Abuse of Dominance by Firms Charging Excessive or Unfair Prices: An Assessment

Abstract

This chapter surveys a controversial but topical aspect of competition law: i.e. the prohibition of excessive or unfair prices. In the first part, we examine the diversity of competition laws across the world when it comes to exploitative abuses of dominance and look at the case law on this issue in a number of jurisdictions. We review and discuss the validity of the main reasons which have been put forward in the academic literature in favour of or against the use of competition law to fight abusively high prices. We then analyse in detail the EU Commission and court jurisprudence as well as national jurisprudences in some member states to get a view of how the EU courts and competition authorities define the terms “excessive” and “unfair”, what tests are used or recommended by courts to make such an assessment and how these tests have been implemented. In the third part, we present a methodological criticism of the legal tests which have been proposed for establishing the “excessiveness” or the “unfairness” of prices arguing that they are neither justified economically nor likely to provide dominant firms with the requisite level of legal predictability. We then turn to the economic literature to examine the main circumstances in which competition authorities should, according to the economists, refrain from using competition law to fight high prices. Finally, we examine a number of recent cases in the EU to assess whether the cases which have been dealt with by competition authorities conform to the economist’s recommendations. We conclude that, except in exceptional circumstances, competition authorities should use their enforcement or advocacy powers to eliminate the obstacles to competition which lead to supra-competitive prices rather than using competition law to make high prices illegal.