antitrust lawyers – PhD and judges clerks - and a team of IT experts. e-Competitions makes comparative law possible. Thanks to this expert editorial work, it is possible to search and compare cases.

PRESTIGIOUS BOARDSe-Competitions draws upon highly distinguished editors, all leading experts in national or international antitrust. Advisory Board Members include: Sir Christopher Bellamy, Ioanis Lianos (UCL), Eleanor Fox (NYU), Damien Géradin (Tilburg University), Barry Hawk (Fordham University) Fred Jenny (OECD), Jacqueline Riffault-Silk (Cour de cassation), Wouter Wils (DG COMP), etc.

LEADING PARTNERSAssociation of European Competition Law Judges: The AECLJ is a forum for judges of national Courts specializing in antitrust case law. Members timely feed e-Competitions with just released cases.

Academics partners: Antitrust research centres from leading universities write regularly in e-Competitions: University College London, King’s College London, Queen Mary University, etc.

Law firms: Global law firms and antitrust niche firms write detailed cases summaries specifically for e-Competitions: Allen & Overy, DLA Piper, Jones Day, Norton Rose Fulbright, Skadden Arps, White & Case, etc.

----

-

-

-

AIMThe Institute focuses government, business and academic attention on a broad range of subjects which concern competition laws, regulations and related economics.

BOARDSTo maintain its unique focus, the Institute relies upon highly distinguished editors, all leading experts in national or international antitrust: Bill Kovacic, Mario Monti, Eleanor Fox, Barry Hawk, Laurence Idot, Fred Jenny, etc.

AUTHORS 3,800 authors, from 55 jurisdictions.

PARTNERS Universities: University College London, King’s College London, Queen Mary University, Paris Sorbonne Panthéon-Assas, etc.

Law firms: Allen & Overy, Cleary Gottlieb Steen & Hamilton, DLA Piper, Hogan Lovells, Jones Day, Norton Rose Fulbright, Skadden Arps, White & Case, etc.

EVENTS More than 250 events since 2004 in Brussels, London, New York, Paris, Singapour and Washington, DC.

ONLINE VERSION Concurrences website provides all articles published since its inception.

PUBLICATIONS The Institute publishes Concurrences Journal, a print and online quarterly peer-reviewed journal dedicated to EU and national competitions laws. e-Competitions is a bi-monthly antitrust news bulletin covering 55 countries. The e-Competitions database contains over 12,000 case summaries from 2,600 authors.

-

-

The Institute of Competition LawThe Institute of Competition Law is a publishing company, founded in 2004 by Dr. Nicolas Charbit, based in Paris and New-York. The Institute cultivates scholarship and discussion about antitrust issues though publications and conferences. Each publication and event is supervised by editorial boards and scientific or steering committees to ensure independence, objectivity, and academic rigor. Thanks to this management, the Institute has become one of the few think tanks in Europe to have significant influence on antitrust policies.

demo version - academic society for competition law · eu competition law; maurice e. stucke draws...

Documents