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Is A Margin Squeeze An Antitrust Or A Regulatory Violation?

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  • Alberto Heimler

Abstract

Margin squeezes can be evaluated under a predation or a refusal-to-deal standard. Both Carlton and Sidak argue in favor of using the predation standard. However, should the conditions for an abusive refusal to deal be satisfied, then margin squeezes should be prohibited even when prices are not predatory. It is sufficient that they are exclusionary. According to the U.S. Supreme Court decision in linkLine, when a vertically integrated company is not subject to an obligation to supply, there cannot be a margin-squeeze case. However, the Court does not establish how to define a margin squeeze when there is an antitrust duty to supply. In those circumstances, the EC approach in the Deutsche Telekom case helps to identify a standard. In any event, remedies in margin-squeeze cases should make sure that incentives to eliminate double-marginalization are maintained.

Suggested Citation

  • Alberto Heimler, 2010. "Is A Margin Squeeze An Antitrust Or A Regulatory Violation?," Journal of Competition Law and Economics, Oxford University Press, vol. 6(4), pages 879-890.
    • Handle: RePEc:oup:jcomle:v:6:y:2010:i:4:p:879-890.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhq020
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    Citations

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    Cited by:

    1. Krämer, Jan & Schnurr, Daniel, 2018. "Margin squeeze regulation and infrastructure competition," Information Economics and Policy, Elsevier, vol. 45(C), pages 30-46.
    2. Gaudin, Germain & Saavedra, Claudia, 2014. "Ex ante margin squeeze tests in the telecommunications industry: What is a reasonably efficient operator?," Telecommunications Policy, Elsevier, vol. 38(2), pages 157-172.

    More about this item

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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