Monopoly Pricing as an Antitrust Offense in the U.S. And the EC: Two Systems of Belief About Monopoly?

53 Pages Posted: 7 Apr 2005

See all articles by Michal Gal

Michal Gal

University of Haifa - Faculty of Law

Abstract

Monopoly pricing per se, that is without need of proof of anti-competitive conduct or intent, is regulated very differently on both sides of the Atlantic, at least in theory. U.S. antitrust law sets a straightforward rule: monopoly pricing, as such, is not regulated. In contrast, under EC law excessive pricing is considered an abuse of dominance and is punishable by fine and subject to a prohibitory order. These approaches fit the divide between the regulation of exclusionary and exploitative conduct: whereas exclusionary conduct is an offense against antitrust law on both sides of the Atlantic, exploitative conduct generally only breaches EU law.

This article analyzes these regulatory approaches, their historical and theoretical roots, as well as the differences that exist in practice between the two systems. As will be shown, the divergent legal rules reflect different ideological goals and different assumptions about how markets operate. The U.S. views the unregulated economy as essentially competitive, if the creation of artificial barriers is prohibited. This approach places significant emphasis on the workings of the market and considers monopoly created by means other than artificial barriers to be relatively unimportant. It also reflects the limited role granted to government in regulating markets directly and the social, moral and political values attributed to the process of competition. EC law reflects a lesser belief in the ability of market forces to erode monopoly and a stronger belief in the ability of a regulator to intervene efficiently in setting the business parameters of firms operating in the market. It also reflects a stronger emphasis on distributional justice.

The importance of the analysis lies beyond antitrust intervention in monopoly pricing, as it opens a window to much broader themes which underlie the competition policies of both jurisdictions and enables us to exemplify and contrast the foundations of both regulatory systems. The regulation of excessive pricing encapsulates issues such as the goals and underpinning of EC and U.S. antitrust systems; the equilibrium point which was adopted to balance between the forces of Darwinian capitalism and those of social justice; the role of government regulation; the balance between practical problems and theoretical principles; and the assumptions regarding the relative administrability of various types of regulation. Monopoly pricing regulation is thus, in many ways, a microcosm of competition policy.

Suggested Citation

Gal, Michal, Monopoly Pricing as an Antitrust Offense in the U.S. And the EC: Two Systems of Belief About Monopoly?. Available at SSRN: https://ssrn.com/abstract=700863

Michal Gal (Contact Author)

University of Haifa - Faculty of Law ( email )

Mount Carmel
Haifa, 31905
Israel

HOME PAGE: http://weblaw.haifa.ac.il/en/faculty/gal/pages/home.aspx

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