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Excessive pricing enforcement action on the rise: a new enforcement trend?

Bill Batchelor, Sophia Real, International Law Office, August 2017

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Although enshrined in the EU treaties since inception, ’unfair pricing’ as an abuse of market power was a little-used tool in enforcers’ armoury. Antitrust authorities are not set up to be price regulators presiding over precisely when a high price becomes a "price which bears no relationship to economic value". Sound economic principles dictate that one company’s excessive price is another’s incentive to enter the market and scoop up that margin. So, excessive pricing should be self policing. The few cases that were brought tended to be based on exceptional circumstances, and many failed on the facts.

A May 2017 EU probe has brought the abuse back to the enforcement agenda. However, this is unlikely to denote a new trend; it is too early to say that this is the new normal. The European Commission has been cautious in its statements on excessive pricing – EU Competition Commissioner Vestager underlined the need for caution: "when we do take action against excessive prices, we need to make sure we’re not taking away the rewards that encourage businesses to innovate." European Court of Justice (ECJ) Advocate General Wahl also confirmed that the bar for regulator intervention in relation to alleged excessive pricing is high.

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