Excessive Pricing and Competition Law Enforcement by Yannis Katsoulacos & Frédéric Jenny

Author:Yannis Katsoulacos & Frédéric Jenny
Language: eng
Format: epub
ISBN: 9783319928319
Publisher: Springer International Publishing

Unfortunately, this standard is rather vague and fails to clarify when exactly the IAA will consider a price-cost margin acceptable and when it will consider it to be excessive. This is especially so, if we bear in mind that when it comes to the safe harbor test, the guidelines are highly specific and state that a price-cost margin of no more than 20% is within the safe harbor. The guidelines are also specific when it comes to the comparison of the product’s price with its price in other markets, different time periods, and the price of competing products:

When there is a difference between the price charged by the monopolist in various markets, which is only the result of differences on the demand side, and the gap does not exceed 20 percent, after neutralizing the differences in variable costs, the Authority will not view this gap in prices as an indication of excessive pricing. This rule will enable monopolists to charge different prices on the basis of the characteristics of the demand for the good and to cover its fixed costs in an efficient manner.

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