towards the telecommunications sector stated that “[i]n order to trade a service or group of services profitably, an operator must adopt a pricing strategy whereby its total additional costs in providing that service or group of services are covered by the additional revenues earned as a result of the provision of that service or group of services. Where a dominant operator sets a price for a particular product or service which is below its average total costs of providing that service, the operator should justify this price in commercial terms: a dominant operator which would benefit from such a pricing policy only if one or more of its competitors was weakened would be committing an abuse.”77
6.2.4 PRICING ABOVE AVERAGE TOTAL COST
Seldom Predatory – excludes only less efficient competitors 127. Price cuts where the resulting price remains above average total costs are in general not considered to be predatory because such pricing can usually only exclude less efficient competitors.78 Companies that are equally or more efficient will, if challenged by the dominant company, be able to follow such price cuts and the ensuing price competition would normally be characterised as competition on the merits. Where it thus can be established that the price, also after the price cuts, remains above average total cost the pricing will not be assessed as predatory, unless exceptional circumstances indicate that such price cuts have led or will lead to substantial harm to consumers.
Collective Domco’s strategy to exclude or discipline 128. An example of such an exceptional situation is where companies in a collective dominant situation apply a clear strategy to collectively exclude or discipline a competitor by selectively undercutting the competitor and thereby putting pressure on its margins, while
collectively sharing the loss of revenues.79 In the case Compagnie Maritime Belge the Court prohibited such a ‘collective exclusion or marginalisation’ where a liner conference in a dominant position selectively cut its prices in order deliberately to match those of a competitor,
77 78 79
Access Notice, cited in footnote 2, paragraph 112.
This assessment may be different in case the price cuts are combined with other exclusionary practices. Such a case can in general be looked at both under Article 81 and 82.