Refusal to Supply and Margin Squeeze:
A Discussion of Why the 'Telefonica Exceptions' are Wrong
12 Pages Posted: 17 Feb 2011
Date Written: February 16, 2011
In its Guidance Paper on Article 102 TFEU, the Commission established three conditions that in its view must normally be satisfied before a "refusal to deal" or "margin squeeze" may be considered contrary to Article 102 TFEU, mirroring those established by the European Court of Justice (the "ECJ") in the Bronner case. However, in its Telefónica decision, the Commission took the view that in the circumstances of that case it did not have to prove that these conditions were satisfied before concluding that there was an abusive margin squeeze, as the particular circumstances of the Telefónica case were fundamentally different from those in Bronner. Against this background, this short paper seeks to demonstrate that the "Telefónica exceptions" do not make sense and are not justified from an EU law standpoint. On the contrary, their application could lead to negative consequences in particular by forcing a vertically-integrated dominant firm to give access to its infrastructure even when this access is not “essential” within the meaning of the refusal to deal case law of the ECJ.
Keywords: refusal to supply, margin squeeze, Bronner, Telefónica, abuse of dominance, General Court, incentives to invest; incentive to innovate; essential facilities
JEL Classification: K 21, K23,K42, L41, L43
Suggested Citation: Suggested Citation