Competition Commissioner Vestager on exploitative abuses

This morning Commission Vestager made a speech entitled “Protecting consumers from exploitation” in which she discusses  whether the Commission should “intervene directly to correct excessively high prices, and other ways that businesses exploit their customers.” It has been a long time since a Commission talked about exploitative abuses and Commission investigations into exploitative prices are very rare. The question for practitioners is whether this signals a renewed Commission interest for running such cases and, if so, whether investigations into exploitative prices are desirable.

Competition practitioners and scholars are generally skeptical about exploitative cases. First, these cases are difficult to run as there is no easy way to determine when a price is exploitative. Second, in most circumstances excessive prices are self-correcting in that they will attract new entry and increased competition will reduce prices. Finally, there is a danger that controlling prices will stifle innovation. The Commissioner is well aware of these challenges and acknowledges them in her speech. Commissioner Vestager’s speech should be read as indicating that while there may be circumstances where the Commission may step in to protect consumers against excessive prices, the Commission should be cautious in its assessment.

From a litigation standpoint, additional Commission decisions finding excessive prices could be a source of class actions. Such actions are still rare in Europe essentially for procedural reasons, but several Member States (the UK, Belgium, France, etc.) have adopted legal regimes making them possible. In this respect, a 19 billion-pound class action lawsuit was initiated in July 2016 against MasterCard Inc., following an ECJ decision that the processing fees the company had charged for cross-border transactions were excessive.

 

 

 

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