Predatory pricing deutsch series#

While the essence of the predatory pricing claim is the same under either statute, the standard of proof differs. In the US, a predatory pricing case may be brought under Section 2 of the Sherman Act of 1890 or the Robinson-Patman Act of 1936. It further noted that the Commission could still consider the possibility of recoupment a relevant factor for predatory pricing analysis. Additionally, in France Télécom v Commission, the ECJ held that the case law of the Court did not require proving the possibility of recoupment of losses as a necessary precondition to establishing that such a pricing policy is abusive.

Predatory pricing deutsch series#

In Tetra Pak II, where anti-competitive intention of Tetra Pak was particularly clear, as manifested in a series of abusive acts, the ECJ indicated that “in circumstances of the present case” it is not required to show the dominant undertaking had a “realistic chance of recouping its losses”. The ECJ further developed its case law in Tetra Pak II and France Télécom v Commission. According to the ECJ, prices below average variable cost (“AVC”) by a dominant undertaking will be presumed abusive while prices below average total cost (“ATC”) but above AVC will be regarded as abusive if they are part of a plan to eliminate competitors. The European Court of Justice (“ECJ”) assessed predatory pricing for the first time in AKZO case. That being said, it also clarifies that this does not mean that the Commission would only intervene if the dominant undertaking would be likely to be able to increase its prices above the level existing before the conduct and proof of overall profits is not required for identifying consumer harm. The Commission’s Guidelines indicate that consumers are likely to be harmed if the dominant undertaking - after the predatory conduct comes to an end - can reasonably expect its market power to be greater than it would have been had the undertaking not engaged in that conduct in the first place. The Commission is not required to demonstrate that competitors have exited the market in order to prove anti-competitive foreclosure. The Commission acknowledges that, normally, only pricing below long-run average incremental cost (“LRAIC”) is capable of foreclosing as efficient competitors from the market. In terms of anti-competitive foreclosure, the Commission will apply the equally efficient competitor analysis to determine whether the conduct is capable of harming consumers. Accordingly, predatory intent should be proven to establish the existence of predatory conduct if the dominant undertaking sets prices higher than AAC. However, if the Commission establishes that an alleged conduct led to net revenues lower than could have been expected from a reasonable alternative in the short term, or in other words, that the dominant undertaking incurred a loss that could have avoided, this may also indicate predatory strategy. Average avoidable cost (“AAC”) is taken into account as a starting point in determining whether sacrifice occurred and if a dominant undertaking charges a price below AAC, this is viewed in most cases as a clear indication of sacrifice. In terms of the sacrifice element, European Commission (“Commission”) will assess whether by charging a lower price for its output or by expanding its output over the relevant time period, the dominant undertaking incurred or is incurring losses that could have been avoided.

The Guidance on the Commission’s enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings (“Commission’s Guidelines”) provides two elements for predatory pricing: (i) sacrifice and (ii) anti-competitive foreclosure. In general, it is considered unlikely that predatory conduct will create efficiencies.įrom EU perspective, predatory pricing falls within the scope of Article 102 of the Treaty on the Functioning of the European Union (“TFEU”).

If sufficient reliable data are available, the equally efficient competitor analysis could also be applied to determine whether the conduct is capable of harming consumers. documents that show a predatory strategy), if any. For such analysis, various cost parameters (in line with the competitive landscape/characteristics of the relevant market) could be taken into account in conjunction with direct evidence (e.g. whether the conduct entails a deliberate sacrifice). In general, the starting point of the analysis is to assess whether the dominant undertaking incurred or is incurring avoidable losses for the relevant time period (i.e.