X hits on this document

PDF document

EUROPEAN COMMISSION DG Competition - page 48 / 113

344 views

0 shares

0 downloads

0 comments

48 / 113

possibility to recoup the losses in the future through (a return to) high prices and other elements that could be used to strengthen its case. In such a case, the dominant company may wish to take up these elements and other circumstances of the case to show that it can justify its pricing (see below paragraph 130 seq.). The dominant company may also wish to show that, although the price is below the relevant cost benchmark, for clear-cut reasons the dominant company’s pricing behaviour should not be considered predatory pricing because there is no possibility that it could have an exclusionary effect on rivals. This may for instance be the case where the low price is part of a one-off temporary promotion campaign to introduce a new product and where the duration and extent of the campaign are such that exclusionary effects are excluded.

6.2.2 PRICING ABOVE AVERAGE AVOIDABLE COST BUT BELOW AVERAGE TOTAL COST69

No presumption if price above AAC but below ATC 111. Where in general a dominant company may have no reason to price below average avoidable cost as it does not maximise profits in the short term, it may have some more reason to price above average avoidable cost but below average total cost. For instance in case of a serious fall in demand the short run profit maximising price may temporarily fall below average total cost. Pricing below average total cost will not entail losses by the mere production of that (particular part of its) output. While the sales do not cover total costs, they still allow coverage

of all variable costs and a part of the fixed costs. It is for this reason that above average avoidable cost predation can not be presumed. Extra elements of proof are required to substantiate a prohibition decision. This has also been expressed by the ECJ in the AKZO case: “Moreover, prices below average total costs … but above average variable costs, must be regarded as abusive if they are determined as part of a plan for eliminating a competitor. Such prices can drive from the market undertakings which are perhaps as efficient as the dominant undertaking but which, because of their smaller financial resources, are incapable of withstanding the competition waged against them”.70

Must show predatory intent or strategy

69 70

The assessment described below will also be followed in case cost levels can not be ascertained. Case 62/86 AKZO cited in footnote 33, paragraph 72.

Document info
Document views344
Page views344
Page last viewedSat Dec 10 20:51:13 UTC 2016
Pages113
Paragraphs1178
Words41343

Comments