Weyerhaeuser, Predatory Bidding, and Error Costs

Abstract

In Weyerhaeuser v. Ross-Simmons the Supreme Court held that the predatory pricing standard adopted in Brooke Group also applies to predatory bidding claims, because the two types of predation are "analytically similar". I argue that predatory bidding is likely to be more harmful to consumer welfare than is predatory pricing. Successful input market predation may lead to a "dual market power" outcome in which the firm has market power in both the input and the output market. In spite of the analytical distinction, consideration of error costs leads me to conclude that Brooke Group remains the best standard to apply to predatory bidding claims.

Keywords: Weyerhaeuser v. Ross-Simmons, predatory pricing standard, predatory bidding, Brooke Group

JEL Classification: K21, K00