The Antitrust Review of the Americas 2009

Pricing in the 21st Century: A Comparative Perspective

Kimberly N Shaw and Todd Miller

01 January 2009

Pricing remains one facet of antitrust law that lends itself to great variation of treatment around the world. The basic problem is that many of the legal approaches to unilateral pricing issues developed before there was a reasonably clear understanding of the true economic effects of any particular practice. This problem is particularly acute with regard to resale price maintenance, but also appears in other aspects of pricing, including price discrimination and predatory pricing. Hence, there can be great discrepancy between approaches to pricing problems around the world. In the United States, the antitrust analysis is moving away from bright line rules and toward standards that require evaluation of pricing practices on a case-by-case basis using economic factors and the business justifications. The US Supreme Court is leading the way in this transition as it attempts to offer new standards to analyse pricing and monopolistic non-pricing behaviour. Most notably, in a 5-4 decision, the Court recently abandoned its prior treatment of minimum resale price maintenance agreements by overturning the almost century old precedent that treated those agreements as per se illegal. In a separate decision, the Court also clarified the treatment of pricing by buyers with substantial market power (monopsony). Furthermore, the lower courts have eroded the unforgiving framework previously utilised to evaluate bundled pricing in favour of a more plaintiff-friendly but less clear analysis. Elsewhere, however, what is essentially a per se prohibition against resale price maintenance continues and enjoys reasonably aggressive enforcement. Perhaps more troubling is the scepticism faced by other pricing practices that may reflect efficiencies or may be otherwise simply benign. To illustrate these points, we focus on a comparison of US law with the law of other jurisdictions, but focused principally on EU law, with regard to three different settings: resale price maintenance; price discrimination by any seller; and pricing by persons with market power, including predatory pricing and bundling.

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