1. Abuse of Dominance
Case Studies

2. Layout of the Session More detail on predatory pricing
Presentation of Aberdeen Journals case
Group discussion and feedback
Cross check against actual findings of the case
Quick discussion on BA case

3. Recap on Abuse of Dominance Assessment
Define the relevant market
Determine if the undertaking under investigation is dominant
Has the undertaking abused its dominant position?
If 'yes' determine an appropriate penalty

4. Predatory Pricing (1)
Is pricing below cost in order to force a competitor from the market or prevent a prospective competitor from entering
It's assumed the loss is recouped via excessive prices after competitive threat is removed
Under European law:
- Price > Average Total Cost (ATC) = No Abuse
- ATC > Price > Average Variable Cost (AVC) = Abuse if intent established [Case 62/86 AKZO v Commission (1991) ECR I- 3359]
- Price < AVC = Abuse
Probability of recoupment does not need to be established [Case C-333/94P Tetra Pak v Commission (Tetra Pak II) (1996) ECR I-5951]

5. Predatory Pricing (2)
Under US law below cost pricing is only an abuse if:
- price is found to be below AVC
AND
- there is a dangerous probability that alleged predator will be able to recoup losses through monopoly prices after rival has exited
[Brooke Group Ltd v Brown & Williamson Tobacco Corp 509 US 940 (1993)]

6. Predatory Pricing (3)
From a US perspective EU approach risks penalising pro-competitive behaviour and puts safe-harbour around inefficient firms, reducing incentives to innovate
From an EU perspective the US approach may allow anti-competitive behaviour to 'slip through the net' resulting in an 'as-efficient' firm exiting the market
Different approaches can have a material effect on markets

7. Loyalty discounts
Occur where discounts are given to customers who purchase all, or a specified portion of their requirements for a given product from a particular firm
Considered abusive in the EU if given by a dominant firm unless short-term or cost justified as deemed exclusionary
In the US such discounts are only abusive if below cost in which case rules on predation kick in