The conventional view of predation is that of a “one-market abuse,” where profit sacrifice and recoupment necessarily take place on the same market. We argue that economic theory allows for a wider interpretation of predation as an exclusionary strategy, where the predatory attack may help a dominant undertaking to leverage its market power into other markets. Economic theory has long acknowledged this possibility, but case law on predation as a leveraging abuse is still scant, pointing to possible under-enforcement. We discuss the two examples we are aware of – Napp (UK) and Qualcomm (EU) – and identify conditions for predation to be a credible leveraging Theory of Harm.
By Pietro Crocioni & Liliane Giardino-Karlinger1
Predation as an exclusionary strategy is apparently simple and old, but still controversial. Simplicity comes from the temporal linearity of the exclusionary story. The predator engages in an initial phase of aggressive (below-cost) pricing to force its rivals to exit the market. In a later phase, after exit occurred, the predator can recoup its losses by charging high prices. There is a long-standing controversy among practitioners and economists on how likely and feasible predation is.
This article starts by briefly describing the recent historical divergence between Europe and the U.S. on the practical approach adopted towards predation cases. The main proposition we put forward is that there is another looming feat...