Excessive pricing Definition

GLOSSARY

Published by a ��˾��ҹ�� Competition expert

What does Excessive pricing mean?

dominant firms can abuse their position by charging a price which is excessive because it has no reasonable relation to the economic value of the product supplied.

The concept of excessive pricing is controversial for many reasons not least it may require the competition law authority to become something of a price regulator, and also because there is no clear method to calculate the 'economic value' of a product. EU and UK case law has tended only to find excessive pricing abusive when other conduct, such as discriminatory pricing, is also present. It is very difficult to prove excessive pricing is abusive, and therefore a breach of Article 102 TFEU and/or section 18 of the Competition Act 1998, as a stand alone offence.

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Pricing—competition law considerations

Pricing—competition law considerations Types of pricing conduct Broadly speaking, EU and UK competition law focuses on two categories of pricing conduct: • agreements and/or concerted practices focused on price, and • pricing policies implemented by 'dominant' undertakings. Agreements and concerted practices • Agreements and concerted practices between two or more undertakings relating to the level at which price is set or otherwise coordinated (directly or indirectly through contractual mechanisms, undocumented conduct and/or information exchanges) • Such 'price restrictions' (as per vertical distribution/resale agreements, price parity arrangements, horizontal cooperative arrangements and cartel or cartel-like activity) are mainly an Article 101(1) TFEU/Chapter I of the UK Competition Act 1998 (CA 98) concern (see The prohibition on restrictive agreements and Chapter I prohibition) • Coordination on price (whether in a horizontal or vertical context) is generally considered illegitimate—it being one of the most troublesome kinds of restrictions insofar as it goes against the very essence of competition (ie freedom to price competitively/independently) • However, certain pricing agreements may be benign or even...

Case T- 699/14 Topps Europe v Commission (rejection of complaint) [Archived]

Case T- 699/14 Topps Europe v Commission (rejection of complaint) [Archived] CASE HUB ARCHIVED—this archived case hub reflects the position at the date of the judgment of 11 January 2017; it is no longer maintained. See further: timeline and relevant/related cases Case facts Outline Appeal to the General Court seeking annulment of the Commission decision of 15 July 2014 rejecting a complaint brought by Topps Europe (a producer of football collectibles) which alleged that FIFA, UEFA and four national football federations license their rights for the World Cup and Euro football tournaments to Panini SpA (a competitor of Topps) in an anti-competitive way (in breach of Articles 101 and 102 TFEU). The Commission decided not to open an in-depth investigation on the basis of enforcement priorities and, as part of this consideration, its determination that there was a limited likelihood of establishing the existence of an infringement. This case focuses on the Commission's procedure and discretion for dealing with competition law complaints. Latest development On 11 January 2017, the General Court dismissed...

Discover our 36 Practice Notes on Excessive pricing

Competition law compliance—dominant position guide for staff

Competition law compliance—dominant position guide for staff 1 What is dominance? 1.1 As a rough rule of thumb, once a business consistently has a market share in excess of 40%, it is likely to be in a dominant position. That market share typically needs to have been maintained for at least two years. However, market share is not the only factor in determining whether a business is dominant—it will be dominant if it can act, to an appreciable extent, independently of its competitors, customers and consumers in the relevant market. 1.2 When an organisation occupies a position of dominance, it has a ‘special responsibility’ not to allow its conduct to impair genuine competition. Failure to adhere to the special responsibility puts a business at risk of abusing a dominant position. Determining what might be abusive is not always clear-cut. 2 Why market dominance is a concern 2.1 Dominant businesses have a special responsibility to ensure their conduct does not distort competition. 2.2 Dominant companies should constantly assess their conduct in...

Competition law compliance—pricing FAQs

Competition law compliance—pricing FAQs This pricing FAQs document is intended as a quick reference guide for staff. Competition law in relation to pricing is concerned with the distortion of competition and safeguarding the interests of consumers. It is not strictly about controlling excessive profits. There may be objectively justifiable reasons why your product or service should be priced differently from comparator products/services, but you must be careful. If you do not find the answer to your question or concern in this document, you must contact [insert, eg the legal team] immediately. 1 Can I discount a package of products even after I have established prices for the individual products? Bundling is generally acceptable if the price meets or exceeds the cost of the items. The incremental price for the second product should cover both its cost and a proportional contribution to fixed cost. 2 Do we have to offer the same prices/discounts to all customers and prospects? Not necessarily: if differences in prices offered to customers are objectively justifiable...

Dive into our 2 Precedents related to Excessive pricing

CMA: CAT fines Pfizer and Flynn £69m for excessive epilepsy drug pricing

The Competition Appeal Tribunal (CAT) has delivered a significant judgment in the long-running case involving the Competition and Markets Authority (CMA), Pfizer, and Flynn Pharma. In separate appeals against the CMA's 2022 decision, the CAT set aside that decision due to material errors identified in the grounds of appeal by Pfizer and Flynn. However, the CAT exercised its jurisdiction to remake the decision and upheld seven of the eight allegations of abuse of dominance previously found by the CMA.

CMA wins application to revive £100m pharma cartel fine

Law360: A London appeals court has upheld more than £100m in fines against a group of pharmaceutical companies over an alleged price-fixing cartel, finding on 6 September 2024 that the Competition and Markets Authority (CMA) had properly argued its case.

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