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The Diverging Approach to Price Squeezes in the United States and Europe


George Alan Hay


Cornell University - Law School

Kathryn McMahon


University of Warwick - School of Law

February 1, 2012

Journal of Competition Law & Economics, 2012
Cornell Legal Studies Research Paper No. 12-07

Abstract:     
Notwithstanding assertions of greater harmonization and convergence between United States and European Union competition law, recent case law has identified significant differences in their approaches to the regulation of a price or margin squeeze. In the US after linkLine the likelihood of a successful claim has been significantly diminished, particularly if there has been no prior course of voluntary dealing and no downstream predatory pricing. In contrast, in a series of decisions in liberalized telecommunications markets, the EU Courts in applying an “as efficient competitor test” have focused on the preservation of competitive rivalry as “equality of opportunity.” This significantly broadens the potential liability for a margin squeeze in the EU and reconstitutes EU competition law as a form of de facto regulation in liberalized markets. Faced with the uncertainty of this standard, the dominant firm has an incentive to avoid liability by raising its retail prices, to the detriment of consumers. This article evaluates this divergence in approach to the regulation of a price or margin squeeze in the US and EU and traces these approaches to differing conceptions of dominant firm regulation which in turn have informed different understandings of the regulation of a “refusal to supply” and the intersection of competition law with sector-specific regulation.

Number of Pages in PDF File: 26

Keywords: European Union, Courts, harmonization, competition law, telecommunications, markets, margin, regulation

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Date posted: February 2, 2012 ; Last revised: March 8, 2012

Suggested Citation

Hay, George Alan and McMahon, Kathryn, The Diverging Approach to Price Squeezes in the United States and Europe (February 1, 2012). Journal of Competition Law & Economics, 2012; Cornell Legal Studies Research Paper No. 12-07. Available at SSRN: http://ssrn.com/abstract=1997384

Contact Information

George Alan Hay (Contact Author)
Cornell University - Law School ( email )
524 College Ave
Myron Taylor Hall
Ithaca, NY 14853
United States
Kathryn McMahon
University of Warwick - School of Law ( email )
Gibbet Hill Road
Coventry CV4 7AL, CV4 7AL
United Kingdom
024765 28399 (Phone)
024765 24105 (Fax)
HOME PAGE: http://www2.warwick.ac.uk/fac/soc/law/staff/academic/mcmahon
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