Predation Analysis and the FTC's Case Against Intel

Abstract

The Federal Trade Commission's pending antitrust case against Intel challenges a number of Intel's discounting and rebating practices. The Commission appears poised to apply a cost-price test to the challenged practices, but proposes to include "fixed sunk costs" in the appropriate measure of cost. This paper explains the importance of using cost-price screens to assess unilaterally imposed prices and analyzes the futility of including sunk costs in the relevant cost measure.

Keywords: Federal Trade Commission, Intel, Cost-Price Screens, Fixed Sunk Costs

JEL Classification: K21, K22