The Costs of Legal Certainty : A Forensically-Informed Methodology on How to Identify the Relevant Costs in Exclusionary Abuse Cases

Abstract: This dissertation examines the forensic relationship between unilateral price practices and prima facie exclusionary abuse(s) under Article 102 TFEU. The research aim is to ascertain relevant cost benchmarks that can be used to determine the legal qualification of a dominant firm’s price practices.The research syntheses and results reflect the law in force on the 1 February 2023 and are outcomes of applying the forensic method. The forensic method was applied by systematising the relevant financial data together with the legal sources for the purpose of categorising impugned price behaviours as exclusionary or competition on the merits.The research demonstrates, inter alia, that the legal use of cost benchmarks is entrenched in concept of the rule of law by seeking to strike a balance between legal certainty and the effectiveness of Article 102 TFEU. In order to realise this objective, the Court of Justice has constructed three distinct legal tests and depending on which test that is used, it will have a significant impact on which cost benchmark(s) that is to be regarded as relevant. The first is the AKZO test, which is a fixed cost test as it explicitly states which cost benchmarks that must be used. The second is the great bulk of cost test, which is a semi-fixed cost test as it is limited to the objectives that the chosen cost yardstick must realise. The third is the as efficient competitor test, which is an open-ended cost test as it is limited to its aim. However, despite clarifications from the Court of Justice, the law on exclusionary pricing remains complex, ambiguous, and sometimes contradictory. To that end, whilst the research concludes that variable cost is an inappropriate benchmark to apply in service sectors, the research also reveals that lex lata allows for the use of variable cost in a manner which is so extensive that the cost yardstick ultimately will apply in an overlapping way. The legal overlap that follows makes Article 102 TFEU wide-ranging to the extent that legal contradictions will occur. The research concludes that the incoherence is the result of using the wrong yardstick over which to classify the cost under scrutiny.Based on the research results, the dissertation makes two main propositions to rectify the incoherence. First, the relevant cost benchmark ought to be the managerial forward-looking calculated out-of-pocket cost. Second, the relevant yardstick over which costs should be classified ought to be the period in which the accused dominant undertaking’s price practice is in force.