Economic Principles for the Enforcement of Abuse of Dominance Provisions

• Authors: Chiara Fumagalli and Massimo Motta.
• BSE Working Paper: 110902 | March 24
• JEL codes: K21, L12, L13, L41

The European Commission (EC) has recently announced its intention to issue Guidelines on exclusionary abuses. In this paper, we explain how economics can and should be used to inform a sound and effects-based approach in the enforcement of Article 102 TFEU. In particular, the EC should be guided only by a consumer welfare standard; exclusive dealing and exclusivity rebates should be subject to a (rebuttable) presumption of harm; price-cost tests are meaningful only for predation and other practices which do not reference rivals; essentiality of the input should not be a requirement for vertical foreclosure cases of any type, but such cases should be limited only to dominant firms that satisfy certain criteria.