The Areeda–Turner Test for Exclusionary Pricing: A Critical Journal

Abstract

Few scholarly articles have had the impact enjoyed by Areeda and Turner’s (Harv Law Rev 88(4):697–699, 1975) article on predatory pricing, which is elaborated in the Antitrust Law (Areeda and Hovenkamp in Antitrust law. Aspen Publishers, New York, 2015) treatise. Proof of predatory pricing under the Areeda–Turner Test requires two things: a market structure plausibly indicating the possibility of “recoupment,” and prices below a relevant measure of cost, which was presumptively average variable cost (AVC). That so many courts embraced the Areeda–Turner Test might seem surprising, given that contemporary assessments from economists were quite negative: They faulted the AVC test itself, the test’s inadequate consideration of fixed costs, and the exclusive focus on short-run (nonsustainable) strategies.