Margin Squeeze Abuse

"This paper discusses the most appropriate framework for assessment of a margin squeeze. Margin squeeze provides a good example to consider how the ongoing Article 82 debate plays out in the context of one particular abuse. In particular, some circumstances suggest an open and shut case—a vertically integrated firm dominant in both upstream and downstream markets setting retail prices below wholesale prices (where the authorities may never even have to get into costs!). Here we show that in reality the assessment is much more complicated and a detailed economics-based assessment is required to properly distinguish pro-competitive from anti-competitive behaviour."