Assessing The Impact Of Exclusion In Abuse Of Dominance Cases

• Published date: 18 November 2021
• Subject Matter: Anti-trust/Competition Law, Antitrust, EU Competition , Cartels, Monopolies
• Law Firm: AlixPartners
• Author: Mr Felix Hammeke, Matt Hunt and Gordon Stevenson

In recent years, there have been numerous claims for damages following on from cartel findings. In contrast, claims for damages related to abuse of dominance have been much less frequent, in large part due to fewer authority fining decisions for such conduct.

This situation is changing rapidly: Europe-wide, there have been several recent findings by the EC and national competition authorities of abuse of a dominant position. Additionally, there are numerous active investigations under way, not least those involving large tech firms. In the UK specifically, standalone private actions for abuse of dominance have also become more common, and the Supreme Court's recent decision in the Merricks v Mastercard case has lowered the bar for collective damages cases. This shift is already leading to claims arising from abuse of dominance.

Most abuse of dominance cases relate to exclusionary conduct rather than exploitative conduct by the dominant firm. Assessing damages in exclusionary cases is challenging as such cases raise complex conceptual economics points, which in turn raise complex factual issues. In our experience, to address these issues it is critical to have access to the right skillsets; a combination of economics and forensic accounting evidence, allied to broader commercial expertise, can make all the difference.

How damages are assessed in abuse of dominance cases

Damage claims in these cases hinge on two crucial issues: firstly, how to prove causation, that is the causal relationship between the abusive conduct and the harm to the claimant; and secondly how to determine the claimant's profits in the 'but for' counterfactual scenario absent the abuse.

Addressing these issues gives rise to several challenges in practice:

• The counterfactual scenario may be vastly different from what has actually taken place in the market. In an exclusionary abuse case, the dominant firm's conduct is likely to have led to a significant change in both the market structure and the nature of competition. This implies that the market might have evolved quite differently absent the abuse.
• The counterfactual must be tailored to reflect the market context and the specific nature and circumstances of the abuse. Relevant considerations include whether the dominant firm engaged in predation, or alternatively sought to raise rivals' costs through customer or input foreclosure.
• The impact on rivals will depend on the dominant firm's conduct and may be multi-dimensional. For...