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Standard of Foreclosure under Article 102 TFEU and the Digital Economy

In this article, the author examines the standard of foreclosure that the European Commission applied in Google Shopping (Search) and Google Android and concludes that the standard of foreclosure is mere capability to foreclose. The only exception is the revenue-sharing abuse in Google Android, where the Commission adopted a standard of capability to foreclose as efficient competitors. These tests are subjected to scrutiny in light of the case law of the Union Courts on Article 102 TFEU from a doctrinal and policy perspective. The author argues that, under EU law, two standards of foreclosure may apply: capability of foreclose and likelihood of foreclosure of as efficient competitors causing negative effects on price, output, quality, or innovation. The capability standard should apply to ‘naked’ abuses, that is, conduct that clearly falls outside competition on the merits because it has the sole purpose of restricting competition and no plausible efficiency rationale, such as predatory prices when prices are below average variable costs or average incremental costs or certain abuses consisting in making false representations to public authorities. The standard of foreclosure of as efficient competitors causing negative effects on price, output, quality, or innovation should apply to all types of conduct that could be anti-competitive but also consistent with competition on the merits, such as tying, conditional rebates or payments, and self-preferencing. Both the Intel and Post Danmark I cases strongly support this conclusion when they establish that the purpose of Article 102 TFEU is not to protect competitors that are not as valued by consumers in terms of price, output, quality, and innovation as the dominant undertaking.