Excessive Pricing: A View from Chile

The University of Oxford Centre for Competition Law and Policy. Working Paper CCLP (L) 41.

39 Pages Posted: 10 Apr 2015

See all articles by Omar Vásquez Duque

Omar Vásquez Duque

Stanford University, School of Law, Students; Stanford University, Department of Economics, Students

Date Written: April 8, 2015

Abstract

Excessive pricing is one of the most controversial topics in competition law. Notwithstanding excessive pricing being one of the most blatant forms of abuse, a non-intervention policy tends to be the prevalent choice worldwide. Such a “hands-off” approach is based on the grounds that excessive prices self-correct, as well as practical difficulties in measuring a competitive benchmark and identifying excessiveness, and the fear of distorting ex ante incentives to innovate and invest. This article aims at providing a more balanced approach, which might be particularly useful for small economies, since market failures tend to linger for a longer time in small markets. Accordingly, it reviews the literature concerning the merit of antitrust intervention and the tests proposed to determine when intervention should take place. Then it illustrates the Chilean experience, which shows challenges concerning the scope of competition law; its goals; and principally the identity of a jurisdiction influenced by both the American and the European systems. This work concludes, on a policy level, that antitrust law might have a role to play in excessive pricing cases; and points out that even if hard enforcement is not considered appropriate, soft-enforcement strategies might also be advisable to address excessive prices. On a practical level, this article concludes that jurisdictions where excessive pricing provisions already exist should prefer tests aimed at defining a workable application of such provisions. This paper provides guidelines to determine their enforcement.

Keywords: Excessive pricing, abuse of dominance, competition law, antitrust, Chile

JEL Classification: K21

Suggested Citation

Vásquez Duque, Omar and Vásquez Duque, Omar, Excessive Pricing: A View from Chile (April 8, 2015). The University of Oxford Centre for Competition Law and Policy. Working Paper CCLP (L) 41. , Available at SSRN: https://ssrn.com/abstract=2591931 or http://dx.doi.org/10.2139/ssrn.2591931

Omar Vásquez Duque (Contact Author)

Stanford University, Department of Economics, Students

Stanford, CA
United States

Stanford University, School of Law, Students ( email )

Stanford, CA
United States

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