This paper – which you can find here – provides an overview of margin squeeze as an antitrust infringement – i.e. the situation where a dominant undertaking charges “a price for the product on the upstream market which, compared to the price it charges on the downstream market, does not allow even an equally efficient competitor to trade profitably in the downstream market on a lasting basis”. The paper also looks at the relationship between margin squeeze and sectoral regulation.
The article starts with an overview of the different ways an undertaking can abuse its dominant position through pricing (chapter 2). It then defines margin squeeze (chapter 3), before looking at how margin squeeze is assessed in a number of EU cases (chapter 4) and into the role of the as-efficient-competitor test in identifying margin squeeze situations (chapter 5). It then discusses why some undertakings appear to be more susceptible to commit this abuse than others, and lists the traits such companies may have in common (chapter 6). The last part of this paper investigates the place of margin squeeze in the European legislative framework. It first considers what type of practices can amount to margin squeeze and how such practices relate to other prohibited practices such as price discrimination, predatory pricing and constructive refusals to supply. It also reviews the differences in treatment of margin squeeze in the EU and the US, and into the reasons for such differences (chapter 7).
Lastly, it focuses on the interaction of competition law and sectoral regulation in this sphere (chapter 8). This last chapter is the heart of the piece, and it starts from the observation that “Every margin squeeze case [in the EU] from Deutsche Telekom onwards originated from a regulated sector”. To understand why this is so, the author first reviews (at a fairly high level) the relationship between competition law and sectoral regulation. It also looks at how competition law and regulation interact in practice under EU law, before trying to look how this interaction affects margin squeeze cases.
The paper is mainly descriptive, and it covers most margin squeeze cases in a fair amount of detail. While also looking at the (lack of) treatment of margin squeeze in the US, it tries to explain why margin squeeze cases are closely associate with the liberalisation of certain economic sectors (in chapter 6, the author identifies telecoms, water sector, railways, postal services, pharmaceuticals, pay television, gasoline and funeral services), often under EU direction.