Jorge Sierra
Student number: 10745076
Supervisor: Dr. Rein Wesseling
Master Thesis International and European Law: European Competition Law and Regulation (LLM)
The Court of Justice of the European
Union on the Goals of Competition Law
The protection of competition as such by means of protecting the
structure of the market as the only goal of EU Competition Law
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Abstract
There is considerable debate in the legal literature about the actual goals of EU competition law. The European Commission, under the framework of its “more economic approach”, advocated for a consumer welfare perspective as the main aim of competition rules. In contrast, the European Court of Justice has affirmed that the ultimate goal of this system of law is the protection of the structure of the market as a means to protect competition as such. This thesis seeks to provide a definition of this goal and to compare it with the consumer welfare standard. The phrasing of the current case law and a review of the economic theories behind the Court’s reasoning leads to the conclusion that EU competition law is only concerned with the protection of the institution of competition, which is achieved by protecting the structure of the internal market, thus delivering benefits for both consumers and individual undertakings.
Key words: EU competition law, Ordoliberalism, Chicago School, Harvard School,
competition goals, structure of the market, competition as such, consumer welfare, GSK judgement, T-Mobile judgement, Intel judgement.
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Outline
1. Introduction………...……….…3
2. The Court of Justice of the European Union in T-Mobile, GSK and Intel………6
2.1 T-Mobile………..7
2.2 GSK……….8
2.3 Intel……….9
3. Outcome of the cases………10
3.1 Context………..……10
3.2 Analysis: The protection of competition as the only relevant goal of EU competition law………...………12
4. The importance of the integration of the internal market objective in the framework of EU competition law………..17
5. The influence of the economic theories behind the aims of EU competition law……22
5.1 The protection of the interests of the consumers and their welfare……….23
5.2 The protection of individual undertakings and their economic freedom…………27
5.3 The protection of the structure of the market as a means to protect competition....31
5.3.1 Competition as such as the goal of EU competition law……….31
5.3.2 The protection of the structure of the market test………...……35
6. The protection of the structure of the market and consumer welfare contrasted………38
7. Conclusion………...………43
8. Bibliography………...….47
8.1 Literature………..…47
8.2 Table of cases………....53
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1. Introduction
Competition law promotes or seeks to maintain competition between individual undertakings within the market by regulating the anticompetitive conducts1. Under such definition, academics disagree on the appropriate goals that should order competition rules and the preferences of which they should be applied. The debate is supplemented by the interaction of both economic and non-economic objectives, turning the work of the policymaker in the design of competition policies and of the courts in its interpretation into a crucially important aspect of the competition scheme adopted.
In the United States (US), the threat that supposes the accumulation of economic power by private entities abusing their own market power, lays out the very foundation of the Sherman Act2. Nevertheless, since Robert Bork’s exposition of his antitrust paradox3, which advocates for a perspective focused on economic efficiency as the single objective of antitrust law4, the discussion over the question of goals has experienced a rapid growth in US academic literature. In the past years, the debate in the European Union (EU) has gained prominence with a number of publications related to this topic. The question of what should be the ultimate goal of this system of law remains subject to discussions given, as is the case in the US, that there are not clear guidelines regarding the issue5.
The position of the different schools of thought allows interpretation of diversely contrasted opinions, which on several occasions have inspired the principles that order the Union’s system of antitrust. The Chicago School of economics focuses on economic efficiency as a means to enhance total economic welfare6, criticising the protection of small competitors at the expense of larger ones7. In contrast, the Freiburg School of Ordoliberalism emphasises the protection of the process of competition, dethroning large
1 Cf. Taylor. International Competition Law, 2006, pg. 1.
2 “(US antitrust law) is founded on a theory of hostility to the concentration in private hands of power so
great that only a government of the people should have it”. Supreme Court of United States 07-06-1948, 461 (United States v. Columbia Steel Co.), 536 [online].
3 Expressed in his work: Bork. The Antitrust Paradox: A Policy at War with Itself, 1980. 4 Cf. Lianos. Some reflections on the question of the goals of EU Competition Law, 2013, p. 2.
5 Cf. Schmitz, S. The European Commission's decision in GE/Honeywell and the question of the goals of
antitrust law, University of Pennsylvania Journal of International Economic Law 2002, pg. 545.
6 Cf. Mackenrodt, Enchelmaier, Conde. Abuse of Dominant Position: New Interpretation, New
Enforcement Mechanisms? 2008, pg. 12 [online].
7 Cf. Van der Bergh & Camesasca. European Competition Law and Economics: A Comparative
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economic units given the assumption that accumulated economic power undermines the competitive order and ultimately threatens the democratic polity8. Finally, the Harvard School, on the basis of the analysis of the structure-conduct-performance paradigm, defended a hierarchized multitude of different goals, which can be substantially influenced by competition policies to obtain a variety of desired results9.
The shift towards a “more economic approach” determined by the European Commission in the early 2000s emphasised the concept of efficiency in the market, thus adopting a view aimed to enhance consumer welfare as the main goal of EU competition rules10. Furthermore, the same position was upheld by the General Court (GC) in the first
GlaxoSmithKline11 decision. Since then, several academics have supported this
perspective12, while others have defended the idea of a plurality of goals within this legal system, driven by the ambiguous case law on the existence of a hierarchy of objectives13 or have defended that competition rules are actually concerned with the protection of competition as such14.
However, the interpretation of the GC and the Commission seemed to be incompatible with the posterior preliminary ruling of the European Court of Justice (ECJ,
8 Cf. Maier-Rigaud, F. On the normative foundations of competition law: efficiency, political freedom and
freedom to compete, in: The Goals of Competition Law, 2012, pg. 164.
9 Cf. Van der Bergh & Camesasca. European Competition Law and Economics: A Comparative
Perspective, 2006, pg. 67-74.
10 Cf. Witt. Public Policy Goals under EU Competition Law, European Competition Journal 2012, pg. 444. 11 GC 27-09-2006, Case T-168/01, GlaxoSmithKline v European Commission [online: All following
references to the European Union Courts case law and their Advocate Generals opinions have been consulted via curia.europa.eu].
12 Notably, see Odudu. The Boundaries of EC Competition Law: The Scope of Article 81, 2006.
13 As stated by Parret: “The system of European competition law has always had and still has different
objectives. A unitary goal is not desirable and not realistic. The issue at stake in the EU is rather the co-existence of different objectives”. Parret. The multiple personalities of EU competition law: time for a
comprehensive debate on its objectives, in: The Goals of Competition Law, 2012, pgs. 61-62. Similarly,
Drexl indicates that establishment of a hierarchy between goals is not desirable or constitutionally straightforward. See Drexl. Competition Law as part of the European Constitution, in: Principles of
European Constitutional Law, 2010, pg. 693. Townley argues that “limiting competition law to
considerations of efficiency is undesirable since efficiency does not account for all of one’s well-being, and competition law intervention cannot be said to ‘make [...] society better off […] unless one considers the effect on wider public policy goals too’”. See Odudu’s review of: Townley, Article 81 EC and Public
Policy, 2009. Odudu, The Wider Concerns of Competition Law, Oxford Journal of Legal Studies 2010, pg.
602. Lianos also adheres to a pluralist position on the question of goals, attending to a comparative institutional perspective. See Lianos. Some reflections on the question of the goals of EU Competition Law, 2013, pgs. 52-65.
14 See Wils. The judgment of the EU General Court in Intel and the so-called 'more economic approach' to
abuse of dominance, World Competition 2014, Pgs. 15-16 [online]; Andriychuk. Rediscovering the Spirit of Competition, European Competition Journal 2010, pgs. 575-586.
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the Court) in T-Mobile15 and was clearly rejected in the second GlaxoSmithKline (GSK)16
decision, both cases dealing with an infringement of article 101 TFEU. Consequently, following the Opinion of its Advocate Generals (AG), the ECJ settled that the competition rules laid down in the Treaty “aim to protect not only the interests of competitors or of consumers, but also the structure of the market and, in doing so, competition as such”17. With these words the ECJ has shed some light for the first time directly assessing its interpretation on the issue of the relevant goals of EU competition law. Consecutively, considerations over the structure of the market have been the main concern of the GC in the recent Intel18 case, which consisted in an infringement of article 102 TFEU. As a result, the Court of Justice of the European Union (CJEU) refused to take any consideration of the effects of the anticompetitive practices on consumers in the three judgements, but rather they focused on the harm to competition. The consideration over the structure of the market brings some intrinsic difficulties as the Court did not indicate the limits in the interpretation of this goal.
From the perspective elucidated in this introductory remark, this Master’s thesis aims to guide the reader on the different objectives of EU competition law and, on the basis of such examination, provide an answer to the following research question: what does the “protection of the structure of the market” and “protection of competition as such” mean and how does the latter objective differs from consumer welfare as the only goal of EU competition law? Accordingly, this work has as its research object a description of the protection of the structure of the market test and the goal of EU competition law of protecting competition, as presented by the ECJ.
With the purpose to present a coherent organisation to guide the reader, the present thesis continues with the following structure: Firstly, the work provides a synthesis of the CJEU’s rulings in the T-Mobile, GSK and Intel cases as the clearer and most recent representation of the EU Courts’ attempt to clarify their position on the question of the goals of EU competition law, following the common approach defended by the CJEU since its early case law. Secondly, the combination of these objectives in the outcome of the ECJ’s case law is clearly and concisely analysed within its context. Thirdly, the
15 ECJ 04-06-2009, Case C-8/08, T-Mobile Netherlands BV v. NMa.
16 ECJ 06-10-2009, Joined Cases C-501/06P, C-515/06P and C-519/06P, GlaxoSmithKline Services
Unlimited v Commission.
17 Ibid, para. 63. See also T-Mobile, Op. Cit., para. 38. 18 GC 12-06-2014, Case T-286/09 Intel Corp. v Commission.
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importance of the objective of internal market integration in relation to competition rules is stressed, especially in the cases involving parallel trade conflicts. Fourthly, an exposition of the different economic and political theories behind the thinking that orders the diverse alleged goals of EU competition law is presented, as well as their reflection on the actual setting of the competition rules in the Treaties and its interpretation by the CJEU. On this basis, the question of what should be understood by the protection of the structure of the market and competition as such is answered. A scheme of different features between such goal and the consumer welfare objective is provided. Finally, the author comprises some concluding remarks on the most relevant aspects of the presented subject.
In its methodology, albeit it is recognised the important role of the Commission in the development of EU competition law, this work is based upon the notion that the CJEU is the ultimate authority entrusted with the task to interpret EU legislation19, acknowledging the foundations of this organisation on the rule of law20. The legal concepts that will be named are to be understood as assumed by the CJEU and definitions will be provided if they are considered relevant to the research question. The economic concepts that will be presented are to be understood within the context of their respective definitions as provided by the different schools of thought. This thesis’ research is focused within the limits of EU Law framework, particularly EU competition law, which will be analysed from an internal perspective, entailing a descriptive aim of the current structure of goals of competition rules.
2. The Court of Justice of the European Union in T-Mobile, GSK and Intel
This section provides a summary of the relevant aspects pursued by this thesis on the basis of the wording of the ECJ and the GC concerning these three judgements, whereby issues regarding the protection of the market structure played an important role not only in the decisions of the CJEU, but also in the concerns expressed by the Advocate Generals. In due course, the rulings proved decisive in determining the viewpoint of the EU judicial branch over the question of the goals of EU competition law.
19 See art. 19 Treaty on European Union (TEU). 20 See art. 2 TEU.
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2.1 T-Mobile
The case focuses on a single meeting held between the five major telephone operators in The Netherlands, in which the decision to exchange price information concerning the intended remuneration payment for certain telephone subscriptions was made. After the findings of the Dutch competition authority, the aforementioned undertakings were fined as a result of entering into a concerted practice. In a preliminary reference lodged by the Dutch Courts the ECJ was asked, among other questions, on the criteria to be used when assessing an anticompetitive agreement that has as its object the prevention restriction or distortion of competition21. Surprisingly, the answer of the Court, rather than limited to the question at hand, provided not only an interpretation of article 101(1) TFEU, but also of all the competition rules of the Treaty22.
The ECJ settled that when dealing with anticompetitive agreements, concerted practices or decisions, it must be borne in mind that their classification as restrictive of competition by object or by effect is an alternative and not a cumulative condition23. Moreover, before stating that the conduct of the operators is anticompetitive by object, the Court emphasises that there is no need to show that such conduct has any effect on consumers24. On the contrary, there is a presumption that all conducts anticompetitive by their nature, i.e. by object, harm consumers given the ability that such conducts possess to distort the normal conditions of the market in question. Subsequently, the ECJ concluded that article 101 TFEU, in addition to all the competition rules contained in the Treaty, are designed “to protect not only the immediate interests of individual competitors or consumers but also to protect the structure of the market and thus competition as such”25. As a result, the judgement takes into consideration the conditions of the market in question, adding a valuable definition of what should be understood as the elements ordering the normal market conditions, these conditions being dependent on the products or services offered, the quantity and scope of the undertakings and the volume of such market26.
21 First question raised by the College van Beroep voor het bedrijfsleven: “When applying Article 81(1)
EC, which criteria must be applied when assessing whether a concerted practice has as its object the prevention, restriction or distortion of competition within the common market?”ECJ 04-06-2009, Case C-8/08, T-Mobile Netherlands BV v. NMa, para. 22.
22 Ibid, see paras. 23-43. 23 Cf. Ibid, para. 28. 24 Ibid, see. Para. 31. 25 Cf. Ibid, para. 38. 26 Cf. Ibid, para. 33.
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This part of the preliminary ruling is clearly influenced by the Opinion of the AG Kokkot, presented previously in British Airways27, to whom the Court refers when
making its assessment. The AG’s Opinion adds important statements that can be tacitly inferred in the judgement, such as the emphasis in the wording of article 101(1) TFEU, directed to protect “competition” within the internal market; the article does not restrict itself to conducts having an impact on consumers28. Accordingly, the Opinion states that EU competition rules are not “only or primarily” designed to protect consumers or competitors, “but to protect the structure of the market and thus competition as such (as an institution)”29. Finally, it is added that the protection of competition also indirectly protects consumers30.
2.2 GSK
In GSK, the ECJ dealt with the restriction in parallel trade posed by an agreement carried out by the pharmaceutical company and its wholesalers in Spain. The case occurred as a result of the appeal of both parties to the decision taken by the GC, which rejected to consider the agreement as anticompetitive by object because it previously required proof of its harmful effects on final consumers. The ECJ settled that the GC had erred in law and, recurring to its previous case law, stated that all restrictions on parallel trade are anticompetitive by object, including the ones in such a unique market as the one of pharmaceutical products31. It also stressed the objective of the Treaty in creating an integrated internal market, to which any kind of restrictions, especially those hampering parallel trade, must be considered as anticompetitive by object32.
Repeating the structure followed in T-Mobile, the ECJ emphasises that there is nothing in the wording of article 101(1) TFEU to believe that only agreements that have negative effects on consumers should be considered as anticompetitive by object. Thus, the Court immediately points out the goals ordering the spirit of EU competition law as a policy, recurring to the same objectives expressed in T-Mobile as those ordering the
27 See Opinion AG Kokkot 23-02-2006, Case C-95/04 P British Airways v Commission, para. 68. In that
case, the case dealt with an infringement of art. 102.
28 See Opinion AG Kokkot 19-02-2009, Case C‑8/08 T-Mobile Netherlands BV v. NMa, para. 57. 29 Ibid, para. 58.
30 Ibid.
31 ECJ 06-10-2009, Joined Cases C-501/06P, C-515/06P and C-519/06P, GlaxoSmithKline Services
Unlimited v Commission, see paras. 59-60. Cf. Loozen. The workings of article 101 TFEU in case of an agreement that aims to limit parallel trade, European Competition Law Review 2010, pgs. 349-350.
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understanding of competition rules33. Special consideration must be given to the second part of the judgement, where it was accepted that exceptions to agreements infringing article 101(1) TFEU by object could exist on the basis of article 101(3) TFEU, however only in limited market circumstances when the normal competitive conditions of the market are blurred34.
As a means to apprehend the decision of the ECJ, special consideration should be made to AG Trstenjak’s Opinion, which acknowledges that even though the rules on competition have the objective of the best possible supply to consumers, it is by preventing harmful private restrictions on competition that they do so35. Subsequently, it is inferred that there is no need to prove actual harm on consumers in the case of practices whose aim is to prevent competition per se, that is, by object. Furthermore, the AG argues that the consumers will benefit from competition, even if they originate from an upstream market, and that it must understood that article 101(1) TFEU is intended to protect competition not only in downstream markets but on all levels36.
2.3 Intel
In this case the GC dealt with the alleged abusive practices of Intel Corp. by offering exclusivity rebates to its customers (namely, computer manufacturers), thus foreclosing actual and potential competitors access to the market and consequently infringing article 102 TFEU. The GC’s analysis, after acknowledging the dominant position of the aforementioned undertaking in the market, focuses on the impact of its actions. It is stated that the conduct of Intel, consisting in the offer of exclusive supply conditions, not only constitutes a distortion of competition within the internal market, but also causes an additional interference with the structure of competition on the market37.
It is also disclosed that there is no necessity, contrary to what the Commission posed, to carry out an analysis of the effects of exclusivity or quasi-exclusivity rebates.
33 ECJ 06-10-2009, Joined Cases C-501/06P, C-515/06P and C-519/06P, GlaxoSmithKline Services
Unlimited v Commission, see para. 63.
34 For a consideration over the applicable circumstances in which article 101(3) TFEU would grant an
exception to an infringement by object of article 101(1) TFEU see: ECJ 16-09-2008, Joined Cases C-468/06 to 478/06, Sot Lelos kai Sia v GlaxoSmithKline, paras. 67-68.
35 Opinion AG Trstenjak Joined Cases C-501/06P, C-515/06P and C-519/06P, GlaxoSmithKline Services
Unlimited v Commission, see paras. 111-112.
36 Ibid, see paras. 113-116.
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As a result, the GC considers that nor is it necessary to prove a direct damage to consumers, a causal link between such damage and the alleged anticompetitive practices or the foreclosure effect over competitors38. Ultimately, the decrease of the freedom of the customers to select other forms of supply39, the increasing difficulties of potential rivals to get access to the market40 and the prospective harm over actual competitors that exclusive rebates entail41, are sufficient means to establish the infringement of article 102 TFEU42.
3. Outcome of the cases
The synthesis of the case law provided in the last section is a reliable proof that the CJEU has emphasised the concept of competition over the protection of consumers. The implications of such positioning however do not seem clear at first sight and an analysis of the declared “aims” of EU competition rules should be made in order to ascertain the relationship between them. Furthermore, it must be considered that the aforementioned case law has to be situated in the broader context concerning the process of modernisation of EU competition law driven by the Commission in the recent years. As a result, this section provides the blueprints of the answer to the research question of this thesis.
3.1 Context
The perspective adopted by the Commission in the GSK and Intel cases has its roots in this institution’s project from the late 1990’s to overhaul the interpretation and enforcement of EU competition rules, providing an increasing role to the economic aspects of this area of law43. Accordingly, the Commission developed a more economic approach of dealing with competition conflicts, which had as its core the prevention of consumer harm.
38 GC 12-06-2014, Case T-286/09 Intel Corp. v Commission, see paras. 102-105. 39 Ibid, para. 77.
40 Ibid, para. 92. 41 Ibid, para. 93.
42 Cf. Venit. Case T-286/09 Intel v Commission—The Judgment of the General Court: All Steps Backward
and No Steps Forward, European Competition Journal 2014, pg. 207.
43 Cf. Kellerbauer. The Commission's new enforcement priorities in applying article 82 EC to dominant
companies' exclusionary conduct: a shift towards a more economic approach? European Competition Law
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A notable example of the influence of this perspective in the labour of the Commission are the suggestions submitted by the Economic Advisory Group on Competition Policy whose conclusions can be summarised as follows: competition should be focused to foster economic growth and remove inefficiencies on the market44, the standard to determine when a practice is detrimental or a legitimate tool to competition must be derived from its impact to consumers45 and that individual competitors should not be protected46. These ideas can be reflected in the analytical framework provided in the following Commission’s guidelines on the enforcement of competition rules, which tend to include new elements of economic analysis and the impact of undertakings’ conducts on final consumers47. From this perspective, entrenched in a utilitarian concept of competition law, the latter is seen as a tool to promote economic efficiency and progress, thus maximising the consequent benefits of consumer welfare48.
The process of modernisation of EU competition law has also to be analysed in accordance with the progressive decentralisation of the enforcement of competition rules in order to be applied by the respective authorities of the member states, as part of the framework provided in Regulation 1/200349. The effects of the decentralising process have proved opposite to reducing the workload of the Commission50. As a result, national competition authorities have been acted guided and supervised by the Commission51,
44 Cf. Economic Advisory Group on Competition Policy, An economic approach to Article 82 (Report),
2015, pg. 3 [online].
45 Cf. Ibid, pg. 8 46 Cf. Ibid, pg. 9.
47 As can be reflected in numerous Commission’s documents. As an example, see: European Commission,
Vertical Restraints Guidelines (2010/C 130/01), par. 7 (“the objective of Article 101 is to ensure that undertakings do not use agreements to restrict competition on the market to the detriment of consumers”); Guidance on the on the Commission’s enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings (2009/C 45/02), par. 5 (“in applying Article 82 to exclusionary conduct by dominant undertakings, the Commission will focus on those types of conduct that are most harmful to consumers”); Guidelines on the application of Article 101(3) TFEU (2004/C 101/08), par. 13 (“The objective of Article 81 is to protect competition on the market as a means of enhancing consumer welfare and of ensuring an efficient allocation of resources. Competition and market integration serve these ends since the creation and preservation of an open single market promotes an efficient allocation of resources throughout the Community for the benefit of consumers”). Cf. Lianos, Some
reflections on the question of the goals of EU Competition Law, 2013, p. 32.
48 See Forwood. The Commission’s More Economic Approach, Robert Schuman Centre for Advanced
Studies 2009, pg. 2 [online].
49 Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on
competition laid down in Articles 81 and 82 of the Treaty. OJ L 1, 4-1-2003.
50 See Wesseling. The Modernisation of EC Antitrust Law, 2000, pg. 205.
51 Cf. Weitbrecht. A. From Freiburg to Chicago and Beyond—the First 50 Years of European Competition
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which has expanded its more economic approach and the consideration of the consumer welfare perspective as the ultimate goal of competition law throughout all member states. The path opened by the Commission counted with the initial support of the GC, which in the first GSK judgement stated that the purpose of EU competition law “is to prevent undertakings, by restricting competition between themselves or with third parties, from reducing the welfare of the final consumer of the products in question”52. Additionally, the GC included a tacit definition of consumer welfare, understood as being measured by the price that final consumers pay for goods, thus EU competition rules have the objective to reduce those prices in order to increase the welfare of the consumers53. Nevertheless, when the Commission’s and the GC’s standpoints reached the ECJ, the latter was reluctant to accept them, therefore setting back the established more economic approach and supporting a legalistic perspective on the basis to the previous case law that the Commission sought to move away from54.
The preliminary judgement of the ECJ in T-Mobile appeared to contrast the Commission’s shift towards an effects-based approach focused on the impact on consumers. Whilst the GC initially supported the Commission’s perspective as previously mentioned, the ECJ turned it back on appeal in the second GSK decision in relation to article 101 TFEU. Ultimately, the GC has joined the ECJ position, extending the latter’s standpoint to conflicts falling under the scope of article 102 TFEU in the Intel case.
3.2 Analysis: The protection of competition as the only relevant goal of EU competition law
The ECJ has not limited itself to critique the focus on consumers as a means to find an infringement of EU competition rules, but also has expressed its interpretation on the aims of such rules; the Court identified these as the protection of consumers, the competitors and of the structure of the market and competition as such. An analysis of the
52 GC 27-09-2006, Case T-168/01, GlaxoSmithKline v European Commission, para. 118. Cf. Odudu. The
Wider Concerns of Competition Law, Oxford Journal of Legal Studies 2010, pg. 602.
53 See GC, ibid, para. 147. Cf. Odudu. Ibid.
54 Cf. Venit. Case T-286/09 Intel v Commission—The Judgment of the General Court: All Steps Backward
and No Steps Forward, European Competition Journal 2014, pg. 206. See also, Meyring. T-Mobile: Further confusion on information exchanges between competitors, Journal of European Competition Law &
Practice 2010, pg. 30; Loozen. The application of a more economic approach to restrictions by object: no
revolution after all (T-Mobile Netherlands), European Competition Law Review 2010, pg. 146; Wils. The judgment of the EU General Court in Intel and the so-called 'more economic approach' to abuse of dominance, World Competition 2014, Pg. 7 [online].
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aforementioned cases and other case law becomes relevant in order to ascertain the elements of the recognised aims of EU competition law.
In relation to the protection of consumers, the ECJ has already stated that one of the concerns of competition rules is to prevent “consumer harm”55. The Commission, in its Guidance of Enforcement Priorities of Article 102 TFEU refers indistinctly to the terms “consumer harm”, “detriment to consumers” or “consumer welfare”56. Even though the concept of consumer welfare has never been directly addressed by the CJEU, it can be inferred that by referring to the protection of consumers they actually mean the protection of consumer welfare. This conclusion can be taken from the statements of the ECJ in the
Syfait II57 and GSK58 judgement, where the benefits of competition are remarked in terms of its impact on prices and supply as these parameters are where consumer welfare is measured, the ECJ is following this standard59. Furthermore, AG Kokkot clearly equalises direct impact on consumer prices to consumer welfare in its T-Mobile Opinion60. The language used by the ECJ appears to respond to the Court’s intention to include dynamic efficiencies as part of the possible consumer benefits under 101(3) TFEU61, while consumer welfare only considers allocative and productive efficiencies.
The ECJ is stressing its Ordoliberal influences regarding the inclusion of concerns over the protection of competitors62. Given that the scheme of EU competition rules does not prohibit monopolies or dominant undertakings resulting from the high performance of their conduct, the protection of competitors has to be understood as the economic freedom of individual undertakings to participate in the competitive process of the market. Consequently, when the ECJ has dealt with cases in which the freedom of an individual
55 ECJ 27-03-2012, C‑209/10P Post Danmark A/S v Konkurrencerådet, para. 20: “It is apparent from
case‑law that Article [102 TFEU] covers not only those practices that directly cause harm to consumers but also practices that cause consumers harm through their impact on competition”.
56 Cf. Lianos, Some reflections on the question of the goals of EU Competition Law, 2013, pg. 16 [online]. 57 ECJ 16-09-2008 Joined Cases C-468/06 to C-478/06 Sot. Lelos kai Sia v GlaxoSmithKline AEVE, see
para. 66.
58 ECJ 06-10-2009, Joined Cases C-501/06P, C-515/06P and C-519/06P, GlaxoSmithKline Services
Unlimited v Commission, see para. 63.
59 Cf. Negrinotti, M. The single market imperative and consumer welfare, in: The Goals of Competition
Law, 2012, pg. 310.
60 See Opinion AG Kokkot 23-02-2006, Case C-95/04 P British Airways v Commission, para. 59. 61 See Negrinotti. Op. Cit., pg. 311.
62 See Kallaugher & Sher, Rebates Revisited: Anti-Competition Effects and Exclusionary Abuse under
Article 82, 2004; Venit, Article 82: The Last Frontier. Fighting Fire with Fire, 2005; Ahlborn & Padilla, From Fairness to Welfare: Implications for the Assessment of Unilateral Conduct under de EC Competition Law, 2008. Cf. Whish & Bailey. Competition Law, 2012, pp. 195-196. See also Negrinotti, Op. Cit., pg.
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undertaking to compete could be hampered, it recurs to the terms of “freedom to compete” and “economic freedom”63. Such aim is not only relevant in competition policies, but is also intrinsically linked to the objective of the integration of the internal market. This interpretation is reinforced by the fact that the ECJ does not usually refer to “market integration” as a term, instead using other terms related to the protection of individual undertakings to engage in parallel trade64. It should be noted that, following the same structure as in the cases where the effects on consumer harm played the main role of the Commission’s considerations, the ECJ has implicitly acknowledged that it is not necessary to prove the effects of likely or actual harm to market rivals65.
Lastly, the protection of the structure of the market emerges as the most relevant concept to be interpreted in answering the aims of this thesis. The rejection of consumer welfare as the ultimate goal of EU competition law poses the question of what should be the objective. Following the aforementioned case law, the main concern of the CJEU is the restriction, distortion or prevention of competition66, being the anticompetitive conduct of the accused undertakings the element that triggers the application of EU competition rules and not the harm to consumer welfare. Consequently, it should be understood that the protection of competition from being distorted is itself the decisive goal of EU competition law. This interpretation is according to the wording of article 101 TFEU, which stresses the concept of competition as the value to be protected in agreements between undertakings, and the GC’s interpretation of article 102 TFEU in
Intel that refers in the same terms to the protection of the structure of competition on the
market67. Furthermore, the statements of the CJEU are also in accordance with Protocol No. 27 on the internal market and competition, annexed to the Treaty of Lisbon, which expresses that the objective of EU competition rules is to establish a system of undistorted competition within the internal market68.
63 Cf. Akman. The role of ‘freedom’ in EU competition law, Legal Studies 2014, pg. 195. 64 Cf. Ibid, pg. 211.
65 See ECJ 15-03-2007 Case C-95/04P, British Airways v Commission, para. 33. Cf. Gormsen & Mardsen.
Guidance on abuse in Europe: The continued concern for rivalry and a competitive structure, The Antitrust
Bulletin 2010, pg. 882.
66 See ECJ 04-06-2009, Case C-8/08, T-Mobile Netherlands BV v. NMa, para. 31; ECJ 06-10-2009, Joined
Cases C-501/06P, C-515/06P and C-519/06P, GlaxoSmithKline Services Unlimited v Commission, see para. 61; GC 12-06-2014, Case T-286/09 Intel Corp. v Commission, para. 90.
67 See Intel, ibid, para. 90.
68 Treaty on European Union, Protocol (No 27) on the internal market and competition, OJ C 83/309. Cf.
Wils. The judgment of the EU General Court in Intel and the so-called 'more economic approach' to abuse
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Even though the ECJ refers to the protection of consumers as an aim of EU competition rules, it can be understood that the Court tacitly accepts the opinion of its advocate generals in suggesting that competition itself entails advantages for consumers in GSK and T-Mobile69. Insofar as the ECJ alleges to take consideration of consumers in the framework of EU competition law at the same time that it recognises the prevalence of the competition standard, it ought to be understood that the protection of competition is used as a means to protect consumers. Furthermore, this interpretation on the benefits of competition to consumers has been recognised since the early days of the ECJ’s work70 and continues to do so today, being the recent TeliaSonera71 judgement a salient example in this regard. In the same argumentative line, the GC acknowledges that the impact on an effective competitive structure is detrimental to consumers72. Nevertheless, from economic theory there seems to be no doubt that competition can harm consumer welfare in some cases, at least in a short term73, which could best be served under the efficiencies of a total welfare approach. However as previously stated, the ECJ has accounted for other possible consumer advantages as a result of the competitive process, such as dynamic efficiencies, which extend beyond a narrow welfare perspective.
The aim of EU competition law to protect competitors is less conflictive with the concept of the protection of competition itself and, so much so that the GC has equated both concepts74. Its relation with the protection of consumers is more problematic when what is protected are inefficient competitors at the expense of consumer welfare. Nonetheless, given that article 102 TFEU is the most significant norm throughout which economic freedom of competitors is achieved, it should be noted that it is not aimed to protect inefficient market rivals, but on maintaining the process of competition by
69 See Opinion AG Trstenjak Joined Cases C-501/06P, C-515/06P and C-519/06P, GlaxoSmithKline
Services Unlimited v Commission, see para. 111; Opinion AG Kokkot 19-02-2009, Case C‑8/08 T-Mobile
Netherlands BV v. NMa, para. 58.
70 See ECJ 21-02-1973, Case 6-72 Continental Can v Commission, paras. 20-26. Cf. Whish & Bailey.
Competition Law, 2012, pg. 19.
71 ECJ 17-02-2011, Case C-52/09 Konkurrensverket v TeliaSonera Sverige AB, para. 24: “Article 102 TFEU
must be interpreted as referring not only to practices which may cause damage to consumers directly, but also to those which are detrimental to them through their impact on competition”. In the same argumentative line, see also: ECJ 16-09-2008, Joined Cases C-468/06 to 478/06, Sot Lelos kai Sia v GlaxoSmithKline, para. 68; ECJ 14-10-2010, C-280/08, Deutsche Telekom v Commission, para. 176.
72 See Case T-286/09 Intel Corp. v Commission, para. 105.
73 See Turner, The Scope of Antitrust and Other Economic Regulatory Policies, Harvard Law Review 1969,
pgs. 1207-1209; Areeda, P. & Kaplow, L. Antitrust analysis, 1997, pgs. 27-35.
74 See GC 03-06-1999, Case T-17/96 Télévision Française v Commission, para. 50. Cf. Akman. The role
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allowing market contestants to compete on the merits75. Subsequently, far more than the actual outcome of such competition, the mere existence of rivalry between firms is a desirable objective for the ECJ76.
Given that the ECJ rejects to take into consideration the actual or potential effects of the practices whose sole object is detrimental to competition, it should be inferred that the protection of competition is, in practice, the only relevant goal of EU competition rules, to which the protection of consumers and competitors follows as the logical consequence of the market process77. Nevertheless, the protection of competition appears as an abstract principle reflected in the wording of the ECJ that defines competition “as such”78 to which, following the statements of AG Kokkot, competition as such can be understood “as an institution” itself79. From the perspective elucidated in this remark, the ECJ considers the “protection of the structure of the market” as the practical application of the principle of competition, the former being the relevant test of the Court throughout which an infringement of the latter is determined. Such interpretation is in accordance with the ECJ argumentation which assumes that by protecting the structure of the market, competition itself is protected80. As a result, authors such as Witt equalise both terms as a matter of practicality in interpreting the case law of CJEU81.
Ultimately, the influence of the Ordoliberal thinkers in the CJEU’s reasoning should be recognised, given that these theorists value the protection of the competitive process from the abuse of economic power more than the actual outcome of competition itself82. Similarly, the ECJ has acknowledged that the damage to the competitive structure is instilled in the very definition of abuse as it can be inferred from the Hoffmann-La
75 See Gormsen. A Principled Approach to Abuse of Dominance in European Competition Law, 2010, pgs.
89-90, 177-178.
76 Cf. Gormsen & Mardsen. Guidance on abuse in Europe: The continued concern for rivalry and a
competitive structure, The Antitrust Bulletin 2010, pg. 883.
77 As stated by Gormsen: “EU protects a competitive structure to protect rivalry. It does this for various
stated ends, including economic freedom' and consumer welfare,' even though these ends may conflict with each other”. Ibid, pg. 877.
78 See ECJ 06-10-2009, Joined Cases C-501/06P, C-515/06P and C-519/06P, GlaxoSmithKline Services
Unlimited v Commission, see para. 63.
79 See Opinion AG Kokkot 19-02-2009, Case C‑8/08 T-Mobile Netherlands BV v. NMa, para. 58.
80 “Like other competition rules laid down in the Treaty, Article 81 EC aims to protect […] the structure of
the market and, in so doing, competition as such”. ECJ, GSK, Op. Cit., para. 63.
81 “As recently as 2011, the Court of Justice reaffirmed its long-established position that consumer harm is
not a requirement of anti-competitiveness and that it also considers such conduct anticompetitive that is detrimental to consumers indirectly through their impact on competition, i.e. their impact on the structure of the market. So much is relatively clear”. Witt. Public Policy Goals under EU Competition Law, European Competition Journal 2012, pg. 464.
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Roche83 judgement84. Subsequently, the protection of the structure of the market can be understood as the core Ordoliberal idea to protect the process of competition85.
In conclusion, following the perspective elucidated by the CJEU, the protection of the structure of the market as a means to protect competition emerges as the only relevant goal of EU competition law; therefore, the other established aims, namely the protection of competitors and consumers are being indirectly safeguarded through the consecution of competition itself.
4. The importance of the integration of the internal market objective in the framework of EU competition law
The mere fact that EU competition rules include in their phrasing that the goal to be preserved is competition within the internal market, provides an idea of the relevance of the objective to achieve the integration of such market in EU competition law and policies. As summarised by AG Kokott: “EU competition rules establish a system designed to protect competition within the internal market from distortions”86. The scope of application of the Union’s antitrust system is the internal market and it is based on the premise that competition should be protected within the framework of the integration objective. Even though some academics have identified the integration of the internal market as a goal incorporated into the aims of EU competition law87, the GSK and
T-Mobile judgements proves wrong this hypothesis insofar as the ECJ has not recognised
such a goal in the listed aims of the Union’s antitrust system.
The objective of the internal market integration is to remove the economic frontiers between the different states of the Union, prohibiting national measures and private
83 ECJ 13-02-1979, Case 85/76, Hoffmann-La Roche & Co. AG v Commission, see para. 90.
84 Cf. Gormsen & Mardsen. Guidance on abuse in Europe: The continued concern for rivalry and a
competitive structure, The Antitrust Bulletin 2010, pg. 883.
85 Lianos subscribes to this posture, being the Opinion of AG Kokott in British Airways the best reflection
of this interpretation. See Lianos, Op. Cit., pg. 33.
86 Opinion AG Kokkot 19-02-2009, Case C‑8/08 T-Mobile Netherlands BV v. NMa, para. 58.
87 See Korah. An Introductory Guide to EC Competition Law and Practice, 2000, pgs. 10, 237; Neven.
Competition Policy Objectives, in: European Competition Law Annual 1997: The Objectives of
Competition Policy, 1998, pgs. 37-38; Parret. The multiple personalities of EU competition law: time for a comprehensive debate on its objectives, in: The Goals of Competition Law, 2012, pg. 65; Negrinotti. The single market imperative and consumer welfare, in: The Goals of Competition Law, 2012, pg. 310.
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entities activities that could hinder free trade between member states (MS)88. The particular characteristics of the EU, which includes a series of political objectives beyond purely economic ones, has led the ECJ to adopt a restrictive approach towards the anticompetitive practices providing for territorial allocation or restrictions to parallel trade89. The Commission has also stressed the importance of competition policies in achieving the unification of the different national markets into a truly Single European Market whose attainment remains one of the priorities of this institution’s agenda90.
The application of competition policies as a means to enhance the integration of the internal market can be understood as having a positive and negative aspect. The latter consists in EU competition law, preventing measures aimed to maintain the economic isolation of a domestic market, whereas the positive aspect involves the understanding that competition can be used to encourage trade between MS by ‘levelling the playfields of Europe’ and stimulating interstate transactions, thus promoting integration91. In procuring both aspects, the Commission has developed a decisive role under the judicial control of the ECJ. Consequently acting as the institution in charge to enforce the competition policies, the Commission was invested in unprecedented powers in this field at the first stage of the establishment of the Union’s antitrust scheme92. Subsequently, on the basis of articles 28-30 of the EC Treaty (presently articles 34-36 TFEU), the institution opted for an active enforcement of competition policies with constant references to the free movement of goods and the objective of market integration, which was crucial at the time93. Accordingly, the Commission prohibited agreements whose object was to restrict competition by hampering the market integration, albeit by allowing producers to reduce prices for the final consumers94.
Even though the attainment of the internal market integration remains an important goal of the EU Treaties, it seemed to lose its prevalence over other objectives since the formal completion of the latter in 1992 by the Single European Act. A noticeable example
88 Cf. Van der Bergh & Camesasca. European Competition Law and Economics: A Comparative
Perspective, 2006, pg. 45.
89 Cf. Lianos. Some reflections on the question of the goals of EU Competition Law, 2013, pg. 14. 90 Cf. Monti. EC Competition Law, 2007, pg. 39.
91 Cf. Whish & Bailey. Competition Law, 2012, pg. 23.
92 Cf. Wesseling. The Modernisation of EC Antitrust Law, 2000, pg. 49. 93 Ibid, pg. 48.
94 See, for example, Commission’s decision 65/366/CEE Dru/Blondel, 1965 and decision 65/426/CEE,
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of this is de Adalat95 case, where the ECJ censured the attempt of the Commission to
achieve price convergence by supporting parallel trade, extending the applicability of article 101 TFEU to a case where no concurrence of wills existed. Therefore, the annulment of the Commission’s decision by the Court made clear that article 101 TFEU is not an instrument that can be used to remove in an absolute generic way, the obstacles of trade between member states96, thus setting the limits between EU competition rules and the objective of market integration.
The protection of the single market has again gained relevance in the ECJ’s decisions in a series of recent cases, whereby it has maintained its traditional approach stating that all measures hampering interstate trade are restrictions of competition by object whether they produce effects on final consumers or not97. In the Expedia98 judgement, the Court held that an agreement with an anticompetitive object that may affect interstate trade, constitutes an appreciable restriction to competition per se99. The Court has thus simplified its classic case law and competition rules, stating that all anticompetitive agreements affecting interstate trade infringe article 101(1) TFEU, following the strict approach already set in the early Consten and Grundig100 ruling. Consequently, it should be noted that the Court identifies the protection of competition within the consecution of the internal market integration.
The case law on the subject of parallel trade is particularly representative of the link between market integration and competition rules, being the ECJ’s GSK judgement a salient example. As previously stated, in the first instance of the GSK judgement, the GC contended that the prevention of parallel trade does not necessarily lead to a breach of article 101 TFEU, arguing that such article has as its prominent objective “to prevent undertakings from […] reducing the welfare of the final consumer of the products in question”101. Nevertheless, by reversing the GC’s decision, the ECJ has reaffirmed that
95 ECJ 06-01-2004, Joined cases C-2/01P and C-3/01P, Commission v Bayer.
96 Cf. Van der Bergh & Camesasca. European Competition Law and Economics: A Comparative
Perspective, 2006, pg. 46.
97 Cf. Lianos. Some reflections on the question of the goals of EU Competition Law, 2013, pg. 14. 98 In ECJ 13-12-2012, Expedia Inc. v Autorité de la concurrence and Others.
99 Ibid, see para. 37.
100 ECJ 13-07-1966, Joined cases 56 and 58-64, Consten and Grundig v Commission. 101 GC 27-09-2006, Case T-168/01, GlaxoSmithKline v European Commission, para. 118.
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limitations on parallel imports are restrictive by object, therefore stressing the objective of the Treaty in creating an integrated internal market102.
Notwithstanding that position, the ECJ has increasingly developed a more pragmatic view of the market integration goal, by thus employing a more compatible reasoning with the welfare perspective103. In the early stages of competition law enforcement, the completion of the internal market objective as a means to protect the economic freedom of parallel traders was not considered as being conflictive with the tool of efficiency or the interest of consumers, therefore there was no need to distinguish or choose between the different aims104. Nevertheless, the conflict is increasingly recognised and the decisions of pharmaceutical parallel trade products are a salient example of this105.
In the Sot Lelos kai Sia106 judgement, the ECJ noted that even though restrictions on parallel trade lead to a presumption of consumer harm, they may still be rebutted in limited circumstances in the context of article 102 TFEU107. Similarly, in the following
GSK judgement, the ECJ stated that restrictions on parallel trade infringing article 101(1)
TFEU may be justified on the grounds of article 101(3) TFEU108. Such interpretation does not override the protection of competition and the structure of the internal market as the goal of EU competition law since, as Lianos notes, the full array of objective justifications does not apply in these cases109. Hence in the case of article 102 TFEU, the only relevant justifications are those where the MS market regulation is a factor liable to create the opportunities for parallel trade110, furthermore when the consequence of the application of article 102 TFEU would entail that the undertaking will not place its product on a MS as a result of the aforementioned regulation111. In relation to article 101(3) TFEU, the ECJ argued that the structural features of the market concerned should be taken into
102 ECJ 06-10-2009, Joined Cases C-501/06P, C-515/06P and C-519/06P, GlaxoSmithKline Services
Unlimited v Commission, see para. 61.
103 Lianos. Op. cit., pg. 14.
104 Cf. Parret. The multiple personalities of EU competition law: time for a comprehensive debate on its
objectives, in: The Goals of Competition Law, 2012, pg. 65.
105 Cf. Negrinotti, M. The single market imperative and consumer welfare, in: The Goals of Competition
Law, 2012, pg. 312.
106 ECJ 16-09-2008, Joined Cases C-468/06 to 478/06, Sot Lelos kai Sia v GlaxoSmithKline.
107 ECJ, Ibid, see para. 69. Cf. Lianos. Some reflections on the question of the goals of EU Competition
Law, 2013, pg. 15.
108 See Negrinotti, M. Op. Cit., 2012, pg. 314. 109 Cf. Lianos. Op. Cit., pg. 15.
110 See ECJ 16-09-2008, Joined Cases C-468/06 to 478/06, Sot Lelos kai Sia v GlaxoSmithKline, para. 67. 111 See ibid, para. 68.
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consideration112. Therefore, the justifications provided under both articles are based on the circumstance that the competitive market structure is already distorted on the basis of other public policies concerns, which oblige the ECJ to take into consideration the characteristic particularities of the market in question, even though they do not exempt EU competition rules from being applied.
In conclusion, despite the integration of the internal market objective seeming to have lost the prominent weight which it had in the first steps of the creation of the Union, the ECJ’s case law proves that it remains one of the core objectives rooted in its interpretation of the Treaties. Indeed, the aim of market integration has historically dominated the implementation of EU competition rules113. The interaction of this goal with the aims pursued by EU competition law does not pose a problem since competition policies play a huge part in the integration process by eliminating economic barriers. Accordingly, the economic freedom of the undertakings participating on the market is protected as a result of the safeguarding of free trade between MS. Furthermore, it is acknowledged by the ECJ that the internal market integration entails benefits for consumers by increasing the available choice of products114 and lowering prices by the increase of actual and potential competitors115. As a result, competition itself is ensured by equating the same market conditions through all the Union. Despite the fact that the ECJ has implicitly recognised possible harm to consumers as an outcome in the integration process, the Court has given to understand that it is only the result of an already distorted competition by the intervention of the public powers. Eventually, the reaffirmation of the importance of the integration objective in GSK arrived at the beginning of the economic crisis in 2008, which confirms the determination of the ECJ to act as the guardian of the internal market116.
112 See ECJ 06-10-2009, Joined Cases C-501/06P, C-515/06P and C-519/06P, GlaxoSmithKline Services
Unlimited v Commission, para. 103.
113 Cf. Akman. Searching for the Long-Lost Soul of Article 82EC, Oxford Journal of Legal Studies 2009,
pg. 301.
114 “Parallel trade […] from one Member State to another, is likely to increase the choice available to entities
in the latter Member State”. ECJ 16-09-2008, Joined Cases C-468/06 to 478/06, Sot Lelos kai Sia v
GlaxoSmithKline, para. 56.
115 Cf. Gerber. The transformation of European Community competition law? Harvard International Law
Journal 1994, pg. 103.
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5. The influence of the economic theories behind the aims of EU competition law
The recognised aims of EU competition law by the ECJ, find their support in the interpretations provided by the different schools of thought on which should be the elements ordering a system of antitrust. Even though the economic science usually plays the main role in the thinking of these schools, other political and social considerations are frequently taken into consideration, which extends the scope of analysis of the competition theory into a broader perspective. Subsequently, the labour of the policymaker in the design of an antitrust scheme, as well as the work of the Courts in its interpretation and posterior enforcement emerge as the most relevant standards in the practical implications of this system of law.
Regarding the interpretation of the aims pursued by EU competition rules, a clear distinction should be made between the position initially supported by the European Commission and the GC in the first GSK judgement, and that one of the ECJ. Before being rejected by the ECJ, the Commission decided to focus on consumer welfare on the basis of an efficiency enhancement standard as a result of its advocacy for a more economic approach117. In contrast, the ECJ and the GC in Intel, have maintained its traditional approach in aiming to protect competition as such. As a result, the decision of the ECJ in the second GSK ruling has overridden the perspective of consumer welfare or economic efficiency as the single goal of EU competition rules118. It must be considered that the interpretation of the ECJ has not meant that the protection of the structure of the market has always prevailed in the CJEU’s decisions. Nevertheless, in the cases where this standard has been outweighed, it has done so as a consequence of the obligations of the Court to take into account the benefits pursued by other policies recognised in the Treaties and in the national legislations of the MS as a result of the multilevel governance system of the Union119. This fact has also raised the issue of the goals of EU competition law in the writings of some authors120. However, this section does not aim to analyse the impact of such policies, but only to offer an internal competition law perspective, which
117 Cf. Lianos, Some reflections on the question of the goals of EU Competition Law, 2013, p. 32.
118 As stated by the ECJ: “neither the wording of [Article 101 TFEU ex] Article 81(1) EC nor the case-law
lend support to such a position”. ECJ 06-10-2009, Joined Cases C-501/06P, C-515/06P and C-519/06P,
GlaxoSmithKline Services Unlimited v Commission, para. 63.
119 Cf. Witt, A. Public Policy Goals under EU Competition Law, European Competition Journal, 2012,
pgs. 444.
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can serve to best understand the reasoning of the CJEU in the three core judgements inspiring this thesis’ aim.
5.1 The protection of the interests of the consumers and their welfare
It is incontestable that the consumers play a huge role in every antitrust law system and its policies given that in essence, the theory of competition in which they are based has as its objective to increase the well-being of society as a whole. Nevertheless, a distinction has to be made between the economic theories advocating for a direct approach to consumer welfare, which configure this standard as the main goal of a competition law scheme, and the models posing for an indirect approach to consumer benefits best served by the results of the competitive process itself.
The focus on consumer welfare between the different liberal economic models is best represented in the thinking of the Chicago School of economics whose authors see the tool of economic efficiency as the finest mode to enhance this welfare’s perspective121. The first academics of this thought developed a perspective derived from the neoclassical price theory122, focusing on productive and allocative efficiency of resources123. For these economists, the existence of a monopoly in a market will not endure given that the attractiveness of the market will allure new participants, eroding the positions of dominance124. Nevertheless, if some monopolies exist, it is due to either the intervention of the state or because they are natural monopolies and therefore, its greater efficiency is the means to legitimately override other participants125. The standard in judging efficiency takes the form of a total welfare perspective, where the only value that matters is the enhancement of the aggregated economic surplus of the participants of the market, either producers, consumers or both126.
121 Originally influenced by the ideas of Aaron Director, several authors contributed to their development
such as Robert Bork, Frank Knight, or Paul Douglas. The following wave of economists of this school known renowned Nobel Prize winners, such as Milton Friedman, George Stigler, Ronald Coase or Lars Peter Hansen, among others.
122 “The price theory proceeds upon the assumption that firms which behave in a rational economic manner
will seek to maximise their profits; firms that do not will not survive over time”. Van der Bergh & Camesasca. European Competition Law and Economics: A Comparative Perspective, 2006, pg. 78-79.
123 Cf. Lianos. Some reflections on the question of the goals of EU Competition Law, 2013, pg. 7.
124 Cf. Montalbán, Ramírez-Pérez, Smith. EU Competition Policy Revisited: Economic Doctrines Within
European Political Work, 2011, pg. 10 [online].
125 Ibid.
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The Chicago approach of competition policy is founded upon the principle that pure competition can be considered as harmful in terms of efficiency; thus antitrust rules are only necessary in certain instances127. These economists appeal that antitrust rules that are too general should be avoided in favour of a more pragmatic “rules of reason”128. Consequently, a competition law scheme should be only aimed to assert whether a conduct intended to maximise profits ought to be considered lawful or not and to ponder if such conducts are economically efficient. As a result, the appearance of cartels, vertical restrictions and other efficient market practices are to be considered legitimate, given that forbidding them would run counter the efficient outcomes of Economics129.
Even though the concepts of economic efficiency and consumer welfare can potentially be in conflict, the idea of the latter in competition law was imported by some Chicagoans, whom considered it as a logical consequence of productive and allocative efficiency130, subsequently equalising the practical results of consumer and total welfare. Notably, Robert Bork, along with other theorists such as Comanor and Schmidt131, equated the goal of consumer welfare with that of general welfare, emphasising that maximisation of consumer welfare is an efficiency goal and not a distributive one132.
This perspective will be assumed by the post-Chicago academics, which tend to value the competitive process as long as it delivers positive results for consumer welfare; making the enforcement of competition rules dependant on case-by-case analysis of the advantages that the producer’s conducts have over consumers133. Consequently, the antitrust system still has an important role to play as long as it makes use of the instruments of economic analysis measured in terms of efficiency and consumer
127 Cf. Montalbán, Ramírez-Pérez, Smith. EU Competition Policy Revisited: Economic Doctrines Within
European Political Work, 2011, pg. 10 [online].
128 Ibid.
129 See Williamson. Markets, hierarchies, and the modern corporation, 1975. Cf. Van der Bergh &
Camesasca, European Competition Law and Economics: A Comparative Perspective, 2006, pg. 79.
130Cf. Andriychuk. Can We Protect Competition Without Protecting Consumers? The Competition Law
Review 2009, pg. 77, 80.
131 Jedličková. One among many or one above all? The role of consumers and their welfare in competition
law and policy, European Competition Law Review 2012, pg. 573
132 Bork. The Antitrust Paradox, 1978, pgs. 66, 97. See also: Hovenkamp, Distributive Justice and the
Antitrust Laws, Washington Law Review 1982, pg. 5 (“to the extent that efficiency goals in general define
some mechanism for making the whole society better off, maximisation of consumer welfare could be an efficiency goal”).
133 Cf. Wils. The judgment of the EU General Court in Intel and the so-called 'more economic approach'
