pricing of the dominant company. This strategy may also be less costly to the dominant company.
Link between Domco and the market – cost concepts 100. The remainder of this section first deals with the necessary link between the dominant position and the market on which the predatory pricing takes place. Subsequently separate sections deal with pricing below average avoidable cost, pricing above average avoidable cost
but below average total cost, pricing below long-run average incremental cost and pricing above average total cost. The section concludes with a subsection on objective justifications.
Predatory pricing in market in which dominant or in another 101. In general predatory pricing will only be dealt with as an abuse under Article 82 if the dominant company applies it to protect or strengthen its dominant position. Usually it will do so by applying predatory pricing in the market where it has a dominant position. It may also do so by applying predatory pricing in another, for instance adjacent market, if it has the effect of
protecting or strengthening its dominance in the dominated market.66 For the latter to happen, there is usually a certain degree of economic interdependence between the two markets, for instance because the products are complements or because demand on the separate antitrust markets is or is expected to become interrelated. A company dominant on the market for a particular product may want to strengthen its market power in a complementary product market to make entry in the dominated market more difficult. Likewise, a company dominant in an older market may want to protect its dominant position by strengthening its market power in a new separate relevant market because demand on the old and new market is or will in the future become interrelated, possibly to the extent of becoming one market. The exception to the rule that predatory pricing is only dealt with as an abuse under Article 82 if it is used to protect or strengthen the dominant position, is the Commission’s policy in sectors where activities are
protected by legal monopoly. In these cases the dominant position is based on exclusive or
Such was for instance the situation in the AKZO case, where AKZO was considered to predate in the flour additives market in order to protect its dominance in the organic peroxides market (Case 62/86, AKZO, cited in footnote 33).