Excessive Pricing: A Way Forward
Thesis for Masters in Economics for Competition Law; 2013
58 Pages Posted: 13 Feb 2016
Date Written: September 29, 2013
One of the most controversial theories of harm in competition law in general, and within the category of exploitative abuses in particular, is that of excessive prices. The Competition Authority, while analyzing any conduct in this category must very carefully and cautiously first assess the structures of the market, which inter alia includes, High and non-transitory entry barriers, the dominance and its origin and other ancillary aspects. Once, such determination is made the Competition Authority while analyzing the abuse under the microscope of excessive or fair, should not only focus on the profitability or price cost comparisons in determining as to whether the prices are excessive or not should also determine as to whether the prices so charged are “unfair” or “fair”. While analyzing this, principle of dual entitlement can facilitate the Competition Authority in reaching a just and appropriate conclusion. It is deliberated that in general this principle is in line with the goals of an effective prohibition of excessive pricing and develop a procedure that defines a price as ‘unfair’ in terms of this principle. Moreover, it has also been argued that while it may sometimes be appropriate to intervene against instances of excessive pricing, the authorities should, as far as possible, endeavor to address the causes of the abuse - that is, market conditions and circumstances that allow the excessive pricing to occur - rather than using price regulation to merely address the symptoms of abuse. Such interventions will, arguably, have more in common with consumer protection policy than with traditional competition policy, however the objective remains the same: to improve the functioning of competition for the benefit of consumers. Accordingly, a test for future consideration is suggested to deal with the excessive pricing abuse.
Keywords: Theories of Harm, Competition Law, Abuse of Dominant Position, Excessive Pricing, Fair, Unfair, Consumer, benefit
JEL Classification: D4, L00
Suggested Citation: Suggested Citation