Here are some initial reactions to the Commission Guidance to Article 82 in no particular order.

• The Commission confirms that exclusion is a derivative antitrust offense. There is only one type of harm to competition, namely consumer exploitation. Exclusion is relevant only if and to the extent it leads to exploitation. (Para. 19) Antitrust conservatives will like this. However, as the Commission giveth it taketh away, namely with a hair trigger standard for exploitation. Consumer harm is recognized at all levels (FN. 15), and in both the short and the long run. Moreover, consumers may be harmed by a loss in innovation, market dynamism, and variety of choice. Even a loss of business rivalry as such may harm consumers, so that “the protection of rivalry and the competitive process outweighs possible efficiency gains.” (Para. 29) The Commission thus reclaims the consumer welfare concept, the favorite meme of antitrust conservatives in paring back the reach of the antitrust laws, as a foundation for a progressive antitrust policy. This proves what commentators have observed all along, namely that the consumer welfare paradigm is not necessarily a rule of non-intervention.
• Technological tying, in the eyes of the Commission, is worse than contractual tying, because it makes a “tying or bundling strategy a lasting one.” (Para. 52) Here, the Commission also includes a negative externality of technological tying in the anticompetitive calculus, namely that “technological tying … reduces the opportunities for resale of individual components.” (Id.) The latter is very much in keeping with recent policy statements in favor of modularization and open systems.
• Cross-subsidies may qualify as predatory, even if the firm is not dominant in the predation market. Tucked away in FN. 39 is the following statement.

  The Commission may also pursue predatory practices by dominant undertakings on secondary markets on which they are not yet dominant. … While the dominant firm does not need to predate to protect its dominant position in the market protected by legal monopoly, it may use the profits gained in the monopoly market to cross-subsidize its activities in another market and thereby threaten to eliminate effective competition in that other market.

  This seems to say that a firm that is lawfully dominant in the market for product A could be liable under Art. 82 for using its profits to subsidize predatory pricing in the market for product B, in which it is not (yet) dominant and where A and B are unrelated.
• The Commission does not like Trinko. Really. For a refusal to deal “it is not necessary that there is actual refusal on the part of a dominant undertaking; ‘constructive refusal’ is sufficient. Constructive refusal could, for example, take the form of unduly delaying or otherwise degrading the supply of the product or involve the imposition of unreasonable conditions in return for the supply.” (Para. 23). Moreover, having obtained a dominant position as a result of previous legislative protection from competition and now being under regulatory compulsion to grant access to essential facilities is an argument for, not against, imposing an antitrust duty to deal. A dominant firm can’t complain about a duty to share

  where regulation compatible with Community law already imposes an obligation to supply on the dominant undertaking and it is clear, from the considerations underlying such regulation, that the necessary balancing of incentives has already been made by the public authority when imposing such an obligation to supply. This could also be the case where the upstream market position of the dominant undertaking has been developed under the protection of special or exclusive rights or has been financed by state resources. In such specific cases there is no reason for the Commission to deviate from its general enforcement standard and it may show likely anticompetitive foreclosure without considering whether the above three cumulative circumstances are present.

The Commission Guidance is clearly a response to the DOJ’s recent report on single firm conduct. Time to check the FTC’s website.

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