Article 82: Gestalt, Myths, Lessons

Abstract

Article 82 of the Treaty Establishing the European Community, which prohibits abuse of a dominant position, is the counterpart to the anti-monopolization provisions contained in Section 2 of the Sherman Act. Unfortunately, however, commentators have variously criticized recent applications of Article 82 as outdated, protectionist, inconsistent - and perhaps most damaging of all, based on faulty economics.

This paper takes issue with these critiques to offer support for a robust Article 82. Narrow analyses focused on the provision's language or specific judicial decisions offer little insight. Rather, an appreciation for Article 82 can only emerge through a richer contextual analysis of its historical origins and its regulatory role within a broader policy of European economic integration.

In developing its argument, the paper explores two common myths. The first is that Article 82 pits innovative American businesses against bureaucratic European regulators. The reality, however, is quite different: faced with lax antitrust enforcement at home, American competitors have found it necessary to turn to Europe for redress against monopolistic abuses. A second misperception is that antitrust should espouse a laissez-faire approach toward dominant firms - a mentality that has most prominently led to anemic interpretations of Section 2 of the Sherman Act. This so-called economic approach, however, is based on the faulty premises of Chicago School economics that, among other ills, misdefines consumer welfare, overplays contestability theory, and ignores core theory. It also slights path dependence, network effects, and the anticompetitive dangers of overbroad intellectual property rights.

Sadly, in recent months Europe has begun to fall under the spell of laissez-faire rhetoric as it explores reinterpreting Article 82 to mimic Section 2. The paper concludes by arguing that these new developments, while troublesome, provide a window to debate three basic sets of questions. First, what interests desire a weakening of the law of abuse and dominant position? Second, can Section 2 learn from Article 82, rather than the other way around? Third, and most fundamentally, can Article 82 provide insight into a broader discussion about the goals and methods of antitrust?

Keywords: antitrust, monopolization, competition law, European Union, international, transnational

JEL Classification: K21, L41, D42, F12, F15