Predatory Pricing—move to an effects-based approach
Predatory Pricing—move to an effects-based approach

The following Competition guidance note provides comprehensive and up to date legal information covering:

  • Predatory Pricing—move to an effects-based approach
  • Towards an ‘effects-based’ approach
  • Post Danmark

Predatory pricing is a well recognised ‘exclusionary’ abuse under Article 102 TFEU—conduct engaged in by a dominant undertaking which specifically targets competitors and aims to eliminate or weaken their position as viable rivals (either by forcing them out of the market or by deterring market entry). In particular, this is achieved by a dominant firm forgoing profits in the short term in order to drive out or discourage competitors. Once the dominant firm has successfully excluded existing competitors or potential entrants, the dominant undertaking will have strengthened its position and be free, in theory, to charge supra-competitive prices and/or degrade its downstream offerings without consequence.

While predation is conceptually easy to recognise and appreciate, distinguishing between a predatory price and legitimate price competition under Article 102 TFEU is by no means straight-forward as:

  1. even dominant firms may lower their prices for totally legitimate and consumer beneficial reasons

  2. even where concerns turn out to be genuine, initial indications of predation can often appear pro-competitive—ie low prices are, intuitively, a good thing and indeed a fundamental objective of EU competition law is to encourage price competition (including price competition from dominant companies), and

  3. evidence of an anti-competitive intent does not often exist—evidence that an authority can point to or use to help make an allegation stick (and even where this is available, it is