When Are Excessive Prices Unfair?

Pinar Akman and Luke Garrod
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Pinar Akman: Centre for Competition Policy, University of East Anglia

No 2010-04, Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) from Centre for Competition Policy, University of East Anglia, Norwich, UK.

Abstract: A dominant firm can abuse its position by charging unfair prices under EU competition law. Among other things, this prohibition has been used to prohibit excessive prices that are 'too high'. This abuse has remained underdeveloped conceptually and in practice at the EU level, so there is ambiguity regarding what constitutes an excessive and therefore unfair price. We consider whether the principle of dual entitlement can be used to define explicitly what constitutes an 'unfair price' in terms of the second stage of the United Brands test. We show 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. We also show that the case law highlights that European Competition Law enforcers have implicitly followed similar steps as the ones developed here in their attempts to define 'unfair prices'. The procedure could be used explicitly to improve the ex ante legal certainty of the test of 'unfair pricing', which in turn may lead to a more effective prohibition if it is used appropriately with suitable remedies.

Keywords: Unfair pricing prohibition; abuse of dominant position; exploitative abuse; excessive pricing; principle of dual entitlement (search for similar items in EconPapers)
JEL-codes: K21 L40 (search for similar items in EconPapers)
Date: 2010-02-01
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Journal Article: WHEN ARE EXCESSIVE PRICES UNFAIR? (2011)
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Juliette Hardman, Center for Competition Policy, University of East Anglia, Norwich Research Park, Norwich, NR4 7TJ, UK

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