“Is there a role for market definition and dominance in an effects-based approach?”

As the old millennium was coming to an end, European Competition law began a massive reform project aimed at modernizing each and every of its constituent parts. As well known, this ambitious project started with the introduction of Regulation n. 2790/1999 on vertical restraints, and its accompanying Guidelines, it followed with the Guidelines on horizontal cooperation agreements, and made all its way up till the review of the Merger Regulation. The underlying leitmotif of these reforms has been to introduce a more economics-oriented approach to the assessment of competition cases. In practice, these reforms have resulted in a progressive erosion of per se rules in favour of the more flexible rule of reason which leaves the floor open to case by case considerations and seems better suited to take into account the appropriate circumstances (especially of economic nature) of the controversy at issue. The turn has come now for abuses of a dominant position to go under review to determine the extent it should conform to the new mainstream trend which calls for a more substantive recourse to economics insights into the assessment of unilateral practices. This contribution is divided in the following way. A first part of this study (para. 1-2) is focussed on the criticism raised against the practice of the European Commission regarding exclusionary practices and the way the new effects-based approach intends to correct these alleged flaws. It then focuses on the renewed importance consumer welfare has in the new approach and analyzes the practical implication of choosing consumer welfare as a tool to measure the anticompetitive harm of the conduct. In particular, the Neoclassical economic theory teaches us that consumer welfare is directly measured via market power and this indeed explains economists’ interest in discarding the old definition of dominance and adopting the concept of substantial market power (para. 3). In what follows, I will explain the conceptual difference between dominance and SMP but I will also point out that the two concepts entail an entirely different methodology in the assessment of unilateral practices (para. 4). I will discuss the likely economic, legal and political consequences arising from the adoption of a SMP test (together with the broader effects-based approach) to see whether it fits the needs of European economic scenario (para. 5). Some final thoughts are referred to consumer welfare and its aptness to serve as benchmark to assess the anticompetitive character of exclusionary practices (para. 6).