ABSTRACT
This chapter 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. Where retail price is lowered the anti-competitive interpretation is essentially a theory of predation. Predation involves incurring losses in order to harm and exclude competitors, with a view to subsequently generating excess profits that more than compensate for the up-front sacrifice. At first, raising wholesale price does not appear to involve incremental losses. Compared with the situation before the price change, profits are likely to increase. Recoupment is the essential component of any predatory strategy. It is important not to equate elimination of competitors with a strong prospect of recoupment, given the law is designed to protect competition and not competitors. Without an effect on competitors there can be no prospect of recoupment and ultimate detriment to consumers.
