Here is the abstract and link of the paper I co-authored with Ianis Girgenson on the counterfactual method.
In Book IX of his History of Rome (written around 25 BC) Titus Livy speculates about a hypothetical confrontation between Rome and Alexander the Great. What if Alexander had not died at the end of the Asian campaign but had returned to Europe to attack Rome? Livy argues that Rome and Carthage would have joined forces to crush the Macedonian army.
Livy’s musings represent an early example of the counterfactual method. This method can be used to assess the effects of an actual or a hypothetical event. The counterfactual describes the world in the absence of that event. If the event has already occurred, one needs to build an alternative past (this is what Livy does when he imagines Alexander’s return to Europe). If the event has not yet taken place, it is necessary to contemplate an alternative future.
The use of the counterfactual under EU competition law goes back to the seminal judgment of the Court of Justice in the Société Technique Minière case. However, until recently, this method was confined to the area of merger control. Under Articles 101 and 102 TFEU, the European Commission and the EU Courts initially adopted a “form-based” approach. This approach paid limited (if any) attention to the effects of the relevant agreement or conduct on competition and consumers. Because the aim of the counterfactual technique is to analyse the effects of a given event it had little relevance under the form-based approach.
In recent years the Commission has transitioned towards the effects-based approach. The modernisation of EU antitrust enforcement caused a renewed interest in the counterfactual technique. Counterfactuals are discussed in various Article 101 guidelines and in the Article 102 Guidance Paper. In June 2011 the Commission published a draft Guidance Paper on quantification of antitrust damages, which contains a detailed analysis of various counterfactuals.
In this paper, we examine the use of the counterfactual method in EU competition law. In our analysis, we distinguish between ex ante control (merger control and Article 101 self-assessment) and ex post scenarios (investigations under Articles 101 and 102, damages litigation).