Difference between revisions of "Predatory Pricing Report"

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| §31(1)(5) of the Federal Act of 19 October 1988 on Cartels and other Restrictive Trade Practices prohibits the sale of goods below cost price when it cannot be justified on material grounds.
 
| §31(1)(5) of the Federal Act of 19 October 1988 on Cartels and other Restrictive Trade Practices prohibits the sale of goods below cost price when it cannot be justified on material grounds.
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| '''Bangladesh has no competition law in force.'''
  
 
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Revision as of 23:12, 23 September 2007

Country Predatory Pricing Prohibition Comment
Albania 0
Algeria 0
Angola 0
Armenia 0
Austria 1 §31(1)(5) of the Federal Act of 19 October 1988 on Cartels and other Restrictive Trade Practices prohibits the sale of goods below cost price when it cannot be justified on material grounds.
Bangladesh 0 Bangladesh has no competition law in force.
Barbados 1 Article 16(3)(d) of the Fair Competition Act (2002) prohibits enterprise actions which "directly or indirectly imposes unfair purchase or selling prices that are excessive, unreasonable, discriminatory or predatory ..."Cite error: Closing </ref> missing for <ref> tag[1]
Belgium 1 Articles 40-41 of The Commercial Practices Act of July 14, 1991 forbid reselling products at a loss.[2]
Bolivia 0
Bosnia-Herzegovina 1 Act on Competition of 2005 is supplemented by the Regulation on Definition of a Dominant Posision of 2006. Article 9(c) of this by-law prohibits "fixing a price of the product or service below the production costs with the view to eliminate the competitors."
Bulgaria 0
Burkina Faso 0
Canada 1 Section 50(1)(c) of Competition Act of August 23, 2000 prohibits engaging in "a policy of selling products at prices unreasonably low, having the effect or tendency of substantially lessening competition or eliminating a competitor."
Cambodia 0
Cameroon 0
Chile 1 The Antitrust Commission has fined firms for engaging in predatory pricing.[3]
China 1 Law of the People’s Republic of China for Countering Unfair Competition of September 2, 1993 states that "an operator shall not sell its or his goods at a price that is below the cost for the purpose of excluding its or his competitors."
Colombia 0
Cote d'Ivoire 0 Article 24 of Law No. 91-999 of December 27, 1991 on Competition prohibits loss leader selling, but not predatory pricing. [4]
Croatia 0 No evidence was found of a predatory pricing provision in the Competition Act of July 15, 2003. The Croatian Law on the Protection of Market Competition of July 14, 1995 did prohibit predatory pricing, however. [5]


Cyprus 0 No prohibition on predatory pricing found.
Czech Republic 1 §11(1)(e) of the Consolidated Act on the Protection of Competition prohibits by a Dominant firm "consistent offer and sale of goods for unfairly low prices, which results or may result in distortion of competition." [6]
Denmark 1 The Danish Monopolies and Restrictive Practices Supervision Act of 1955 forbids predatory pricing.[7]
Estonia 0 No prohibition on predatory pricing found.
EU Generally[8] 1 Article 82 (formerly Article 86) of the EC Treaty prohibits predatory pricing. The Commission began prosecuting predatory pricing in 1985, in the AKZO case.[9] This case led to the establishment of a two-pronged test for predatory pricing. A firm was guilty of the offense if it either:
  1. Sets the price at below average variable cost. This amounts to a per se assumption of abusive behavior.
  2. Sets the price at below average total cost, but above average variable cost. This is also assumed to be predatory, but requires a specific plan by the firm to eliminate competitors.
Finland 1 Article 7(4) of the Act on Competition Restrictions (480/1992) makes, "a pricing practice which is unreasonable or obviously aimed at restricting competition" an abuse of a dominant position.[10]
France 1 French Competition Act (Ordinance no. 86-1243 of December 1, 1986 (amended July 9, 1999)

"Article 10-1: Price offers or price practices with respect to consumer sales prices that are abusively low in relation to the costs of production, transformation, and marketing are prohibited, since these offers or practices have as their purpose, or may have as their effect, to eliminate from a market or to prevent access to a market by an enterprise or one of its products."

(Note: This Article has been used only rarely by enforcement agencies.) [11]

Germany 1 Section 20(4) of Act Against Restraints of Competition states that dominant firms cannot use their market power to hinder competitors in an "unfair manner," which occurs when a firm "offers goods or services not merely occasionally below its cost price . . . ."[12]
Greece 1 Courts have interpreted predatory pricing as an abuse of a dominant position. [13]
Guatemala 1 Article 341 of the Criminal Code, Decree No. 17-73, prohibits "the sale of goods of any kind at a price below their cost, in order to prevent free competition in the domestic market."[14]
Hong Kong 1 Article 7(a) of The Competition Policy Advisory Group Statement on Competition Policy, May 1998 lists predatory pricing as an example of an abuse of a dominant position.
Hungary 1 Article 21(h) of Act LVII of 1996 on the Prohibition of Unfair and Restrictive Market Practices as amended, effective November 1, 2005 makes it prohibited to "set extremely low prices which are not based on greater efficiency in comparison with that of competitors and which are likely to drive out competitors from the relevant market or to hinder their market entry[.]"
Ireland 0 The enforcement agency has investigated an alleged abuse of predatory pricing, but found it did not constitute an abuse and was instead, "intense competition."[15]
Italy 0 Italy has no prohibition on predatory pricing. However, "it is foreseeable that the same principles set forth in EC law to prohibit predatory price cutting by a dominant undertaking may be applied."[16]
Latvia 0 Latvia has no explicit prohibition on predatory pricing. However, "[p]redatory pricing by definition as a practice aimed at hindrance, restriction or distortion of competition would qualify as an abuse of dominant position.[17]
Lithuania 1 Lithuania's competition authority includes predatory pricing in its definition of an abuse of a dominant position. This definition is found in an intra-agency bylaw,[18] a supplement to their more general competition legislation.[19]
Luxembourg 1 Below cost selling of goods and services is prohibited under the Act on Commercial Practices, Unfair Competition and Comparative Advertising (July 2002).[20]
Malawi 1 Article 32(2)(a) of the Malawi Competition and Fair Trading Bill of 1998 prohibits predatory pricing.
Mali 1 Article 17 of Ordonnance N°92-021/P-CTSP Instituant la Liberte des Prix et de la Concurrence, dated April 13, 1992 prohibits predatory pricing.
Malta 1 Article 9(2)(b) of Chapter 379 Competition Act of Malta forbids "charg[ing] prices which are below the average variable cost price of a product in order to drive rival competitors out of the market[.]"
Mauritius 1 Article 11(2)(a) of The Competition Bill N° VI of 2003 prohibits below-cost selling by a dominant firm.
Netherlands 0 Dutch law does not forbid resale at a loss, either. [21]
Poland 1 Article 8(2)(1) of The Act on Protection of Competition and Consumers prohibits "direct or indirect imposition of unfair prices, including predatory prices or prices glaringly low."[22]
Portugal 1 Decree-Law 370/93 of October 29, 1993 (as amended by Decree-Law 140/98) forbids selling goods at a price below the actual price of purchase (plus taxes and transportation costs).[23]
Romania 1 Article 6(f) of The Parliament of Romania Competition Law of 1996 explicitly prohibits predatory pricing.
Saudi Arabia 1 Article 5(1) of the Competition Law of 2004 prohibits "selling a commodity or service at a price below cost, with the intention of forcing competitors out of the market."
Slovak Republic 1 The Slovak Republic forbids abusive acts by a dominant firm seeking to exclude competition.[24] The Antimonopoly Office of the Slovak Republic (their enforcement agency) has used this provision to prosecute temporary predatory pricing of fuels,[25] but the decision was never given effect, as the defendant discontinued its pricing scheme.
Slovenia 0 No predatory pricing provision found. Office for Protection of Competition received one complaint of predatory pricing against Produkcija Plus d.o.o. - RTV Slovenia d.o.o. on 2/20/01. However, the complaint was dismissed (Office did not rule on the merits).[26]
Spain 1 There are two cases where the courts have issued fines for predatory pricing:

1. General Electric Espana[20] - GE's local affiliate was fined Pta 15 million (~90,000 euros)[27]

2. Arbora/Ausonia[28]

Predatory pricing, presumably, is covered by common law because there is no mention of it in the Spanish competition laws.

Note: More recently, Telefónica, a Spanish firm, was fined by £102.6m (€152m) by the EU competition agency.[29]

Sweden 0 No predatory pricing provision found.
Switzerland 1 Article 7(2) of the Federal Act on Cartels and Other Restraints of Competition of October 6, 1995 prohibits "the under-cutting of prices or other conditions directed against a specific competitor."


United Kingdom 1 Chapter II of the Fair Trading Act of 1973 prohibits predatory pricing. The OFT has published the following guidelines to assess whether pricing schemes are predatory:[30]
Price below average variable cost Predation can be assumed
Price below average variable cost but below average total cost Evidence on costs may indicate predation but evidence required of intention to eliminate a competitor before predation could be found
Price above average total costs Evidence on costs does not indicate predation

The Competition Act of 1980 is also at the disposal of the Director General of the Office of Free Trade (OFT) for the prohibition of predatory pricing.

United States 0 Though predatory pricing is formally prohibited, the law in the United States is riddled with exceptions that effectively eliminate the predatory pricing prohibition. The "recoupment test" is a notable example.[31]
Uruguay 1 Article 3(2)(c) of the Law of the Defense of the Competition prohibits predatory pricing.[32]
Vietnam 1 Secondary source indicates Vietnam prohibits predatory pricing.[33]
Zimbabwe 1 Amendment 14 of 2001 to the The Competition Act of 1996 prohibits "[s]elling at very low prices or at below production costs as a deliberate strategy of driving competitors off the market."

References

  1. World Bank, Competition Law Database, http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTLAWJUSTICE/EXTCOMPLEGALDB/0,,contentMDK:21314799~menuPK:2137510~pagePK:2137398~piPK:64581526~theSitePK:2137348,00.html
  2. Competition Law in the EU (p. I-518)
  3. Organization of Economic Cooperation and Development, Competition Law and Policy in Chile, http://www.oecd.org/dataoecd/51/53/24955980.pdf and Global Competition Review website, http://globalcompetitionreview.com/ara/chile.cfm
  4. Report on United Nations Conference on Trade and development of 24 November 1997, available at, http://www.unctad.org/en/docs/c2emd11.pdf
  5. USAID Croatia Commercial Law Assessment Report, March 2002, http://www.bizlawreform.com/country_assess/Croatia%20Assessment.pdf.
  6. http://www.unctad.org/en/docs/c2clp50_en.pdf
  7. Organization for Economic Cooperation and Development report, http://www.oecd.org/dataoecd/7/54/2375661.pdf (p. 33)
  8. Information for this section has been gleaned from The EC law of Competition (eds. Jonathan Faull and Ali Nikpay)
  9. AKZO [1985] OJ L374/1.
  10. Competition Law in the EU (p. II-363-64)
  11. Competition Law in the EU (p. I-190)
  12. http://www.globalcompetitionforum.org/regions/europe/Germany/Act%20Against%20Restrainst%20of%20Competition.pdf
  13. Competition Law in the EU, p. 605 (citing Competition Commission Decisions 232/95 P.Lambropoulos&Co. Priv. Partn.; 264/95 Protoporia Publications Litd.
  14. FTAA report, Inventory of Domestic Laws and Regulations relating to Competition Policy in the Western Hemisphere, March 22, 2002, http://www.ftaa-alca.org/ngroups/NGCP/Publications/domlaws_e.asp
  15. http://www.oecd.org/dataoecd/63/50/37028481.pdf, 12
  16. Competition Law in the EU, Vol. 1, 384.
  17. Dace Silava-Tomsone, Getting the Deal Through – Dominance 2006, http://www.lt-v.lv/pdf/Latvia_dace.pdf
  18. http://www.konkuren.lt/english/antitrust/legislation_resoliution_52.htm
  19. http://www.konkuren.lt/english/antitrust/legislation.htm
  20. http://www.entemp.ie/publications/commerce/2005/groceriesorder/chapter9.pdf
  21. Competition Law in the EU, Vol. 1, 445.
  22. http://www.konsument.gov.pl/files/ccp_act.pdf
  23. Competition Law in the EU (p. I-326)
  24. 136/2001 Coll. ACT of 27 February 2001 on Protection of Competition and on Amendments and Supplements to Act of the Slovak National Council No. 347/1990 Coll. (Article 8(2)(e))
  25. Decision No. 2001/DZ/P/2/283 issued by Chairman of the Office on September 26, 2001 (http://www.antimon.gov.sk/eng/article.aspx?c=395&a=2139
  26. http://www.uvk.gov.si/fileadmin/uvk.gov.si/pageuploads/Enforcement_Record_2001.pdf
  27. TDC Dec. 295/91, or December 30, 1991
  28. TDC Dec. 291/90, January 7, 1992
  29. http://www.computerworlduk.com/management/government-law/legislation/news/index.cfm?newsid=3865
  30. Competition Law in the EU (p. II-63)
  31. See Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993)
  32. See Law of the Defense of the Competition, http://www.sice.oas.org/compol/natleg/Uruguay/dec1503.asp#DECRETO
  33. http://www.freshfields.com/practice/comptrade/publications/pdf/10388.pdf