Excessive Pricing and Price Squeeze under EU Law

Article 82 of the EC Treaty provides for a condemnation of excessive prices. However, the general concept of ‘excessive price’ may cover two very different realities. An excessive price may be an exploitative abuse, i.e. direct exploitation of market power. In this case, the dominant firm charges a high price to its customers (being end-users or undertakings with which the dominant firm does not compete). Alternatively, an excessive price may be an exclusionary abuse, aiming to strengthen or maintain the market power of the dominant firm by putting rivals at disadvantage. In this case, the dominant firm in one market, say upstream, sets the price of the input so high that the margin between wholesale and retail prices is insufficient for an efficient firm to profitably operate in the downstream market. These two types of excessive prices are based on different legal and economic principles, hence are analysed separately in this paper. This paper aims to study the current case law of both types of excessive prices, and on the basis of economic theories and legal reasoning, propose policy recommendations for the antitrust authorities and the Courts.