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Margin squeeze: an above-cost predatory pricing approach

Gaudin, G; Mantzari, D; (2016) Margin squeeze: an above-cost predatory pricing approach. Journal of Competition Law & Economics , 12 (1) pp. 151-179. 10.1093/joclec/nhv042. Green open access

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Abstract

We provide a new legal perspective for the antitrust analysis of margin squeeze conducts. Building on recent economic analysis, we explain why margin squeeze conducts should solely be evaluated under adjusted predatory pricing standards. The adjustment corresponds to an increase in the cost benchmark used in the predatory pricing test by including opportunity costs due to missed upstream sales. This can reduce both the risks of false positives and false negatives in margin squeeze cases. We justify this approach by explaining why classic arguments against above-cost predatory pricing typically do not hold in vertical structures where margin squeezes take place and by presenting case law evidence supporting this adjustment. Our approach can help to reconcile the divergent U.S. and EU antitrust stances on margin squeeze.

Type: Article
Title: Margin squeeze: an above-cost predatory pricing approach
Open access status: An open access version is available from UCL Discovery
DOI: 10.1093/joclec/nhv042
Publisher version: http://dx.doi.org/10.1093/joclec/nhv042
Language: English
Additional information: © The Author 2016. Published by Oxford University Press. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http:// creativecommons.org/licenses/by/4.0/), which permits unrestricted reuse, distribution, and reproduction in any medium, provided the original work is properly cited.
Keywords: Social Sciences, Economics, Law, Business & Economics, Government & Law, K21, L12, L43, EMPIRICAL-EVIDENCE, PROPERTY-RIGHTS, ANTITRUST, POLICY, ENTRY, TELECOMMUNICATIONS, INFRASTRUCTURES, COMPETITION, INVESTMENT, INDUSTRY
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of Laws
URI: https://discovery.ucl.ac.uk/id/eprint/10057033
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