The concept of recoupment in predatory pricing : should the European Court of Justice adopt it as a requirement?

Abstract

The concept of predatory pricing is a pricing strategy used in pursuance of increased competitive advantage, achieved as a result of unsustainably low set price level. The predation stage sets prices at below cost levels, followed by the recoupment stage in which the firm, if successful, uses their monopolistic power to raise the price level and recover losses incurred during the predation stage. In the United States predatory pricing is recognized as a violation of a number of legal acts which include the Sherman Act and the Clayton Antitrust Act. Contrary to the approach taken in EU competition law, US antitrust law utilizes the concept of recoupment as an integral part in detecting questionable predatory pricing cases. Over the years, the US Supreme Court has, in a number of cases, confirmed recoupment as a requirement for predatory pricing in a number of cases. Under Article 102 of the Treaty on the Functioning of the European Union (“TFEU”), predatory pricing is considered an abuse of a dominant position, however, according to European Union (“EU”) competition law, recoupment is not considered a requisite. This term paper will tackle the concept of predatory pricing, specifically the notion of recoupment and will analyse the two jurisdictions to formulate a conclusion on the proposed research question. Both legal positions have their own interpretations and justifications for predatory pricing, confirmed through case law. Different opinions and literature offer an analysis regarding whether or not the EU should follow the footsteps of the United States, instilling recoupment as a requirement to prove predatory pricing, or continue its own path with regards to the requisites for predatory pricing.