Friday, April 24, 2009
Posted by D. Daniel Sokol
Paolo Palmigiano (British Telecommunications) discusses Margin Squeeze in the United States and in Europe: Stand Alone Abuse or Refusal to Deal?
ABSTRACT: A striking contrast between the two [United States and Europe] becomes obvious in relation to the so-called abuse of “margin squeeze.” Recent court cases dealing with very similar situations, show the differences of approach. In the United States, the Supreme Court decision in linkLine in 2009 considers that there is no such thing as a stand alone abuse called “price squeeze” but rather the abuse can be either a refusal to deal at the wholesale level or predation at the retail level. In Europe the Court of First Instance (“CFI”), in its recent Deutsche Telekom case in April 2008, seems to confirm the Commission’s view that margin squeeze can well be considered a stand-alone antitrust offence. Another margin squeeze case, Telefonica is currently pending in front of the CFI and it might add further clarification.
These cases raise some very interesting questions, in particular on the nature of the abuse and on the correct approach to margin squeeze. My view, expressed in this short article, is that the differences have their origin in different policy objectives and, as such, they may both be appropriate if seen in their particular context.