AEC Criterion and Exclusionary Conduct: Recent Development under EU Competition Law

Gianluca Faella (Universita degli Studi Link)


The role, relevance and implications of the AEC criterion for the enforcement of Article 102 TFEU have traditionally been widely debated. The AEC criterion is one the main standard of assessment that have been proposed to identify unilateral exclusionary conduct. Such criterion is consistent with the principle that antitrust law should ensure the physiological functioning of the competitive process as a means of selecting the most efficient firms, as well as with the idea that competitive initiatives by dominant firms should be allowed where capable of triggering virtuous competitive dynamics through a process of imitation.

However, there are still doubts about the relevance, scope and content of the AEC criterion in the enforcement of Article 102 TFEU. A first general question is what is whether, under EU competition law, the AEC criterion should only be applied as a quantitative test based on prices and costs of dominant firms, or could be considered a criterion with a broader scope, based on the possibility to replicate, imitate or, in any case, react to (price or non-price) conduct of dominant firms. A second, related question is whether the AEC criterion can be considered a generally valid standard of assessment for abusive practices, or at least some of them (namely, pricing conduct, or some of such practices). A third question is whether, where applicable, the AEC criterion operates as a safe harbor, or the contested conduct can anyway be found abusive on other grounds. Recent developments in the case law of the European courts on Article 102 TFEU (including Intel, SEN and Unilever) address some of the above issues and provide some guidance, even though many questions and doubts remain open.

The recent case law of the ECJ suggests that the AEC may be relevant for the assessment of both elements of abusive conduct under Article 102 TFEU, i.e. whether the contested conduct (i) is capable of having exclusionary effects, and (ii) does not constitute a form of competition on the merits. SEN and Unilever acknowledged and endorsed the relevance of the AEC criterion for both price and non-price conduct. However, the Court used a very cautious and nuanced language, which avoided the introduction of limiting principles and binding requirements. Following the annulment of certain important decisions (such as Intel and Qualcomm) for failure to carry out an appropriate price-cost analysis, the Commission seems to have used the nuances in the recent rulings of the ECJ to lighten some of the burdens it had placed on itself through the Guidance on exclusionary conduct. This allowed the Commission to significantly scale back the role of the AEC test not only for non-price conduct, but also for price abuses, as shown by the Amendments to the Guidance on exclusionary conduct adopted by the Commission in 2023.

This approach is not convincing. The risk is the use of an approach possibly based on economic analysis, but unstructured and difficult to predict, which could disincentivize potentially procompetitive conduct. The AEC criterion should continue to be the reference test for pricing practices. Moreover, the AEC criterion may be relevant, more generally, for assessing and, possibly, ruling out non-price abuses, especially if the AEC criterion is understood in a broad sense, as the possibility of replicating, imitating or, in any case, react to the practice of the dominant firm.

However, the AEC criterion must be applied taking into account the circumstances of the case, as well as the practical problems that may arise in defining and applying an appropriate price-cost analysis for certain practices. In some cases, it may be necessary to adjust the AEC criterion to account for possible situations of asymmetry between the dominant firm and competitors (exclusive availability of certain resources, network effects, presence of a non-contestable share of demand, etc.). Moreover, for certain practices (such as loyalty discounts), the difficulties in applying a price-cost test based on the AEC criterion should be taken into account by adopting a reasonable evidentiary standard. Finally, the application of the AEC criterion may not be appropriate in the case of naked exclusion, i.e. conduct exclusively aimed at excluding competitors or increasing their costs, without providing any benefit to consumers or resulting in any positive effect on competition.

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