Advocate General: Unfair prices can only exist in regulated markets?

Unfair or excessive pricing is one of the most vexed questions under EU competition law.  Advocate General Wahl (the “AG”) of the European Court of Justice has suggested that excessive pricing should be considered unlawful only in regulated markets and only prices that are “persistently” and “significantly” supra-competitive should be caught by the prohibition of abuse of a dominant position.

The AG’s opinion was given in the context of a referral to the Court of Justice from the Supreme Court of Latvia which is ruling over an appeal by collecting society AKKA/LAA against a penalty imposed by the Latvian Competition Council in respect of their setting of allegedly abusive fees.  The fees charged were 50% to 100% higher than the EU average and the competition authority said that the society had failed to provide an objective justification.

The AG said that only “important deviations” should be considered abusive for the purposes of Article 102 TFEU.    He also pointed to a dearth of EU case law on the issue of unfair pricing and said that interventions by competition authorities against excessive prices should focus on cases where the actions by the sector regulators had failed to correct the abuses.

The call for caution in the AG’s opinion is in my view a sensible approach and regulators should be reluctant to rush to a conclusion that allegedly high prices are unlawful where this finding does not accord with recognised economic thinking, such as for example in industries that are characterised by economies of scale or which are capital-intensive.  In other cases, comparisons with other markets might be useful benchmarks but regulators should consider whether such comparisons are properly made.

Case C-177/16 - Biedrība ‘Autortiesību un komunicēšanās konsultāciju aģentūra – Latvijas Autoru apvienība’ v Konkurences padome, Advocate General's opinion of 6 April 2017