ABSTRACT
This chapter determines whether what is perhaps the most unambiguous example of predatory pricing documented to date is an exception to the rule formulated by J. S. McGee — that predatory pricing is an extremely rare phenomenon because it involves certain losses today against uncertain gains in the future while, at the same time, cheaper alternatives exist such as merger or collusion. It addresses the question of whether the Roche case is an exception to the McGee rule. Attention is paid not only to the diazepam market but also to another related market, chlordiazepoxide, which is vital to any appreciation of the Roche case. The chapter discusses the background to the problem of new entry threatening Roche's monopoly of diazepam. It describes, discusses and evaluates the predatory pricing and other solutions to the threat of new entry. The chapter also addresses the question of whether Roche's predatory pricing is the exception which proves the McGee rule.
