sector specific regulation telecom

Margin Squeeze: Where Competition Law and Sector Regulation Compete

This paper starts with an overview of the different ways in which an undertaking can abuse its dominant position through pricing and then zooms in on margin squeeze. We start by defining margin squeeze, and then take a thorough look at its assessment framework. It is examined why some undertakings appear to be more susceptible to this abuse than others. The paper subsequently investigates the place of margin squeeze in the European legislative framework, considering which kind of antitrust abuse margin squeeze could be and how the ECJ currently conceives it. Finally, we explore the interaction of the competition law approach with the regulatory approach to margin squeeze.
Reference :

Friso Bostoen, 'Margin Squeeze: Where Competition Law and Sector Regulation Compete' (2017) 53 Jura Falconis 3.

Predatory Bundling and the Exclusionary Standard

Recent decisions - all relying on a stylized example first provided by the Ortho court - hold that a multi-product seller that uses a bundled discount in a way that excludes an equally or more efficient competitor engages in predatory bundling. According to these decisions, a bundle can be considered predatory even when the price of the bundle exceeds its cost. The article offers evidence demonstrating that the Ortho's stylized example and its monopoly leveraging theory are erroneous. The article further shows that even when a bundle's price excludes more efficient competitors and even when a component in the bundle is priced below cost, and thus sold at a loss, it may still have welfare enhancing effects. The result is that bundles that fail the discount allocation test and even bundles that fail the Brooke Group test may still be desirable. The article provides a number of examples from the airline and telecommunication industries to illustrate that both exclusionary and below cost bundles can be not only welfare enhancing, but also very common. Keywords: Predatory Bundling, Bundled Discount, Package Discount, Predatory Pricing, Exclusionary Behavior, Antitrust, Industrial Organization JEL Classification: K21, L12, L41, L42
Reference :

67 Wash & Lee L. Rev. 1231 (2010) (Lead Article)

Margin Squeeze in the Telecommunications Sector: A More Economics-based Approach

A margin squeeze occurs when a vertically integrated company, dominant in the supply of an indispensable upstream input, pursues a pricing policy which prevents downstream competitors from trading profitably, thereby leading to their ultimate exclusion from the downstream market. In the telecommunications sector, where large ex-state firms still enjoy considerable market power, margin squeeze has long been frequent. Interestingly, the United States and the European Union have tackled this problem in considerably different ways. Dismayed by the idea of an antitrust court intervening in a company’s price setting, the US Supreme Court held that margin squeeze was exclusively the domain of regulation. Conversely, the Court of Justice of the European Union has endorsed a modern economics-based approach enabling competition authorities to engage in a coherent and verifiable antitrust assessment of the price differentials that potentially amount to a margin squeeze. This paper will argue that (1) the economics-based approach is the right solution in the European context, but that (2) this approach will only lead to convincing results if it includes a rigorous and transparent analysis of the effects on competition and consumers.
Reference :

World Competition 35(2)/2012, S. 205–232 (Kluwer Law International BV, The Netherlands)