Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Wednesday, February 20, 2013

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

Posted by D. Daniel Sokol

Ramin Silvan Gohari, University of Fribourg, Department of Commercial and Business Law has posted Margin Squeeze in the Telecommunications Sector: A More Economics-Based Approach.

ABSTRACT: 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.

http://lawprofessors.typepad.com/antitrustprof_blog/2013/02/margin-squeeze-in-the-telecommunications-sector-a-more-economics-based-approach.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef017ee78b75d8970d

Listed below are links to weblogs that reference Margin Squeeze in the Telecommunications Sector: A More Economics-Based Approach:

Comments

Post a comment