Exclusionary non-price abuses under Article 102 TFEU: useful guidance from the CJEU
The recent ruling by the Court of Justice of the European Union (CJEU) in C-377/20, Servizio Elettrico Nazionale and Others v Autorità Garante della Concorrenza e del Mercato is a helpful summary of the principles which apply in assessing whether conduct constitutes an abuse of dominance under Article 102 TFEU, in particular the interpretation of the concept of “competition on the merits”.
Upon the liberalisation of the retail market for electricity distribution in Italy, the activities of Enel group (the former statutory monopolist) were unbundled and various stages of the electricity distribution process were assigned to separate undertakings, including Enel Energia SpA (EE) (active in the liberalised market) and Servizio Elettrico Nazionale SpA (SEN) (active in the so-called protected market).
In 2017, following a complaint by an industry association, the Italian competition authority (AGCM) opened an investigation into EE, SEN and their parent company Enel SpA (Enel). In December 2018, the AGCM issued its final decision holding that EE and SEN, coordinated by Enel, had abused their dominant position in the energy distribution sector in Italy in breach of Article 102 TFEU, in the period January 2012 - May 2017. The abusive conduct consisted of seeking consent to the transfer of customer data (from customers within the protected market) to companies within the Enel group separately to seeking consent to the transfer of the same data to companies outside of the Enel group. This was followed by the issue of ‘offers’ to consenting customers aimed at persuading those customers to switch to companies within the Enel group after liberalisation of the market. The AGCM held that this conduct constituted an abuse of dominance as it had a potentially restrictive effect on competition.
Following a partially unsuccessful challenge of the AGCM decision at first instance, EE, SEN and Enel appealed to the Consiglio di Stato, which referred five questions to the CJEU for preliminary ruling regarding the interpretation and application of the Article 102 TFEU prohibition in cases concerning exclusionary non-price abuses.
The CJEU judgment 
On 12 May 2022, the CJEU issued its preliminary ruling, endorsing in many respects the Opinion of Advocate General Rantos delivered in December 2021  and giving guidance on the assessment of whether exclusionary practices by dominant undertakings are in breach of Article 102 TFEU.
Having affirmed that the ‘ultimate objective’ of competition law is consumer welfare, the CJEU reiterated its well-established case law, that Article 102 TFEU is intended to prohibit conduct which has or has the potential to have anti-competitive effects in the relevant market.  Such anti-competitive effects could consist of hindering the existing competition on the market or, more importantly in this factual context of the liberalisation of a statutory monopoly, hindering the development of competition. This includes practices which cause direct harm to consumers (such as increases in prices) but also those which cause them indirect harm by undermining an effective competitive structure in the market.  Therefore, evidence of direct harm is not necessary; it is sufficient to show that the conduct is ‘likely to’ undermine an effective competitive structure in the relevant market.  Although this presumption can be displaced if the undertaking concerned can demonstrate that the anti-competitive effects are outweighed by positive effects for consumers. 
As to whether conduct has the ‘capacity’ to produce anti-competitive effects, the CJEU held that exclusionary practices (such as those at issue in this case) should, due to their nature, be presumed to have the capacity to restrict competition and produce anti-competitive effects.  While intention is not entirely irrelevant,  it is the effects (or potential effects) of the conduct which is relevant. However, the absence of actual effects does not mean the conduct cannot fall foul of Article 102 ; a dominant company could use the lack of effects as evidence that the conduct was not ‘capable of’ producing such effects and thereby escape the application of Article 102.
By way of further explanation, the CJEU stated that where the conduct consisted of a predatory practice, the competition authority must show that: (i) the conduct in question was likely to make it more difficult for competitors to enter or remain on the relevant market (and, thereby, was likely to have an impact on market structure) – i.e. “capacity” to produce anti-competitive effects; and (ii) that the practice was based on methods other than those which constitute competition on the merits.  The justification for this approach being that on markets where there is a dominant undertaking, competition is already weakened and any practice which doesn’t constitute competition on the merits is likely to undermine the competitive conditions on that market even further and should be prohibited.
The CJEU, following AG Rantos , gave some further guidance as to the interpretation of ‘competition on the merits’. Recognising that competition on the merits may lead to the disappearance of less-efficient competitors, the CJEU explained that the test for whether a practice constituted competition on the merits was whether a hypothetically ‘as efficient competitor’ would be able to adopt the practice. If the practice was based on the exploitation of means or resources resulting from the possession of a dominant position, it was not competition on the merits.  In this case, Enel, as the former monopoly holder, was not entitled to use resources and means that it had due to its monopoly position (here, access to consumer data), and which were not available to its competitors, to maintain its dominant position on the newly liberalised market in question.
The CJEU further noted that the ‘lawfulness’ of the conduct under laws other than competition law was not a relevant factor in the assessment of whether there was an abuse of dominance contrary to Article 102. This is the obvious and logical corollary of the focus of the assessment on the effects of the conduct and also ensures that conduct which does produce anti-competitive effects, but where those effects are either objectively justified or outweighed by efficiency benefits, is not prohibited.
The final question the CJEU addressed is one that has given rise to a considerable amount of debate amongst academics and practitioners following the CJEU’s judgment in Sumal , namely the issue of parental liability. The CJEU held that when a dominant position is abused by one or more subsidiaries belonging to one economic unit or (the term usually adopted by the CJEU) ‘undertaking’; the parent company will be jointly and severally liable for that abuse provided it exercises ‘decisive influence’ over the subsidiary.  The CJEU noted that ‘decisive influence’ will be presumed where the parent company directly or indirectly holds all or almost all of the capital of the subsidiary.
While statutory monopolies are increasingly rare beasts, the spectre of dominant companies seeking to capitalise on the fruits of that dominance in related markets is, unfortunately, not uncommon. The CJEU states that to utilise such ‘fruits’, where an as efficient competitor would not have access to those same fruits, does not constitute competition on the merits and may therefore fall foul of the prohibition in Article 102 TFEU. Of course, such conduct must also have, or have the potential to have, anti-competitive effects on the relevant market but, there too, the bar is not high. It suffices that the effective competitive structure of the market be undermined. Indeed, why should it be otherwise? The price of anti-competitive conduct can be very high indeed; entrenched monopolies rendered incontestable and the elimination of more efficient competitors who bring greater choice, quality and innovation to markets.
 The liberalisation involved two phases. In the first phase, Italy opened electricity distribution to competition for some customers (mainly large companies), while smaller ‘captive’ customers (SMEs and residential users) continued to benefit from a protected service (“servizio di maggior tutela”) under which prices and conditions remained strictly regulated. In the second phase, the market was also opened for ‘captive’ customers (from January 2021 for SMEs and from January 2022 for residential users).
 The full text is available here (in French), the authors have read the judgment in Italian/French and any translation of the judgment in this article is informal.
 Opinion of AG Rantos of 9 December 2021 EU:C:2021:998.
 C-85/76 Hoffmann-La Roche v Commission  ECR:C:1979:36, excepting conduct whose effects are merely hypothetical, C-23/14 Post Danmark EU:C:2015:651.
 C-52/09 TeliaSonera Sverige EU:C:2011:83.
 Para 47.
 Para 48.
 C-307/18 Generics (UK) & Ors EU:C:2020:52.
 It is a factual circumstance which can be taken into account in determining whether conduct has or has the potential to produce effects see para 21 C-307/18 Generics (UK) & Ors EU:C:2020:52.
 The test is whether the conduct is “capable of” producing anti-competitive effects [FN3, supra].
 Para 61.
 Paras 69-71 Opinion of AG Rantos.
 Paras 78 and 91.
 C-882/19 Sumal S.L. v Mercedes Benz Trucks España, S.L EU:C:2021:800.
 Para 108 and C-152/19 P Deutsche Telekom v Commission EU:C:2021:238.