The Diverging Approach to Price Squeezes in the United States and Europe

George A. Hay and Kathryn McMahon

Journal of Competition Law and Economics, 2012, vol. 8, issue 2, 259-296

Abstract: Notwithstanding assertions of greater harmonization and convergence between U.S. and EU competition law, recent case law has identified significant differences in those jurisdictions' approaches to the regulation of a price or margin squeeze. In the United States after linkLine, the likelihood of a successful claim has been significantly diminished, particularly if there has been no prior course of voluntary dealing and no downstream predatory pricing. In contrast, in a series of decisions in liberalized telecommunications markets, the EU courts, in applying an “as efficient competitor test,” have focused on the preservation of competitive rivalry as “equality of opportunity.” This significantly broadens the potential liability for a margin squeeze in the European Union and reconstitutes EU competition law as a form of de facto regulation in liberalized markets. Faced with the uncertainty of this standard, the dominant firm has an incentive to avoid liability by raising its retail prices to the detriment of consumers. This article evaluates this divergence in the approach to the regulation of a price or margin squeeze in the United States and the European Union and traces these approaches to differing conceptions of dominant firm regulation, which in turn have informed different understandings of the regulation of a refusal to supply and the intersection of competition law with sector-specific regulation.

JEL-codes: K21 L12 L41 L43 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (8)

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Journal of Competition Law and Economics is currently edited by Nicholas Economides, Amelia Fletcher, Michal Gal, Damien Geradin, Ioannis Lianos and Tommaso Valletti

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