![]() ![]() The Commission is not required to demonstrate that competitors have exited the market in order to prove anti-competitive foreclosure. The Commission acknowledges that, normally, only pricing below long-run average incremental cost (“LRAIC”) is capable of foreclosing as efficient competitors from the market. In terms of anti-competitive foreclosure, the Commission will apply the equally efficient competitor analysis to determine whether the conduct is capable of harming consumers. ![]() Accordingly, predatory intent should be proven to establish the existence of predatory conduct if the dominant undertaking sets prices higher than AAC. However, if the Commission establishes that an alleged conduct led to net revenues lower than could have been expected from a reasonable alternative in the short term, or in other words, that the dominant undertaking incurred a loss that could have avoided, this may also indicate predatory strategy. Average avoidable cost (“AAC”) is taken into account as a starting point in determining whether sacrifice occurred and if a dominant undertaking charges a price below AAC, this is viewed in most cases as a clear indication of sacrifice. In terms of the sacrifice element, European Commission (“Commission”) will assess whether by charging a lower price for its output or by expanding its output over the relevant time period, the dominant undertaking incurred or is incurring losses that could have been avoided. The Guidance on the Commission’s enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings (“Commission’s Guidelines”) provides two elements for predatory pricing: (i) sacrifice and (ii) anti-competitive foreclosure. In general, it is considered unlikely that predatory conduct will create efficiencies.įrom EU perspective, predatory pricing falls within the scope of Article 102 of the Treaty on the Functioning of the European Union (“TFEU”). If sufficient reliable data are available, the equally efficient competitor analysis could also be applied to determine whether the conduct is capable of harming consumers. documents that show a predatory strategy), if any. For such analysis, various cost parameters (in line with the competitive landscape/characteristics of the relevant market) could be taken into account in conjunction with direct evidence (e.g. whether the conduct entails a deliberate sacrifice). In general, the starting point of the analysis is to assess whether the dominant undertaking incurred or is incurring avoidable losses for the relevant time period (i.e. ![]()
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