Predatory Pricing after linkLine and Wanadoo
31 May 2009
By Dr. Gregory K. Leonard and Adrian Emch of Sidley Austin
Historically, the US Supreme Court has required plaintiffs in predatory pricing cases to meet stringent conditions to prevail on their claims. The Supreme Court's point of view appears to have been motivated by a concern with the chilling effects on price competition that "false positives" in predatory pricing cases would have, combined with a strong skepticism, from both a theoretical and practical point of view, about whether predatory pricing is a rational business strategy. On the other hand, the traditional EU case law on predatory pricing has set a substantially lower bar to prevail on a predatory pricing claim than has the US Supreme Court. In the recent decision in Wanadoo, the European Court of Justice largely opted to continue along the lines of the previous case law. In this article from Global Competition Policy, NERA Senior Vice President Dr. Gregory K. Leonard and Adrian Emch of Sidley Austin examine the Wanadoo case and analyze whether general inferences can be drawn from this case and other recent developments in the area of predatory pricing. The authors conclude that, while the enforcement agencies in the EU and US appear to be converging toward a common approach that is effects-based, the substantial divergence between the courts in the two respective jurisdictions remains. Thus, as a practical matter, companies may have to continue to take very different approaches to pricing in the EU and US if they seek to avoid incurring liability under allegations of predatory pricing.
