4 Abuse of Dominance

Subject(s):

Exclusionary effect — Bundled pricing — Excessive pricing — Predatory pricing — Access to essential facilities — Game theory

The chapter deals with the economics of abuse of dominance. It discusses form-based and effects-based approaches to unilateral conduct, and explains the economic criteria that can be used, including the degree of foreclosure, the as-efficient competitor test, and cost benchmarks. The chapter then addresses specific types of exclusionary abuse, including predatory pricing, price discrimination, rebates, margin squeeze, bundling and tying, and refusal to supply and essential facilities. As each of these practices may reflect normal competition and have beneficial efficiency and welfare effects, this chapter sets out how economic tests can be applied to identify instances where the practices produce significant anti-competitive effects. While interventions under the abuse of dominance rules tend to focus on exclusionary behaviour, competition laws also deals with exploitative conduct. This chapter sets out the economic principles of excessive pricing as a specific form of exploitative abuse.