Identifying an Unlawful Margin Squeeze

Abstract

The burgeoning numbers of margin squeeze cases arising have raised a number of difficult problems for resolution in EU competition law. This paper discusses those difficulties and how they are being resolved. It examines exactly what a margin squeeze is and how it relates to other potentially anticompetitive exclusionary conduct of dominant firms. It considers criticisms of, and problems arising from, the recognition, in early cases, of a broad margin squeeze doctrine and the extent to which the law in this area has evolved, especially following publication of the Guidance on the Commission’s Enforcement Priorities in Applying Article [102 TFEU] to Abusive Exclusionary Conduct by Dominant Undertakings and, crucially, the Court of Justice's judgments in Deutsche Telekom v Commission and Konkurrensverket v TeliaSonera Sverige AB.

The paper discusses (i) whether it is appropriate to attempt to control margin squeezes at all through ex post application of the competition rules, particularly where a regulatory regime impacts on access and pricing issues; (ii) whether there is a need for an independent margin squeeze offence (separate from other heads of ‘abuse’); and if there is, (iii) how it is identified; (iv) whether the existence of the margin squeeze is sufficient to establish a violation of Article 102 or whether anything further must be demonstrated; and (v) whether either regulatory or traditional competition law remedies can adequately deal with a margin squeeze, or whether a strategy of ‘separation’ might be a feasible and preferable means of dealing with the problem presented.

Keywords: Article 102, Abuse, Margin Squeeze

JEL Classification: K21, L40, L41