Excessive Pricing

Abstract

Issues of “unfair” or excessive pricing traverse a number of potential abuses under Article 102 TFEU. Many refusal to deal cases involve situations in which a dominant firm insists on access terms that are uneconomic. Margin squeeze cases can also involve a wholesale price that is excessive in relation to the retail price. Tying and bundling allegations may also involve issues of excessive pricing. Price discrimination abuses, by which a dominant firm applies dissimilar conditions to equivalent transactions, may also raise excessive pricing concerns for the party paying the higher price. The concern regarding excessive prices under Article 102(a) is, however, narrower in scope. A firm with market power violates Article 102(a) if it “directly or indirectly” imposes “unfair purchase or selling prices or other unfair trading conditions.” Such practices are regarded as an “exploitative” abuse, since they result in a direct loss of consumer welfare. In economic terms, the dominant firm takes advantage of its market power to “extract” rents from customers that could not have been obtained by a non-dominant firm.

Keywords: Abuse, Antitrust, Competition Law, Dominance, Error Costs, Excessive Prices, Legal Standards

JEL Classification: K21, L13 and L40