‘To abuse, or not to abuse: discrimination between consumers’ (2007) 32 European Law Review 492

1. ‘To abuse, or not to abuse: discrimination between consumers’(2007) 32 European Law Review 492 Dr. Pinar Akman The Norwich Law School and ESRC Centre for Competition Policy p.akman@uea.ac.uk

2. Identifying the problem While writing the previous chapter of my PhD on ‘unfair pricing’ I ended up reading about price discrimination. Then it occurred to me that… • Article 82(c)EC prohibits ‘applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage’. • Legal literature has predominantly interpreted this as a ban on discrimination directed at other undertakings. Hence, secondary line discrimination. • Economics literature generally examines price discrimination as a practice directed at consumers, ie end-users. • No decision of EC Courts on discrimination between consumers.

3. Research Questions Can discrimination between consumers be an abuse under Article 82EC? (Question 1) If so, should discrimination between consumers be an abuse under Article 82EC given the economics of price discrimination? (Question 2)

4. Initial Hypotheses • Proposition 1: Article 82EC can cover discrimination between consumers. - List not exhaustive. - EC Commission/Courts have not looked for ‘competitive disadvantage’ which is supposedly what excludes consumers from scope. • Proposition 2: Given Proposition 1 and the ambiguous welfare effects of discrimination according to economics, Article 82EC may prohibit welfare-enhancing conduct. Possible over-intervention.

5. Methodology 1 • To answer Question 1, I found out the reasons why Article 82EC cannot arguably cover discrimination between consumers. - Literal reading of Article 82EC: ‘trading parties’ understood as ‘traders’; competitive disadvantage requirement, etc. • I tried to disprove these arguments. - ‘Trading parties’ can be anyone that enters into trade with the dominant undertaking, including consumers. - ‘Competitive disadvantage’ has almost been read out in practice. Economics shows that in some cases consumers’ demands can also be interdependent. • Then, I came up with the arguments why it can cover discrimination. – Case-law; - Non-exhaustive list; - Exploitation. Question 1 answered in the affirmative.

6. Methodology 2 • To answer Question 2, I studied the economics literature on price discrimination: effects of discrimination on welfare are ambiguous. • Then I considered other arguments: effects-based approach; fairness; etc. • Finally I looked at the implications of prohibiting discrimination between consumers: risk of over-intervention; greater limit on freedom of contract; fairness vs efficiency; increase in (private) enforcement of Article 82EC; increase in the special responsibility. • Reconciliation with economics – define ‘abuse’ properly. • I concluded that discrimination should be an abuse only if the Commission can prove that the practice reduces welfare – compared to non-discriminatory pricing. Outright ban of discriminatory practices is not justified. Mere exploitation of some consumers due to discrimination should not suffice.

7. Lessons Learned… • This paper was not in my research proposal for the PhD. • I did not (strictly) plan the structure, but I followed what seems to be the most logical way of answering the question. • This was probably the easiest chapter of my PhD to write and the first one to be published. This could be because the question was - narrow enough to be tackled in a clear and concise way; - timely – reform of Article 82; economic approach; private enforcement; - appealing to a wider audience – hence the generalist journal; - quite simple, basic and obvious, but no one had tackled it before in the literature.