Critically Assess the EC Competition Law’s Approach to Predatory Pricing

4422 Words 18 Pages
Introduction

Predatory discrimination has a special place both in law and economics because it can be seen as an instrument of abuse. From a point of view, price cutting is a useful way for competition and has benefits to customers. However, from the legal and economic aspects, there is not an agreed definition of predatory pricing. In spite of this, it is very important.
To understand predatory behaviors, dominant position and abuses should be understood. This paper will start with the definitions and arguments on dominance and abuse. Besides entry barriers will be defined in this part. Later, it will highlight predatory pricing with views and comments. There are a few important cases in EC law about predatory pricing. The mains
…show more content…
In economic literature there are two important debates on entry barriers. The definition of European Commission for entry barriers is as follows;
“Barriers to expansion and entry are factors that make entry impossible or unprofitable while permitting established undertakings to charge prices above the competitive level”.
Entry barriers show how easy is it to enter to the market. There are many barriers to enter the market, some of them are :

 Control of resource
 Customer loyalty
 Economy of scale
 Government regulations
 Inelastic demand
 Investment
 Sunk cost
 Patents

Although some commentators argue that entry barriers are not related to competition , from my point of view entry barriers are extremely related to competition since without these barriers competition would not exist.

3. Abuse

The competition act forbids the firms to abuse their dominant market position. If an undertaking is acting anti-competitive, effects of the conduct is important. Section 7 of the competition act says that an undertaking with 45% or more market share is directly dominant. The firms with market shares between 35% - 45% are foreseen dominant undertakings if they can not prove that they do not have the market power. It is not necessary for undertakings to prove the results of the effects of dominant position because the likely effect is important. If an undertaking performed below pricing and it did not work, it can not defend itself by

Related Documents