Thursday, June 24, 2021
While the content of margin squeeze has been largely provided by the case-law of European courts detailing how the foreclosure of competitors occurs as a direct result of its usage, some key conceptual issues have remained unresolved. These issues are not confined to how to identify abusive margin squeezes, but if it is prudent for a competition authority to pursue these abuses in enforcement action. The many embedded choices in an investigation by a competition authority (e.g. on costs and revenue standards) inflate the risk of mistakes and blur the lines related to other forms of abuse. This perhaps runs the risk of “regulatory shopping”, where other forms of abuse are masked as margin squeezes, lowering the threshold for market intervention. Restraint in pursuing margin squeeze cases can therefore often be the prudent position. In this paper, we review the case law and make some practical observations on enforcement action.