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Is Consumer Welfare Obsolete? A European
Union Competition Perspective*
Frédéric Martya
Abstract: in 2005, the European Commission advocated for a more economic approach to enforcing competition
on consumer welfare. The Court of Justice was reluctant to adopt such an approach until its 2017 Intel Judgment. Its
paradoxical in that it is concomitant with a sharp challenge to the consumer welfare criterion in the United States.
The purpose of this article is to retrace the history of this criterion, particularly its adoption in the context of com-
from the consumer welfare criterion but by integrating it into a broader perspective that also takes into account the
protection of the competition process itself.
Keywords:
competition law
Received: 13 de abril de 2020 Accepted: 09 de febrero de 2021
Available online: 06 de agosto de 2021
How to cite: Mart y, F. (2021). Is the Consumer Welfare Obsolete? A European Union Competition Law and Competi-
tion Perspective. Prolegómenos, 24(47), 55-78. https://doi.org/10.18359/prole.4722
DOI: https://doi.org/10.18359/prole.4722
enero-junio ■ ISSN: 0121-182x ▪ e-ISSN: 1909-7727 ■ pp. 55 -78
Revista
Prolegómenos
2021
Vol. 24(47)
* Research article.
a fellow, Research Group on Law, Economics, and
Management Université Côte d’Azur, Valbonne, France.
E-mail: frederic.marty@gredeg.cnrs.fr https://orcid.org/0000-0002-9881-2036
¿Es obsoleto el bienestar del consumidor? Una perspectiva de la
competencia en la Unión Europea
Resumen: en 2005, la Comisión Europea abogó por un enfoque más económico de la aplicación de las leyes de com-
petencia. El único criterio para evaluar la legalidad de una práctica de mercado debe ser la evaluación de sus efectos
netos sobre el bienestar de los consumidores. El Tribunal de Justicia se mostró reacio a adoptar este enfoque hasta
la sentencia de Intel de 2017. Su aprobación —que es discutible en la medida en que la sentencia puede dar lugar a
diferentes interpretaciones— puede parecer paradójica en el medida en que es concomitante con un fuerte desafío
de este criterio, en particular en su adopción en el contex to de la ley de competencia de la . Nuestro objetivo es
demostrar que las críticas al enfoque basado en los efec tos pueden abordarse sin alejarse del criterio de bienestar
del consumidor, sino integrándolo en una perspectiva más amplia que también tenga en cuenta la protección del
propio proceso de competencia.
Palabras clave: prácticas anticompetitivas; enfoque basado en los efectos; bienestar del consumidor;
ordoliberalismo; derecho de la competencia de la Unión Europea
O bem-estar do consumidor se tornou obsoleto? Uma perspectiva de
concorrência da União Europeia
Resumo: em 2005, a Comissão Europeia advogou por uma abordagem mais econômica da aplicação das leis de
concorrência. O único critério para avaliar a legalidade de uma prática de mercado deve ser a avaliação de seus
efeitos líquidos sobre o bem-estar dos consumidores. O Tribunal de Justiça se mostrou relutante a adotar essa
abordagem até a sentença da Intel de 2017. Sua aprovação, que é discutível na medida em que a sentença pode dar
critério do bem-estar do consumidor nos Estados Unidos. O objetivo deste artigo é voltar à história desse critério,
em particular sua adoção no contexto da lei de concorrência da União Europeia. Além disso, demonstrar que as
críticas à abordagem baseada nos efeitos podem ser tratadas ao não nos afastarmos do critério de bem-estar do
consumidor, mas sim integrando-o numa perspectiva mais ampla que também considere a proteção do próprio
processo de concorrência.
Palavras-chave: práticas anticoncorrenciais; abordagem baseada em efeitos; bem-estar do consumidor;
ordoliberalismo; direito da concorrência da União Europeia
57
Is Consumer Welfare Obsolete? A European Union Competition Perspective
Revista Prolegómenos ■ Vol. 24(47)
As a cornerstone of European Union (hereaer
) competition law enforcement since the (grad-
ual) adoption of the eects-based approach over
the last 15 years, the consumer welfare criterion
is paradoxically being challenged at the very mo-
ment when it seemed to be gaining ground. is
contribution aims to put this dynamic of adoption
into perspective with the history of competi-
tion case law and the history of economic thought.
We show how the debates surrounding the con-
centration of economic power in the United States
() and its consequences on competition have
led to a re-examination of the place of consumer
welfare as the sole criterion for assessing compet-
itive practices. ese considerations echo the now
secular debates on the Sherman Act’s nality and
the questions raised by 1930s neo-liberals on both
sides of the Atlantic. It is a question of deciding
between a competition policy that aims to secure
the outcome of competition—allocative ecien-
cy— and a competition policy that aims to protect
the competition process for its own sake.
is second option amounts de facto to up-
dating the European concept of the dominant
operator’s special responsibility for preserving a
situation of eective competition. erefore, it is
not a question of rejecting the criterion of consum-
er welfare but of reconciling objectives that may to
some extent be incommensurable and sometimes
contradictory: loyalty, fairness, preservation of
market access... In the end, it is a matter of the
judge’s role in applying the rule of law.
is article discusses the place of the consumer
welfare criterion and its implementation in compe-
tition rules. e rst section shows that it was only
very belatedly integrated into the framework of
competition law. e second section highlights
that in the face of the challenges posed, particu-
larly in the , the consumer welfare criterion re-
mains valid from the moment it is integrated into
broader competitive reasoning, as implemented by
the European Commission. Nevertheless, our con-
clusion reveals that such a reconciliation between
potentially contradictory criteria may not go by
itself. Our third and conclusive section discuss-
es the diculties in implementing a competition
protection standard and presents some arguments
in defence of the total welfare criterion as an alter-
native to the consumer welfare one.
A gradual convergence of Eu
competition law enforcement
towards a more economic approach
is rst section highlights how European com-
petition authorities have gradually adopted con-
sumer welfare as the sole criterion for competition
rules enforcement, even though the foundations
for the construction of European competition pol-
icy are based on broader theoretical roots, partly
derived from German ordoliberalism1.
The historic foundations of the
competition law
In this section, we rst investigate the history
of competition laws to separate the inuence
from the European roots of the competition
policy before considering in a second subsection
the concentration of markets in the current anti-
trust debate.
The European roots of Eu competition law
Historically, the rst competition laws were North
American. e rst competition laws enacted were,
more precisely, Canadian2 in 1889 and with
the Sherman Act in 1890. Meanwhile, the protec-
tion of competition was all but satisfying in the
European continent. For instance, in France, the
sanction of cartels remained purely hypotheti-
cal for a long time. Although the 1810 Penal Code
1 We will therefore assimilate the European
approach and ordol iberalism in the rest of the
-
ble, but it intends to simplify the point. It would
also be possible to use the concept of t he Brussels
School (see Hildebrand, 2012).
2 The Combines Investigation Act, extended to in-
clude mergers and monopolisation activities, and
consumer protection. See https://ww w.compe-
titionbureau.gc.ca/eic/site/cb-bc.nsf /eng /03631.
html
58 F. Ma r t y
Revista Prolegómenos ■ Vol. 24(47)
had provided legal tools to sanction cartels3, the
courts, since the Restauration, had made a dis-
tinction between good and bad cartels, leading to
non-enforcement (Didr y & Marty, 2016). In Germa-
ny, the Reichsgericht (the Supreme Court) validat-
ed cartel arrangements in 1897 based on freedom
of contract (Joliet, 1967). In the same decade, in the
United Kingdom, the House of Lords, then sitting
as a supreme court, in its Mogul Steamships deci-
sion (1892), acquiesced to “predatory” strategies as
long as they benet the consumer and appear to
adhere to the principles of free competition4. us,
before 1914, no legislation comparable to the Cana-
dian and legislation existed in Europe. Gerber
(1998) points out that some projects were neverthe-
less discussed in Austria-Hungary and Sweden on
the eve of the First World War. However, these laws
were not adopted.
Even worse, the experiences of the wa r economy
caused large corporations and public authorities to
consider inter-rm coordination, i.e., cartelisation,
as an eective tool for steering the national econo-
my. In this regard, it is instructive to note that the
German example strongly inuenced the French
government during the conict itself. A reversal
is thus taking place in the aermath of the Great
War. e pre-war period was shaped by prevailing
classical liberalism. e laissez-faire appeared as
the best approach in terms of economic policy. As
in other government interventions, competition
policy did not have a specic role to play unless
3 Article 419 of the 1810 Penal Code stated, “All
those who, by false or slanderous claims delibe-
at the prices demanded by the sellers themselves,
by meetings or coalitions between the principal
holders of t he same merchandise or commodi-
ty, tend not to sell it, or to sel l it only at a certain
price, or all those who, by any f raudulent means
or ways whatsoever, have raised or lowered the
been determined by natural and free competition
in trade, shall be punished by imprisonment be -
hundred to ten thousand francs.”
4 Mogul Steamship Co. v Mc Gregor, Cow & Co, 23
QBD 588.
contractual freedom and property rights were
at stake. In this respect, the European practices
were quite close to the Classical Legal ought
prescriptions, which hindered the application of
government interventions and antitrust rules en-
forcement in the Lochner era5.
By contrast, the inter-war period was charac-
terised by the defence of the cartel as an ecient
way of organising the economy and avoiding de-
structive competition. is position was defended
by some of the major industry captains (G. Swope
in the for , A. Detoeuf in France for Alsth-
om) and ultimately by the public authorities (see
the Laval decree-laws of 1935 in the French case,
for instance).
e sole exception on the European continent
was Germany with the Weimar Republic 1923
Competition Act. e most fundamental root
of European competition law lies in assessing
its failure to overcome the market power of large
companies (Marty, 2015). Many legal scholars
and economists who founded the Freiburg School
(Freiburg im Breisgau) took part in the experience
and concluded on the requirements for an eective
competition policy. From this perspective, strong
competition regulation is necessary to ensure the
5 A double phenomenon characterised the Lochner
era. Firstly, it entailed an under-enforcement of
antitrust rules based on protection of proper-
ty rights and freedom of contract, this last one
conceived as an approxi mation to individual
liberty (K irat & Mar ty, 2019). Secondly, it invol-
ved the enforcement of these same rules against
trade unions (see Glick, 2019a). Glick illustrates
this enforcement bias through the case of the Se-
cond Cleveland Administration from 1893 to 1897
the Democrat Party since the Civ il War). If the
Cleveland Administration brought eight antitrust
cases, four of t hem would target la bour unions.
The most strik ing case was v Debs i n 1894.
Debs’ labour union boycotted Pul lman railway
cars in solidarity with striki ng workers at the
Pul lman Palace Car Co. He was sanctioned (and
eventually jai led) as his position gave rise to an
unlawf ul strike t hat interfered with mail deli-
very and interstate commerce ( Supreme Court,
Debs In Re 158 564 (1895).
59
Is Consumer Welfare Obsolete? A European Union Competition Perspective
Revista Prolegómenos ■ Vol. 24(47)
competitive process itself against private econom-
ic powers. e government must not only act as a
night watchdog, in the sense of 19th-century Man-
chesterian liberalism, but also as a government that
actively intervenes to protect competition, includ-
ing against itself, as soon as its natural result is the
concentration of economic power (Mongouachon,
2011).
e Lippman Colloquium organised in Par-
is by Louis Rougier in 1938 was the focal point
of this theoretical dynamic (Mirowski & Pleh-
we, 2009). is conference marked the birth of
neo-liberalism and was at the foundation of the
Mont Pèlerin Society () aer the war in 1947.
Whether it was the Lippman Colloquium or the
rst conference of the , the dierent branch-
es of neo-liberalism were still present, namely the
ordoliberals and what was to become, under the
impetus of A. Director and E. Levi, the Second
Chicago School (Bougette et al., 2015).
We will dene the rst approach, German or-
doliberalism, in this subsection and the second,
the Chicago School neoliberalism, in the following
subsection. Ordoliberalism is based on a set of as-
sumptions that are quite straightforward to dene.
First, two powers threaten the market process:
governments, which may be tempted to instru-
mentalise (or neutralise) it, and private economic
powers, which may be tempted to manipulate it
for their benet. Second, the market process is not
seen as self-regulating. It can result in the concen-
tration of economic power and thus in its exhaus-
tion6. ird, government intervention is required
to counteract this tendency, but this intervention
must be “neutral.” It must therefore be based on
quasi-constitutional rules and be impersonal so as
not to be instrumentalised7. Fourth, the protection
of competition through public interventions does
6 On the opposite, according to Friedman (1962),
private monopolies raise fewer concer ns than pu-
blic ones as they are “generally unstable and of
brief duration unless they can cal l government to
their assistance” (p. 131)
7 The gover nment may be captured by private eco-
nomic power, as the best guarantee against com-
petition are regulatory barriers to entry. See Zin-
gales (2017) for an analysis of these phenomena.
not aim to secure the actual outcome of competi-
tion (productive eciency) but its process in itself
and for itself.
e competitive process is conceived as a
means of discovering and revealing the knowledge
spread among the various players in the economy
in the sense of Hayek (1945). Competition is also
considered a tool for dispersing economic pow-
er. Competition is the mechanism for dispersing
power in the market sphere, as democracy is the
one for dispersing power in the political sphere
(Marty & Kirat, 2018). e two dimensions are
consubstantially combined in the ordoliberal ap-
proach: the defence of democracy and the defence
of competition go along with each other.
e above leads to two specicities. First, com-
plete competition must be protected, which means
a situation in which companies are price-takers,
i.e., they do not have any market power8. Second,
if an undertaking has such power, it must behave
as if it did not. e notion of the dominant oper-
ator’ special responsibility in the decisional prac-
tice of the European Commission stems from this
approach9. e notion of special responsibility is
dened as follows in the jurisprudence:
A nding that an undertaking has a dominant
position is not in itself a recrimination but simply
means that, irrespective of the reasons for which it
has such a dominant position, the undertaking con-
cerned has a special responsibility not to allow its
conduct to impair genuine undistorted competition
on the common market10.
As we will see infra, it is more a matter of pro-
tecting the market process than securing allocati-
ve eciency.
8 Such an approach considers that the best sit uation
on the markets preser ving consumers’ freedom of
choice (see Amato, 1997).
9 Court of Justice, 9 November 1983, C-322/81,
NV Nederlandesche Banden Industrie Michelin
c. Commission and 13 February 1979, Case 85/76,
10 General Court (Court of First Instance), 30 Sep-
tember 2003, Case T–203/01 Manufacture françai-
se des pneumatiques Michelin v Commission.
60 F. Mar t y
Revista Prolegómenos ■ Vol. 24(47)
However, the European competition policy
should not be regarded as mechanically driven by
ordoliberalism. Firstly, the second German com-
petition law was enacted in 1957, only aer the
Treaty of Rome. Secondly, other future Member
States had their competition legislation before
then. is was the case, for example, in France
with the Commission Technique des Ententes cre-
ated in 1953, which is a distant predecessor of our
contemporaneous French Competition Authority.
irdly, the Treaty of Rome, which resulted from
the Messina Convention and the Spaak Report,
was a compromise11 between national attitudes
more oriented towards competition (Federal Re-
public of Germany) and others more inclined to
use industrial policies (France and Italy). Fourthly,
the rise of DG Competition, in which the ordo-
liberal inuence was from the outset the stron-
gest within the Commission (Vay, 2019), was only
very gradual (Warlouzet, 2010). e implemen-
tation of Regulation 17/6212 was challenging, and
most of the ordoliberal inuence came through
the decisional practice of the Court of Justice
from the 1970s onwards. Its competition law-based
judgments could be part of an integrationist pro-
cess in the sense of Gerber (1998): the aim is to
build a unied internal market governed by the
rules of free and undistorted competition.
Before addressing the following points, it is
worth noting that the internal competition laws
of the various Member States have adopted ex-
tensive objectives that go beyond the criterion of
consumer welfare, which is never mentioned in
the Treaty. Moreover, the competition laws of the
various Member States are very composite in their
structure. ey encompass both restrictive prac-
tices law (competitor law) and antitrust law (market
law). In doing so, the task of redressing the balance
of economic power is never absent from competi-
tion law, as is the protection of the consumer and
broader “non-economic” values (pluralism, among
11 See Warlouzet (2008) for an in-depth analysis.
12 Council: Regulation No 17: First Reg ulation
implementing Articles 85 and 86 of t he Treaty, 21
February 1962.
others). As Roda (2018) clearly shows, competition
law is designed to reconcile the dierent objectives
assigned to market competition, which are by na-
ture conicting.
The issue of Bigness: Should the
competition laws protect a given market
structure?
e purpose of the decisional practice was to
ensure a situation of eective competition. e
aim was not to protect competitors, as it could be
the case in a structuralist logic (à la Harvard), but
to compel the dominant operator to check that its
decisions will not have the eect (or are not likely
to have the eect) of hindering competition on the
relevant market. erefore, the purpose is to pro-
tect competition not as regards its outcome but as
regards its process.
is European perspective has conicted in
these two last decades with the approach devel-
oped by the second branch of neoliberalism, e.g.,
the Second Chicago School, since the 1950s. It is
not a question, in this paper, of developing the gen-
esis of the latter (see, for instance, Bougette et al.,
2015) but of tracing some of its basic tenets.
First, this school is directly connected to the
First School of Chicago, of which Henry Simons
was the gurehead, yet it diers somewhat di-
ametrically from his positions. Simons was a
neo-liberal who endorsed the very same advo-
cations as the ordoliberals. He was even more
interventionist. He regarded the market as not
self-regulating, as it was seen as inexorably con-
verging towards the concentration of economic
power. According to Simons, such a tendency was
a problem in itself, whether from an economic or
political perspective. It is, therefore, a require-
ment to implement the antitrust rules resolutely.
is enforcement can dismantle rms to make
competition possible again. According to Simons,
dismantling may be a necessary antitrust remedy
whatever its cost in terms of eciency (Kirat &
Marty, 2019). e Second Chicago School will as-
sume the perfect opposite of these positions. Situ-
ations of overwhelming dominance are no longer
61
Is Consumer Welfare Obsolete? A European Union Competition Perspective
Revista Prolegómenos ■ Vol. 24(47)
considered a problem, and the implementation of
antitrust rules must be based on a single criteri-
on: eciency13, regardless of any considerations
related to the competitive structure on the rele-
vant market.
Second, the Second Chicago School refuses to
consider certain practices as anticompetitive (ex-
cept for horizontal price cartels, below-cost preda-
tory strategies, naked exclusions). In other words,
the approach prescribed as early as the initial stud-
ies in the late 1940s was to move away from per se
rules to a rule of reason based on an assessment of
the net eect of the practices in question14. Once
again, the critical question was what the evalua-
tion criterion should be.
e decisive contribution of Robert Bork (1966)
was to propose a single criterion: the maximisation
of consumer welfare15. Like Richard Posner’s view,
according to which wealth maximisation must be
the sole criterion for decision making in economic
analysis of law (Kronman, 1980), Robert Bork pro-
poses the maximisation of consumer welfare as the
13 As Kovacic (2020, p. 482) states in his critical as-
sessment of the academic literature devoted to
-
rrent us antitrust enforcement: “The modern
antitrust era is said to be a time when t he Chicago
School recast antitrust goals from an egalitarian
perspective to a cramped concern with economic
14 For an histor ical perspect ive on the use of the rule
of reason i n Antitrust, see Hovenkamp (2018).
15 At t his point , referri ng to Melamed a nd Petit (2018)
we should emphasise t hat the Supreme Court’s de-
cision to adopt the consumer wel fare test should
not be considered literally. Whi le it refers to a
Consumer Welfare prescription (Reiter v Sonoto -
ne, 442 330, 1979), the Sherman Act and compe-
tition policies as a whole are not prescriptive but
proscript ive in nature. It is a matter of sanctioning
anti-competit ive practices that are not conducive
to the maxi misation of welfare. To quote Melamed
and Petit (2018), competition law prohi bits practi-
ces that create or perpetuate market power on a
only criterion for competitive decision making16.
is position is perfectly embodied by the Schor v
Abbott Labs judgement of the 7th Cir. in 2007: “If
a manufacturer cannot make itself better o by in-
juring consumers through lower output and high-
er prices, there is no role for antitrust law to play.”17
Nevertheless, Robert Bork’s interpretation
constituted a sharp departure from the Su-
preme Court’s positions (Kirat & Marty, 2019).
In Trans-Missouri Freight (1897), the Supreme
Court had interpreted the Sherman Act as protec-
tion of small dealers and worthy men18. In its 1945
Alcoa ruling19, Judge Learned Hand had stated that
antitrust law aims to “put an end to great aggrega-
tions of capital because of the hopelessness of the
individual before them.” Only four years before
Robert Bork’s article, the Supreme Court had reaf-
rmed in its Brown Shoe ruling20 that antitrust has
to protect “small, locally owned businesses.”
In our second part, we will revisit the discus-
sion of this criterion both in terms of legitimacy
and eects, but the consumer welfare standard
is the cornerstone of what will become the more
economic approach (or eects-based approach) in
matters of competition rule enforcement.
e Supreme Court gradually adopted the ap-
proach advocated by the Second Chicago School
in the second half of the 1970s with the GTE Syl-
vania21 (rule of reason, e.g., balance of eects) and
16 The second Chicago School should not be seen as
monolit hic i n terms of ant itrust recommenda-
tions, either among its various promoters or over
time. For example, Posner’s prescriptions may de -
of predatory pricing (Kovacic, 2020).
17 Schor v Abbott Labs, 457 F.3d 608, 611, 7t h Cir.,
20 0 7.
18 T he United States v Trans-Missouri Freight A ss’n,
166 290 (1897).
19 The United States v A lcoa, 148 F.2d 416 (2d Cir.
1945).
20 Brown Shoe Co., Inc. v the Un ited States, 370 294
(1962).
21 Continental Television v GTE Sylvan ia, 433 36
(1977 )
62 F. Mar t y
Revista Prolegómenos ■ Vol. 24(47)
Sonotone (consumer welfare test22) judgments23.
e appointment of William Baxter, by President
Reagan, as head of the DoJ Antitrust Division
(Assistant Attorney General), in the early 1980s
consolidated this evolution24, which culminat-
ed in 2008 with the DoJ’s report on Single Firm
Practices. In this regard, the Economic Report of
the President published in February 2020 by the
Trump Administration largely revives this model,
as shown in chapter 6, “Evaluating the Risk of De-
clining Competition,” among other things (White
House, 2020).
test was made in 1975 in Justice Brennan’s dissen-
ting opin ion on the National Bank Supreme Cour t
decision (the United States v Citizens & Southern
Nat’l Bank, 422 86 (1975)): “Correspondent
banking, like other intra-industry interaction
an opportunity both for the k ind of education and
shar ing of expertise t hat ulti mately enhances
consumer wel fare and for “understandi ngs” that
inhibit, if not foreclose, t he rivalry that antitrust
laws seek to promote.”
23 As Kovacic (2020) states, even i f the Sylvan ia ruling
cites Robert Bork’s and Richard Posner’s articles
prominently, we should be cautious about the ac-
decisions. See Hutchinson (2017) for an in-depth
analysi s of the use of econom ics by Supreme Court
justices.
24 The 1982 DoJ merger control guidelines were a
clear break f rom the 1968 guidel ines. The aim wa s
no longer “to preserve and promote market struc-
tures conducive to competition” but to prevent
“harm to consumer welfare, generally in the form
of price i ncreases and output restrictions.” We
should notice t hat a more economic approach gra-
dually spread throughout the administration
in the 1960s around merger control, as William-
a Chicagoan one. As it i s also the case for Antitrust
enforcement, the Harvard School has played a
was Special Economic Assistant to the Head of the
Antitrust Division of the Department of Justice
in 1966 -67, while Donald Turner was Assistant At-
economics to head the Antitr ust Division).
A very gradual implementation of
is section presents the implementation of the
more economic approach in enforcing com-
petition law since 2005 to the detriment of the
so-called forms-based one, e.g., the ordoliberal
inuenced one.
The issue of Bigness: Should
the competition laws protect a given
market structure?
e eects-based approach, in which consumer
welfare was the only criterion to be used in an-
titrust matters, emerged latterly in the European
Union compared to the . Several factors may ex-
plain the shi that was initiated in the early 2000s.
A rst factor held to the search for soundness
of the decisions in the face of the jurisdictional
control exercised by the General Court (then the
, Court of First Instance). Indeed, the Court
had annulled several Commission decisions (in
the eld of merger control25) because of a mani-
fest error of assessment in the economic reason-
ing (Marty, 2007). ese three cancellations have
raised several legal certainty issues about the rms
and credibility of the Commission (Roda, 2019).
e use of an economic approach is intended to
enhance legal certainty for the authority in charge
of enforcing competition rules, the aim being to
minimise the risk of the decision overturned or
reversed on appeal26.
25 See for instance: CJE/02/50 6 June 2002, Judgment
of the Court of First Instance in Case T-342/99, A ir-
tours v Commission. In t his judgment, t he Court
of First Instance annul led a previous Commission
decision declaring the merger between A irtours
and First Choice incompatible with the common
market.
26 The Commission enjoys a certain margin of appre-
ciation in complex economic assessments. The
Genera l Court has not entered the complexity of
re-doing the economic analysis or revising the
conclusions drawn therefrom by the Commission
63
Is Consumer Welfare Obsolete? A European Union Competition Perspective
Revista Prolegómenos ■ Vol. 24(47)
A second factor was related to the transatlan-
tic debates at the beginning of the rst decade of
this century between antitrust and compe-
tition policy. e Microso case gave rise to sever-
al debates induced by the (supposed or actual)
consideration of competitors’ interests in antitrust
litigation. e motto “e purpose of antitrust laws
is to protect competition, not competitors27” was
tantamount to blaming European competition pol-
icy for unduly favouring inecient competitors to
the detriment of consumers on the grounds of pre-
serving an eective competition structure on the
market, which is conceived as eective rivalry be-
tween rms (Fox, 2003). is tension reects both
a discussion on the objectives assigned to competi-
tion law and the trade-o between the criterion of
maximisation of consumer welfare and the crite-
rion of maximisation of total welfare, to which we
shall return later. e eects-based approach was
seen as the only way to enforce competition laws
eciently (Gerber, 2010).
ird, the focus on consumer welfare should
not be separated from a broader movement to-
wards public management whose accountability is
(oecd, 2019). However, the Court scrutinises com-
plex (economic) evidence in considerable detai l:
“Referring to t he existence of a margi n of di scre-
tion does therefore not prevent the Cour t from ca-
rrying out a full and unrestricted review, in law
and in fact.”
27 See Brunswick Corp. v Pueblo Bowl- O-Mat, Inc.,
429 477 (1977). Kovacic (2020, p. 479) insists on
the importance of this statement in the current
in later decisions, this phrase suggests that anti-
detriment.” Such an approach is not exclusively
shared by the Chicago School; it was also (at least
partially) endorsed by the Harvard School (see
Wu, 2018). Accordi ng to W. Kovacic, although the
Harvard School has endorsed a broader range of
legitimate aims for antitrust enforcement (unlike
the Chicago-based approach), it never has adop-
ted the “antitrust egalitarian approach” of the cu-
rrent new Brandeis movement.
based on results. New public management assigns
to public policies an eciency objective to which
competition policy makes no exception. e max-
imisation of consumer welfare is part of this ob-
jective of guiding and monitoring results. We will
insist on our conclusion on the emphasis (and
European) public debate place on the requirements
of predictability, administrability, and credibility
in matters of competition law enforcement.
e implementation of this approach within
the was gradual. Essential features were already
contained in Regulations 1/200328 and 139/200429
(the latter on merger control) with distinct open-
ings for an eciency-based defence. However, the
real turning point was the publication in 2005 of
the report produced by the group of experts ap-
pointed by DG Competition (, 2005). e
latter was devoted to implementing a more eco-
nomic approach to Article 82 of the Treaty30, which
deals with exclusionary or exploitative abuses (Eu-
ropean Commission, 2009).
e report’s advocates take up the criterion of
consumer welfare maximisation by considering a
derived criterion, the criterion of the ecient com-
petitor. e Commission’s February 2009 orienta-
tions on priorities regarding sanctioning abuses
of dominant positions conrmed this inexion31.
e Commission insists on the importance that
the implementation of the competition rules not
result in undue protection of an economic oper-
ator whose productive eciency would be lower
than the one of the dominant rm (Marty, 2013).
28 Council Regulation No 1/2003 of 16 December
2002 on t he implementat ion of the rules on compe -
tition laid down i n Artic les 81 and 82 of the T reaty.
29 Council Regulation No 139/2004 of 20 January
2004 on the control of concentrations between un-
dertakings (the Merger Regulation).
30 This article is now Article 102 under the numbe-
ring of the Lisbon Treaty, which entered into for-
ce in 2009.
31 Communication from the Commission, Februar y
2009, Guidance on the Commission’s enforcement
priorities in applying Ar ticle 82 of the Treat y
to abusive exclusionar y conduct by dominant un-
dertakings.
64 F. Mar t y
Revista Prolegómenos ■ Vol. 24(47)
In other words, the aim is to prevent decisions that
would transfer welfare between consumers and
competitors. As Roda (2018) points out, this in-
exion has in no way been based on legislative de-
cisions; the Commission has made this change
through its so law texts.
is approach leads—at least in principle—to
a greater emphasis on eciency-based defence. It
also amounts to departing from the formal prohi-
bition of specic practices for dominant operators.
e eects-based approach provides for a case-by-
case assessment of the lawfulness of their market
practices solely based on their net eect on con-
sumer welfare.
e Commission’s approach has, however, al-
ways been marked by a pragmatic stance. It has
been a question not only of sanctioning practic-
es that foreclose a competitor as eciently as the
dominant operator but also those likely to have
that eect. In other words, there is no need for the
competitor to be eectively crowded out from the
market. e fact that foreclosure is not eective
does not exonerate the dominant operator from
its liability. Pragmatically, the test may be adjust-
ed since small competitors cannot be reasonably
expected to be as ecient as the dominant opera-
tor because of their economies of scale and scope.
us, the reasonably equally ecient competitor
test is used (Marty, 2013).
For instance, in margin squeeze cases where
the vertically integrated dominant operator has
a monopoly position in an upstream segment,
the question is whether its downstream activity
could be protable if the same price conditions as
those which the dominant operator imposed on
its competitors operating in the same downstream
market were applied to it. Nevertheless, the more
economic approach implementation was not im-
mediate and eective by far. Two criticisms have
been made. e rst concerned the actual place
given to the eciency-based defence. e second
was the reluctance of Luxembourg courts, which
are responsible for judicial review, to endorse this
shi in their case law.
The eu Court of Justice’s jurisprudence:
From defending conventional decisional
practice to the Intel case turnaround in
September 2017
e Court of Justice has been oen criticised for
being too attached to its past decades’ jurispru-
dence (Roda, 2018), which would have been an
obstacle to a shi from formalism to eects on
competition law enforcement (Petit, 2009). It
would lead to sanctioning some of the strategies of
dominant operators according to their form even
without carrying out a balance of eects. e Intel
judgment handed down in September 201732 was
interpreted as a substantial shi away from the po-
sitions successively taken by the Commission and
the General Court33.
It is not a matter here of detailing the case, but
the Intel case is of particular interest to us in that it
has crystallised the European debate. In 2009, the
Commission ned Intel €1 billion (then the highest
ne for antitrust practices on the European conti-
nent) for a combination of foreclosure practices to
the detriment of its competitor, AMD, in the micro-
processors market. e wide range of sanctioned
practices include retroactive loyalty rebates based
on the share of each customer’s consumption of
chips sold by the dominant operator. e ques-
tion was whether these rebates (which amounted
to exclusivity rebates) were to be considered anti-
competitive and therefore sanctioned in their form
32 Judgment of the Court (Grand Chamber) of 6 Sep-
tember 2017, Intel Corp. v European Com mission,
case C-413/14P.
33 The 2012 Post Danmark judgment had already lar-
-
ciency over choice, quality, or innovat ion: “Com-
the departure f rom the market or the margina-
so less attrac tive to consumers from t he point of
view of, among other things, price, choice, q uality
or innovation” (§22).Judg ment of the Cour t of Jus-
tice (Grand Chamber), 27 March 2012, Post Dan-
mark A/S v Konkurrencerådet, C-209/10.
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Is Consumer Welfare Obsolete? A European Union Competition Perspective
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alone or whether an assessment of the eects had
to be carried out to arrive at that conclusion.
In its 2009 decision, the Commission made
this balance but only as a supplementary consider-
ation, holding that the very form of the rebates put
in place by Intel constituted an abuse of a domi-
nant position. e General Court conrmed
this appreciation in its 201434 ruling. However, in
September 2017, the Court of Justice returned the
case to the Court of First Instance, considering
that the latter was nevertheless required to review
the balance of eects carried out by the Commis-
sion. is judgment is subject to divergent inter-
pretations in Europeanist doctrine (Idot, 2018).
For some scholars, it marks the Court’s endorse-
ment of the eects-based approach; for others,
the Court’s position is essentially procedural: e
General Court is required to consider in its ruling
the issues raised by the parties.
Whatever the interpretation of the Intel judg-
ment, the Court of Justice has been gradually mov-
ing towards an eects-based approach through
successive opinions of Advocates General, particu-
larly in the context of referrals for preliminary rul-
ings, which was, for example, the case for the AG
Wahl’s opinion in the Intel decision of September
2017 cited above. In his opinion35, he expressed a re-
quest for a preliminary ruling in a case of excessive
pricing in the collective management of authors’
rights in Latvia (2017). His position also corre-
sponded to a consumer welfare focused logic36.
34 General Court, 12 June 2014, Intel Corporation v
Commission, case T-286/09.
35 Opinion of advocate general Wah l, 6 April 2017,
-
-
preme Court, Latv ia)).
36 “At any rate, I am not sure that concepts such as
be of great assi stance to a competit ion authority.
-
e same applies to the conclusions of AG Wa-
thelet in the Orange Polska case related to the cal-
culation of nancial penalties37. e AG insisted
that the amount of the ne must be based on the
assessment of the actual damage. For the latter, the
General Court should have “assessed whether the
eects of the infringement had been correctly es-
tablished by the Commission.” To do so, the Court
had to consider all the circumstances of the case
in its assessment, particularly the defendant’s ev-
idence and arguments. In other words, abuse of a
dominant position cannot be assessed in abstracto.
Still following the opinion of the AG Wahl38,
the Court of Justice, in a judgment on a request
for a preliminary ruling in the case of MEO39,
also consolidated the eects-based approach by
specifying that the implementation of tari dis-
crimination by a dominant operator cannot be
regarded as anti-competitive in itself and that
the—at least potential—anti-competitive ef-
fects had to be demonstrated. e mere existence
of a dierence in the treatment of trading partners
is not enough to characterise abuse. erefore, it is
necessary “to carry out an examination of all the
relevant circumstances to determine whether price
discrimination produces or is likely to produce a
competitive disadvantage.”
Can we conclude that the eects-based ap-
proach is hegemonic in both and competit ion
law enforcement? We will see in the second part
that this nding can be subject to some nuances.
37 Opinion of Advocate General Wathelet delivered
on 21 February 2018, Orange Polska SA v Euro-
pean Commission, case C-123/16P.
38 Opinion of Advocate General Wahl delivered on 20
December 2017, – Serv iços de Comunicações
e Multiméd ia SA v Autoridade da Concorrência,
case C-525/16.
39 CJEU, 19 April 2018, - Serviços de Comun i-
cações e Mu ltimédia v Autor idade da Concorrên-
66 F. Mar t y
Revista Prolegómenos ■ Vol. 24(47)
From the Capitol to the Tarpeian
rock: The consumer welfare criterion
challenged
In this second part, the aim is to focus successive-
ly on the criticisms that may have been levelled
against the consumer welfare criterion in the the-
oretical eld and then in recent decision-making
practice. However, it may be possible to challenge
its alternatives on the merits.
The consumer welfare test
arena and in the digital economy
e consideration of the consumer welfare criteri-
on as the exclusive basis for enforcing competition
rules is the subject matter of a twofold criticism,
which relates to its legitimacy in the academic
sphere and tractability in litigations related to the
digital economy.
Robert Bork’s interpretation of the
Sherman Act criticised: Fifty years of
doctrinal controversies
e rst criticism of the consumer welfare crite-
rion lies in its legitimacy considering the an-
titrust legislative history. e concept of surplus
was developed in economics by Marshall in his
Principles of Economics published in 1890 at the
very same time as the Sherman Act was enacted.
Its promoters in the Senate could not rely on
such concepts. It was the economic power of big
business that was targeted much more than its ef-
fects on prices. Such a reading is opposed to that of
Bork (1966), for whom consumer welfare was the
sole criterion underlying the legislator’s reasoning.
Despite this historical evidence, Robert Bork had
maintained in his Antitrust Paradox published in
1978 that: “Congress designed the Sherman Act as
a ‘consumer welfare prescription.”40
40 We will see that such a position, far from obv ious
in lega l terms (see Melamed & Petit, 2018), has
been endorsed by the Supreme Court in its 1979
Sonotone ruling.
Divergent positions were early articulated in
the academic literature, which was the case of
Lande (1982), for instance, for whom the Sherman
Act was essentially aimed at unduly sanctioning
welfare transfers linked to the exercise of econom-
ic power. Unlike Bork, Lande considers—in light
of the legislative debates that preceded the enact-
ment of the Sherman Act—that the legislators’
objectives were less concerned with economic ef-
ciency than with the protection of weaker parties
in transactions with big companies, whether de-
pendent companies, farmers, or consumers. It was
not about protecting a given market structure or
seeking an eciency objective but about counter-
balancing “abuses of dominance” in transactions.
Barak Orbach (2010) has pointed out the par-
adoxical nature of the consumer welfare test pro-
posed by Bork, which can cover both the consumer
surplus and the total surplus41. is ambiguity is a
serious matter42. e overall surplus measures the
net eect of a practice by balancing its eects on
the consumer and the producer. A practice that
signicantly increases output (through productiv-
ity gains) but results in a slight loss of welfare for
the consumer in terms of price could be validated
against the rst criterion and rejected against the
second. In other words, the consumer welfare test
encompasses issues of welfare distribution. From
a Chicago-style perspective, the primary concern
must be eciency. e distributional dimensions
of welfare must be considered ex post through oth-
er public policy tools43.
Moreover, the very notion of consumer wel-
fare involves such trade-os: some consumers may
win, and others may lose. e net eect alone is
taken into account. A Kaldor Hicks criterion is at
41 On this point, see also Blair and Sokol (2012).
42 Accord ing to Glick (2019b), “because the concept
of [consumer welfare] is vacuous, it is not sur pri-
sing that there is little agreement on its meaning
or application i n antitr ust.”
43 Farrel l and K atz (2006) present a clear statement
of this view accord ing to which a division of la-
bour is preferable: “A number of reasons suggests
that antit rust policy is poorly suited as red istri bu-
tion vehicle in comparison with various tax and
subsidy schemes.”
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Is Consumer Welfare Obsolete? A European Union Competition Perspective
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stake and not a Pareto one44. us, welfare trans-
fers are assumed. However, the test does not lead
to balance eciency gains realised by the produc-
er and losses incurred by consumers, which is the
core dierence between a total welfare test and a
consumer welfare one.
e ambiguity of Bork’s analysis is decisive
here. e total welfare test focuses only on ecien-
cy, ignoring any consideration of the distribution
of welfare. e consumer welfare test implies sep-
arating producer and consumer gains, which is as
crucial in sanctioning anti-competitive practices
as it is in merger control. As Wilson (2019) notes:
“in merger analysis, the gains to the merging pro-
ducers do not count; only the eect on consumer
prices is relevant.”
Beyond the criterion used to assess welfare,
one of the most recent and sharpest criticisms
of Robert Bork’s approach was made by Lina Khan
in her “Amazon’s Antitrust Paradox” published in
2017 in the Yale Law Journal. Lina Khan’s work is
emblematic of the neo-structuralist movement,
also named the new Brandeis movement45. Accord-
ing to Khan (2018b),
e Chicago focus on ‘consumer welfare’ […]
has warped American’s antimonopoly regime, by
leading both enforcers and courts to focus mainly
on promoting ‘eciency,’ on the theory that this will
result in low prices for consumers. e xation on
eciency, in turn, has largely blinded enforcers to
many of the harms caused by undue market power
including on workers, suppliers, innovators, and in-
dependent entrepreneurs—all harms that Congress
intended for the antitrust laws to prevent. (p. 132)
Lastly, it should be noted that Bork’s inter-
pretation of this criterion prevents any sanction
of undue transfers of welfare compared with a
44 However, these two criteria are challenged on
their theoretical grounds by welfare economists
(Glick, 2019b).
45 Former Woodrow Wilson’s advisor from 1912 to
1916, Louis Brandeis, was appoi nted to the Su-
preme Court in 1916. Figurehead of the associat io-
nalist movement (Berk, 2009), Brandeis was ve-
hemently opposed to the then conventional view
according to which bigness is a necessary evi l to
hypothetical situation of perfect competition (i.e.,
if the rms were price-takers) and does not protect
the competitive process itself. erefore, it departs
signicantly from the decisional practice of an-
titrust until the 1970s and the ordoliberal founda-
tions of European competition policy.
Consumer welfare may also be challenged on
theoretical grounds. Firstly, it does not resolve sit-
uations where some consumers gain from certain
practice and some others lose. erefore, it as-
sumes that individual utilities can be aggregated
(Glick, 2018). Second, this criterion is based on a
substantial rationality model that can be discussed
in light of the contributions of behavioural eco-
nomics (Stucke, 2007). However, it is vital to sep-
arate the eects-based approach, in general, from
the exclusive focus on allocative eciency, in par-
ticular. e rst one is not specic to the Chicago
School. As Kovacic (2020) underlines, the modern
Harvard School also endorses such approaches.
e Chicago School corresponds to the second
one. Still, such an approach focuses on Robert
Bork’s views and is even more restrictive than
those of other Chicagoan scholars. As Kovacic
(2020, p. 485) states, “e Chicago School supplies
an easily recognized villain, and Robert Bork is
its sinister mastermind.” Concisely, the two main
challenged characteristics of this approach are i)
its exclusive focus on allocative eciency and ii)
its ambiguity between consumer welfare and total
welfare criteria.
Is the consumer welfare criterion still
suitable for our digital economy?
e inuence of the Second Chicago School was
spotlighted in the Stigler Center report on digi-
tal platforms (Stigler Center for the Study of the
Economy and of the State, 2019) mainly for blam-
ing the noninterventionist bias of antitrust en-
forcers. Even if the specicity of the Chicagoan
prescriptions in this respect may be questionable,
it remains that the report challenges the limits of
the consumer welfare criterion in matters of com-
petition law enforcement in the digital sector.
Competition damage—as well as consumers’
damage—is not limited to a reduction of surpluses.
68 F. Mar t y
Revista Prolegómenos ■ Vol. 24(47)
For instance, how to capture the consequences of
a reduction in the variety of goods and services
available to consumers in the consumer welfare
criterion? Or how to consider the eects of fore-
closing even a less ecient competitor if it causes
the disappearance from the market of a supplier
whose products were distinct from the domi-
nant rm’s ones in terms of quality and privacy?
In the area of mergers control, the acquisition of
WhatsApp by Facebook is emblematic of this is-
sue. e damage does not come from eliminating
an oer or a higher price but from reducing pri-
vacy guarantees. Can the damage caused to con-
sumers, in general, be estimated knowing that
their preferences may direct them towards one or
another product? erefore, the disappearance of a
supplier may damage competition, which this sin-
gle aggregate criterion does not capture.
e activities of big rms in the digital econo-
my today raise signicant competition concerns.
However, it is dicult to consider that they di-
rectly harm end-users or result in allocative inef-
ciencies. e business models of platforms are
characterised by zero price models (or even nega-
tive prices in some cases when subsidies for specif-
ic equipment and services are included) and very
high rates of innovation (Marty & Warin, 2020).
e consumer does not have to lose out—certain-
ly in the short term and possibly, even in the long
term—as long as market positions remain contest-
able, i.e., the competitive and technological turbu-
lence makes the seemingly monopolistic positions
of the moment precarious.
However, considering that the economic his-
tory of the last twenty years in the digital sector
has no reason to repeat itself indenitely, it is to
be feared that competition will be signicantly
damaged. Even if today’s dominant companies
had once supplanted the past dominant rms (Ya-
hoo!, MySpace), the technological and economic
conditions have dramatically changed. Once it is
assumed that barriers to market entry are inexora-
bly increasing, today’s monopolies may still be in
place tomorrow.
In digital markets, barriers to entry may be due
to the investments required, the accumulated data
(and the controlled data ows), the algorithms
developed, and the data processing capacities, but
also the acquired position of a market gatekeeper
or keystone player in an ecosystem (mobile oper-
ating system, digital industrial platform, cloud
computing platform). What then are the competi-
tive risks? e rst one is the risk of predatory be-
haviour. e gains assured to consumers may only
be short-term in nature. As soon as consumers are
captive, i.e., locked in a silo, the platform may in-
crease its prices or reduce innovation pace. ere
is, therefore, the potential for long-term damage
through the development of silo eects. Consum-
ers will be all the more dependent as they will have
strong incentives to opt for single-homing, and
their ability to exit the platform will be hindered
by switching costs (whether in monetary terms or
in loss of contents).
is dependency pattern does not only concern
individual consumers. It can be extended to trad-
ing partners, i.e., the complementors of the digi-
tal ecosystem. e issue is twofold. It pertains to
possible exclusionary abuses and exploitative ones.
For the latter, it is no longer an issue of mark-up
but an issue of mark-down. e keystone player
may exploit its monopsony power to the detriment
of their complementors. In such a context, the rel-
evancy of the consumer welfare criterion may be
challenged46.
Complementors may be in a position of eco-
nomic and technological dependence (Smor-
to, 2018). ese include independent vendors in
marketplaces or application developers in mobile
ecosystems. ey are “attracted” to the platforms
through contractual incentives or the provision of
boundary resources (lines of code, data, interop-
erability protocols). However, these contractual
46 Yet this poi nt is being debated. While a large body
-
tions of monopsonist market power (in the plat-
forms sector, on certain segments of the labour
market, among others), these considerations have
been taken into account in certain transac-
tions i n the (in the context of the takeover of
Essendant by Staples, for example). See Sycamore
Partners II, L.P.; Staples, Inc; and Essendant Inc.,
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terms (such as data access) make them economi-
cally and technically dependent on the platform.
e transactions between keystone players and
their complementors are cooperative by nature but
intrinsically unbalanced.
Damage to competition can be damage to a
trading partner. From a French typology, it would
be possible to consider that we are dealing here
only with restrictive practices and not with anti-
competitive practices. It would be a question of pe-
tit droit de la concurrence and not grand droit de
la concurrence. e former deals only with con-
tractual imbalance-related issues and not, as the
latter does, with the eects on consumer welfare
(e.g., eects on the whole market). e relationship
between platforms and their complementors illus-
trates the issue of abuse of economic dependence
(Bougette et al., 2019). Although this concept does
not exist in competition law, it can be found in
French, Italian, German, Portuguese, Greek, and,
since spring 2019, Belgian legislations47.
e European Regulation on Platform-to-
Business Relations adopted in June 2019 illus-
trates the seriousness of these issues. It shows that
the dependency of complementors can induce a
certain number of competitive damages that can-
not be fully reected in consumer welfare. ese
may include discriminatory access to a platform
with critical infrastructure features (a platform
in a gatekeeper position can be seen as an essen-
tial facility), which may involve unfair access not
only in relation to competitors in a downstream
or related market but also in transactional terms.
Unfair conditions may be imposed on comple-
mentors. e issue is then not only fairness but
also equal access to the market for companies
(both complementors and competitors). Compe-
tition as a process may then be at stake.
On the one hand, competition is being damaged
by restricting consumers’ freedom of choice. On
the other, harm to competition can take the form
of harm to innovation. To the extent that access to
47 For an in-depth analysis of dominant dig ital plat-
forms’ capacity to abuse t heir economic power at
the expense of thei r trading partners through un-
balanced transaction terms, see Monnerie (2019).
technological paths can be closed o by the plat-
form, it can induce damage to dynamic eciency,
which was the sense of the damage to innovation
put forward in the Microso case 16 years ago. In
the same way, as soon as the platform “controls”
the innovation dynamics of its complementors, it
can reduce the incentives and capacities to devel-
op disruptive innovations (which can disrupt the
platform) to make only incremental innovations
possible (Marty & Warin, 2020). ese are all the
more useful for the keystone player in a digital eco-
system as they make it possible to perpetuate data
ows and address the “non-consumption” issue.
In contrast, disruptive innovations are much
less likely in this context, as the monopoly has no
interest in replacing itself. Despite its investments,
it would still benet from the same rent. ere-
fore, the damage to innovation can damage the
pace of innovation and composition (radical ver-
sus incremental). Given the market power that the
platforms enjoy and their potentially irreversible
nature, it is not a matter of departing from the cri-
terion of consumer welfare but instead of adding
specic considerations that are more directly relat-
ed to the ordoliberal tradition.
Firstly, this may involve reinvigorating the con-
cept of the dominant operator’s special responsi-
bility regarding the competition (Sauter, 2019).
Because of its intrinsic strength (and the natural
tipping tendencies of these markets), the domi-
nant operator must ensure that its decisions do not
bring about irreparable foreclosure of competitors
who may not be able to compete on the merits.
Secondly, some justication for imposing obliga-
tions might fall within the scope of asymmetrical
regulation of competition, which could be the case
of guaranteeing access to some of their assets on
the ground of essential facility doctrine (or access
to interface protocols) or the right to data porta-
bility. Such a special responsibility could also be
expressed in terms of platforms’ “technological” or
“competitive” neutrality.
erefore, it is not a question of addressing
damage to consumer welfare but tackling potential
harm to eective competition. By returning to the
ordoliberal approach, it is the process of competi-
tion that must be preserved. From this perspective,
70 F. Mar t y
Revista Prolegómenos ■ Vol. 24(47)
the lawfulness of dominant rms’ practices must
no longer be assessed by their net eect on con-
sumer welfare.
To some extent, although the and Euro-
pean contexts are complicated to compare, the
Neo-Brandeisian trend also endorses the logic
of widening the spectrum of competitive harms
that could be considered alongside the criterion of
consumer welfare (Newman, 2019). However, the
range of damages is considerably more compre-
hensive: decreased potential for the development
of start-ups (the notion of killing zone), increased
inequalities, privacy problems, growing fake news,
among others. erefore, it is more a matter of
regulating the economic power of specic rms
than a matter of defending competition. Ultimate-
ly, the standard eective competition proposed by
Maurice Stucke and Marshall Steinbaum (2018) is
closest to the approach defended within the . In
the same vein, Wu’s “protection of competition”
test echoes the ordoliberal prescription according
to which competition laws must protect the com-
petition process itself and not its result: eciency
(Wu, 2018).
It is also necessary to stress the convergence
of dierent simultaneous trends, which call into
question, if not the criterion of the consumer’s
welfare itself, then at least its role as an exclusive
consideration in enforcing the competition rules.
We have already addressed these points above, but
we propose to group them here in as a summary.
First, criticism of the consumer welfare criteri-
on underlies a critique of the Chicago School. We
have seen that it is far-reaching to associate the
more economic approach with this single criteri-
on, especially with this single school. Hovenkamp
(2005) described the antitrust consensus in no way
as a consensus around the Chicago School as it ex-
isted in the 1960s. e of the American anti-
trust doctrine undoubtedly exhibits a double helix,
and the courts do not base their decisions on text-
books from the 1960s (Kovacic, 2007). As Kovacic
(2020) clearly states, the inuence of the Chicago
School on actual antitrust enforcement is oen ex-
aggerated in academic literature. e eects-based
approach should not be reduced to Robert Bork’s
analysis, and the Chicago School had more play as
a catalyst for the economic turn of the antitrust
enforcement than as a unique compass. e Har-
vard School had also initiated such a turn.
However, the adequacy between the criterion of
consumer welfare, the eects-based approach, and
Chicago-style prescriptions reects two trends that
have been very strong in recent decades. On the
one hand, it is a question of taking one branch of
economics—and one branch alone—and making
it the alpha and omega of economic analysis. Many
approaches, oen complementary to the latter, are
rejected outside the scope of the discussion. On
the other, the Chicago approach has been less and
less seen as an approach prescribing a case-by-case
balance of eects but as increasingly per se rules
by considering certain practices (especially verti-
cal ones) as pro-ecient48. e outcome may be an
under-enforcement of competition rules. e
burden of proof lies exclusively on the complai-
nants, and its standard is increasingly high. Such
an approach is problematic since it is conside-
red—contrary to Easterbrook (1984)—that a false
negative decision can be more costly than a false
positive one.
Secondly, digital economy evolutions question
the reasoning that focuses on allocative eciency
alone, statically, and based on partial equilibrium.
ree consequences are to be taken into account.
48 For a stri king i llustration of such tendencies, see
the draft publ ished by the ftc and the DoJ regar-
ding the Vertical Merger Guidelines (DoJ-FTC,
2020, p. 9): “Because vertical mergers combine
complementary economic functions and elimina-
te contracti ng frictions, they have the potential to
-
tition and consumers. Vertical mergers bring to-
to coordinate how these assets are used may be
able to streamline production, inventor y mana-
gement, or distribut ion, or create innovative pro-
ducts i n ways that would have been hard to achie-
ve through arm’s lengt h contracts.” Economides
et al. (2020, p. 7) a lso insist on t he adverse permis-
produce through its “misplaced emphasis on the
-
71
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Revista Prolegómenos ■ Vol. 24(47)
First, competition turbulences in digital markets
may not be as severe as een years ago (Marty &
Warin, 2020). As noted above, the growing impor-
tance of barriers to entry means that the contest-
ability of markets is less and less assured. Second,
platform markets are characterised by additional
diculties in delineating relevant markets and as-
sessing the eects on all business sides, which does
not invalidate the consumer welfare criterion, but
requires recognition of the increasing risks of false
negatives. ird, the development of these digital
markets itself legitimately increases the scope of
competitive concerns. Much of the debate around
hipster antitrust focuses on the necessity to con-
sider non-economic or at least very general dimen-
sions (employment, inequalities) in competition
authorities’ decisions.
Although the parallel is not necessarily relevant,
it could be argued that each public policy tool must
have a specic objective and that bringing antitrust
to address macroeconomic objectives may at best
have sub-optimal results. is “Tinbergen rule”
should not mean that the competition judge consid-
ers broader dimensions, but it does mean, as we will
see in our last subsection, that he should then bal-
ance conicting objectives for which it is dicult to
nd common equivalents. For instance, how could
a competition judge arbitrate between the interests
of consumers and the interests of employees?
However, this enlargement can also take place
within the competition policy itself. e develop-
ment of the platform economy integrates into the
competitive reasoning concerns that fall under
other branches of law. is is the case of consum-
er law since the users of the platforms are private
individuals, which is also the case of contract law.
Platforms involve numerous vertical contractual
restrictions, which concern restrictive practices
(le petit droit de la concurrence) and competition
law enforcement (le grand droit de la concurrence).
Contractual imbalances raise concerns not only
for the parties concerned but also for competition.
ey may give rise to exclusionary abuses, ex-
ploitative abuses, and abuses of economic depen-
dence that competition law must (and can) address
(Bougette et al., 2019).
Such concerns echo the reections, particu-
larly in the context of merger control, about the
notion of trading partner welfare. Contractors
dependent on platforms are not protected any
more than competitors in the past, but barriers
to accessing the market may harm the consumer
regarding freedom of choice and the diversity of
options available. Similarly, if exploitative abuses
are committed, trading partners can no longer
invest, thus beneting consumers. Furthermore,
if the keystone player controls the technological
trajectory of its complementors, it can hinder any
disruptive innovation and lock its complementors
into innovations that reinforce their (and consum-
ers’) dependence on it.
e last area of law at stake is the right to pro-
tection of personal life (privacy). e platforms
involve constant trade-os between the transfer
of personal data and the provision of services. A
free service can be paid for by a disproportionate
extraction of personal data. e consumer may
not be aware of this (the so-called privacy myo-
pia). Simultaneously, such extraction may oer a
data advantage to the dominant player against its
(potential) competitors. It may create a barrier to
entry. e long-term eects of this asymmetric
data extraction can reduce the market’s contest-
ability and eventually its foreclosure, which con-
stitutes a particular form of predation for which
we must develop tools to balance the two eects.
e case of Facebook’s takeover of WhatsApp is a
good illustration of these trade-os between e-
ciency and privacy. In addition, it made it possible
to “deconstruct” the notion of consumer by op-
posing consumers who did not value the protec-
tion of personal data (and who could therefore use
Facebook Messenger) and those who agreed to pay
the price to access the service in exchange for the
protection of their data.
The worst criterion except
for all the others?
Newman (2019), commenting on Hovenkamp’s
2005 book e Antitrust Enterprise, indicated that
antitrust seemed to have reached the equivalent of
the end of history with the eects-based approach
72 F. Mar t y
Revista Prolegómenos ■ Vol. 24(47)
until a decade ago. Within this perspective, the
origin and termination of all analyses lay in mea-
suring prices and output49. In other words, alloc-
ative eciency is how practices are evaluated and
their sole criterion of assessment.
While this criterion has apparent limitations,
it has advantages. It provides a single standard
against which practices can be measured and
achieves the objectives of legal certainty. e lat-
ter relates to the clarity of the rule, the limited ap-
plication of discretionary aspects, and nally, the
predictability of its enforcement. Finally, adopting
a single criterion makes it possible to avoid arbi-
tration between qualitative and oen conicting
objectives. e analysis developed by Melamed
and Petit (2018) as a (reasoned) defence of the
consumer welfare criterion goes in this direction.
Consumer welfare provides a legitimate criterion
insofar as it does not carry underlying values or
political choices50.
Similarly, from public choice, a one-dimension-
al criterion is more dicult for interest groups to
manipulate (Dorsey et al., 2018). e application
of the test is predictable, which enhances the le-
gal security of operators and limits the risk of op-
portunistic lawsuits that are particularly costly for
defendants51.
49 Focusi ng on prices and outputs alone removes any
qualit y di mension and can lead to false negatives
in platform markets operating under zero-price
models. Nevertheless, more sophisticated ver-
sions of the consumer welfare criterion incorpo-
rate dimensions such as qual ity or diversity of
supply. These non-monetar y variables are conver-
ted into prices as part of the analysis. For instan-
ce, such an approach has been implemented in the
airline industr y (see Keating et al ., 2013).
50 This position can nevertheless be d iscussed in l i-
ght of the debates to which it gives rise. The c hoice
of a given economic method or tool cannot be re-
garded as neutral or purely technical. To this end,
one should think of the debates in t he us between
technica l antitr ust and political antitrust. Whi le
to be neutral, its implementation invariably in-
volves choice and polit ical prior ities.
51 This point can also be discussed concerning the
We present above some criteria proposed in the
academic literature. Do they constitute alternative
or complementary standards to consumer welfare?
It seems that the second option should be dismis-
sed because of its imperfections. It nevertheless
captures essential dimensions that the former
cannot.
A rst criterion could be the consumer free-
dom of choice standard. Any “conduct that ar-
ticially limits the natural range of choices in
the marketplace” (Lande, 2001, p. 504) would be
anti-competitive. A second criterion can consist
of renewing—with the original 1890 legislative in-
tent—and searching for conciliation for multiple
purposes, such as preserving a dispersed indus-
try structure or fairness in economic transactions
(Wilson, 2019). However, it raises the diculty in
arbitrating among these objectives52 . A third cri-
terion can be the protection of the competitive
process. Competition policy should sanction all
practices that can impair the latter (Werden, 2014).
is brief overview shows that the consumer
welfare criterion criticisms are more likely to call
for an adjustment of the criterion than for its pos-
sible abandonment. When it comes to the abuse of
a dominant position, it is, in any case, a question
of assessing a potential eect on competition. An
eects-based approach is necessary; the consumer
more economic (i .e. -
volves collecting and processing considerable vo-
lumes of data by defendants. Simpler—i .e., more
formal—rules could limit these costs. Let us add
a dimension: the data required are mai nly price
and sales data of the incriminated dominant un-
dertaking. They of ten do not allow an assessment
of the impact of the practices on consumer wel-
fare. Here we come to a paradox already pointed
out by Bosco (2013): the more economic approach
operators’ costs in predator y pricing cases rather
than in any measure of consumer welfare.
52 politica l and theoretical debates tend to add ad-
ditional goals to these object ives such as income
inequal ity reductions or job protection. The se-
cond issue is related to t he monopsonist power (or
-
sed, among others, by Khan and Vaheesan (2017).
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Is Consumer Welfare Obsolete? A European Union Competition Perspective
Revista Prolegómenos ■ Vol. 24(47)
surplus criterion is constantly called upon to play
a central role, if only because of its tractability53.
Nonetheless, it should not be an exclusive and
overly restrictive test in its operationalisation by
unreasonably raising the standard of proof and
placing it on the complainants54. erefore, the
risk is being exposed to false negatives and tipping
towards pro-trust antitrust that constitutes both
economic and political risks (Marty & Kirat, 2018).
Let us recall one of the lessons of original
neo-liberalism: the concentration of econom-
ic power—if no longer reversible—involves two
risks for democracy. e rst is the risk of po-
litical power capture by private economic pow-
ers (we could add to this) when platforms play a
central role in access to information, the risk of
manipulating public opinion, whether voluntary
or not55). e second risk is that the concentration
of economic power will trigger a backlash from
the political power in terms of regulation, which
should not come as a surprise: this was already
the case in 1912 in the with the presidential
debates between Ta, Roosevelt, and Wilson
(see Crane, 2015). e concentration of econom-
ic power posits the political question of the mo-
dalities of regulation between Jeersonian and
Hamiltonian approaches (Pasquale, 2018). e
53 Wilson (2019) insists on three favourable charac-
teristics associated with the consumer wel fare
criterion: predictabil ity, administrability, and
credibility.
54 Crémer et al. (2019, p. 4) propose for digital mar-
kets to “impose on the i ncumbent the burden of
proof for showing the pro-compet itiveness of its
conduct.”
55
but the accumulation of personal data combined
with the isolation of consumers in vertical silos
raises serious concerns about t he social control of
individuals. As such, t he strategies— economica-
-
ms can be questioned from t he angle of pol itical
-
tell igence era, do we wish to endow t he powers—
whether private or publ ic—wit h such tools of
social control, even if they bring unquestionable
characteristic of the 1930s neoliberal approach
was to lean towards the former.
Similarly, the contestation of the consumer
welfare test—or the restrictive use made of it—
should not call for implementing a discretionary
antitrust that could lead either to a neo-classical
legal thought (reactionary antitrust) or to a return
to an obsolete and impractical structuralist model.
An antitrust that would target the Bigness itself,
which would champion dismantling in the absence
of demonstration of damage to the consumer,
would cause several damages. First, concentration
as such occurs naturally for the sectors of activi-
ty concerned. Second, it does not in itself pose a
problem as long as competitors and consumers
can exert countervailing pressure. ird, eventual
dismantling—if practicable—would impose social
costs that are dicult to anticipate and could re-
sult in signicant losses of eciency, which does
not mean that structural remedies should be ex-
cluded per se, but that they should be subjected to a
cost-benet analysis, of which consumer welfare is
an essential dimension.
Nevertheless, many considerations taken into
accoun in the context of antitrust make sense
in the European context as soon as they are accli-
matised to it. e standard of eective competition
proposed by Steinbaum and Stucke (2018) or that
of the defence of the competition process support-
ed by Wu (2018) are not far from the ordoliberal
logic. For instance, Tim Wu (2018) suggests that
practices should be weighed against their compat-
ibility with competition on the merits. A strategy
that has the eect of hindering or distorting the
competitive process would then be considered
anti-competitive. ese dimensions echo the
case-law concept established by the Court of Jus-
tice of the dominant operator’s special responsibil-
ity. e implementation of this approach had been
made narrower by the so-called more economic
approach (of which the criterion of consumer wel-
fare was the keystone).
ese current developments in both the
competitive, political, and theoretical elds sug-
gest that the European Commission builds the
model that may constitute an attractive com-
promise. Without disavowing the benets of the
74 F. Mar t y
Revista Prolegómenos ■ Vol. 24(47)
eects-based approach, the latter maintains an or-
doliberal conception of competition (a process to
be protected for itself and possibly against itself).
e Court of Justice and the Commission
increasingly consider dimensions that had been
progressively marginalised, such as transparen-
cy, fairness, or loyalty (Petit, 2018), and retain a
plurality of objectives among which eciency is
an essential but not exclusive component. ese
objectives are straightforward: the protection of
free, undistorted competition on the merits. e
criterion of consumer welfare makes it possible
to reect—at least partially—the last objective but
needs to be supplemented by further analysis for
the rst two. Competition need not be reduced to
its result—e.g., allocative eciency—. It is a tool
of discovery in the Hayekian sense of the term, an
instrument of discovery of knowledge in society,
and nally—and this point is essential—a vector of
dispersion of economic and political power. ere
can be no eciency without free competition and
no democracy without free competition.
Discussion
As a discussion, we might consider two issues.
e rst one deals with the potential eects of
implementing a “protection of competition” crite-
rion. e second one is related to a quite surpris-
ing defence of a total welfare criterion, presented
by Wilson (2019), as an alternative for antitrust
enforcement.
If the criterion of consumer welfare is likely to
remain the cornerstone of the implementation of
competition rules, it appears that it cannot be the
only criterion, as it does not capture all the dam-
age to competition. Is the concept of damage to
competition a good alternative? e notion of the
dominant operator’s special responsibility can be
an interesting compromise, more satisfying than
truly hipster style approaches as a return to non-
faulty monopolist rules and eventually advocacy
for structural remedies such as dominant platform
dismantling56 or “antitrust lawsuits to unwind pre-
viously completed mergers” involving tech giants
56 See Kha n (2019) in the case of e-commerce platfor-
ms.
(Kovacic, 2020, p. 487). However, how should it be
implemented in practice? It implies specic duties
for dominant operators, such as mandatory access
to data or platforms (Chaiehloudj, 2020).
On the one hand, it remains essential to avoid
excessively asymmetrical competition regula-
tion models and, on the other hand, to guarantee
non-discriminatory practices regarding access to
or carrying obligations for third party oers or
contents. Melamed and Petit (2019) exemplify the
scope of these obligations: “the promotion of in-
ter and intra platforms rivalry would require the
imposition of positive obligations— must carry
requirements, mandatory sharing, data por-
tability measures—on platform-based rms [...]”
(p. 765). It should be noted that this raises anoth-
er essential legal issue: Should competition law
merely sanction certain practices, or should it
impose market behaviour? In other words, how
can such an essential facility doctrine be managed
eectively?
Surprisingly, the consumer welfare criterion is
also challenged by the total welfare one. We have
noted that Robert Bork’s conception was ambig-
uous. His consumer welfare may be conceived as
total welfare. According to Hovenkamp (2019):
Bork did not use the term ‘consumer welfare’
in the same way that most people use it today. For
Bork, ‘consumer welfare’ referred to the sum of the
welfare, or surplus, enjoyed by both consumers and
producers. Bork referred to consumer welfare as
‘merely another term for the wealth of the nation.’
(p. 101)
Wilson (2019) considers this total welfare
criterion can be relevant as soon as we assign to
competition laws the sole purpose of promoting
economic eciency. Such a focus on total surplus
makes sense from a Chicagoan perspective. As
soon as competition law must cope with eciency,
it is out of the scope to consider welfare distribu-
tion, as the consumer welfare criterion imposes to
do so. It is only a matter of expanding the size of
the pie (see, for instance, Williamson, 1968).
e Second Chicago School rejects distribu-
tional considerations outside the scope of econom-
ics. e reduction of welfare inequalities pertains
75
Is Consumer Welfare Obsolete? A European Union Competition Perspective
Revista Prolegómenos ■ Vol. 24(47)
to the sphere of political preferences; it should be
addressed through taxation57. In the same vein,
the increasing concentration of market power has
both a potential impact on eciency (by deterring
potential competitors from investing and from in-
novating) but also on the robustness of democracy
(the higher the nancial risks associated with ad-
verse political choices, the higher the capacity and
the incentives to invest for exerting an inuence
on political power). e regulation of lobbying ac-
tivities or the reform of campaign nancing can
address the capacity to convert economic power in
a political one (Shapiro, 2018) but not the private
interests to capture public regulation.
According to Wilson (2019), adopting this cri-
terion could lead to more favourable decisions if,
for example, a merger would bring signicant ef-
ciency gains58 in industries characterised by high
levels of xed costs59. Among the arguments pre-
sented in defence of a total welfare criterion is the
possibility of considering multi-market eects. A
transaction may increase the market power on one
segment and have positive eects on another. Such
an operation may also transfer innovations from
one segment to another and, by doing so, may gen-
erate dynamic eciencies.
It, therefore, appears that the debate over the
criteria that should guide the competitive deci-
sion requires a re-examination of the criterion of
consumer welfare, as it stems from Robert Bork’s
work. Two avenues of evolution are therefore to
be considered. As Christine Wilson (2019) does,
the rst is to question the relative interest in con-
sidering the total welfare test, which is, aer all,
very close to the consumer welfare test as dened
by Bork. e second is to revive the European
57 However, Piketty (2013) has demonst rated t hat in-
potential economic grow th.
58 Christine Wilson (2019) also quotes t he case of
the 1986 Canad ian Competition Act that opens the
-
ciency gains in mergers (sec. 96(1)).
59 -
ciency gains, it also increases market power and
thus reduces the incentives to make consu mers
tradition based on ordoliberalism, from which the
has only recently begun to depart. Moreover,
by combining an eects-based approach and con-
sidering the dominant operator’s special responsi-
bility for maintaining eective competition, this
approach makes it possible to reconcile dierent
competition policy objectives without giving way
to a structuralist approach. It is always a question
of balancing several values60, which inexorably
gives room for discretion.
However, two arguments must be taken into
consideration. First, the criterion of consumer
welfare also involves such trade-os, even if only
between dierent consumers. Second, an ordolib-
eral approach seems exceptionally reasonable in
an economy where the digital sector is increasing-
ly important. It is characterised by three features
that argue in favour of this approach: the increas-
ing and perhaps irreversible market concentra-
tion, the need to ensure the sustainability of the
innovation-based competition model, and coping
with the unpredictability of market dynamics.
From this perspective, the criterion of protecting
the competitive process makes more sense than
ever (de Streel, 2020).
Acknowledgement
e author would like to thank the Universidad
Militar Nueva Granada for its invitation to the VII
Congreso Internacional de Derecho Privado held
in Bogotá in November 2019. He is particularly
grateful to Claudia Margarita Martinez, Fulvio
Germán Santarelli, Carlos Andrés Perilla, Juan
Carlos Villalba Cuéllar, and Javier Francisco Fran-
co Mongua for the constructive and stimulating
exchanges at this conference.
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