Predatory Pricing Law in Canada, Australia and New Zealand: Recent Developments

Abstract

Should the European Commission decide to review its own policy in the area of predatory pricing, the issue will prove particularly thorny: (a) predatory price-cutting is difficult to distinguish from legitimate price competition; (b) the price-cost test requires an extremely detailed investigation of the defendant's cost structure and revenues; (c) under-enforcement may cause large companies to try to establish a reputation for toughness in order to deter entry into their markets; (d) over-enforcement may encourage weak competitors to sue their more efficient, price-cutting rivals, which would, in turn, discourage them from cutting prices in the first place; (e) the issue of possible defences to predatory pricing claims is not yet settled; and (f) both the Commission and the EC courts are under pressure to adopt the recoupment requirement, which is in use in several other jurisdictions. In this context, it may be useful to look at recent developments in non-EU, non-US jurisdictions - such as the Boral judgment (February 2003) and the Qantas preliminary judgment (February 2003) in Australia, the Air Canada judgment (July 2003) and the Culhane judgment (April 2004) in Canada, and the recent judgment of the Privy Council in Carter Holt Harvey (July 2004), a New Zealand case.

Keywords: Antitrust, predatory pricing

JEL Classification: K21, L12