Predatory Pricing after linkLine and Wanadoo
Global Competition Policy Magazine, May 2009
12 Pages Posted: 3 Jun 2009
Date Written: May 27, 2009
In the United States, beginning with the Matsushita decision in 1986, the Supreme Court has required plaintiffs in predatory pricing cases to meet stringent conditions to prevail on their claims. As a result, predatory pricing cases have become 'rarely tried and even more rarely successful', to paraphrase Matsushita. The Supreme Court’s point of view appears to have been motivated by a concern with the chilling effects on price competition that 'false positives' in predatory pricing cases would have, combined with a strong skepticism, from both a theoretical and practical point of view, about whether predatory pricing is a rational business strategy. European Union (EU) antitrust law has generally followed a different path with regard to predatory pricing. The traditional EU case law, based on the AKZO judgment, has set a substantially lower bar to prevail on a predatory pricing claim than has the U.S. Supreme Court. For example, under the case law of the European Court of Justice (ECJ), a price could be found to be predatory, even if it were above average variable cost, where the defendant had a 'plan to eliminate a competitor'. This raises the question: When it comes to predatory pricing, is the 'EU from Venus, and the United States from Mars'? This short article attempts to answer the question by analyzing the recent developments in the area of predatory pricing across the Atlantic, in particular the Supreme Court’s linkLine decision and the ECJ’s Wanadoo judgment.
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