Margin squeeze

The term margin squeeze (or price squeeze) is a convenient label for some forms of exclusionary abuse involving an interaction between two levels in a supply chain.

This applies in particular to cases where the controller of an infrastructure facility with a dominant position seeks to "reserve to itself" parts of a related downstream market.

How we can help

We can advise parties to disputes relating to an alleged margin squeeze on how they might be able to put their case or develop relevant economic evidence to support or refute the analyses outlined below.

Before a dispute has erupted, we can advise potential complainants or potential recipients of complaints about the validity of concerns raised, the steps that might be taken to ensure compliance, or the prospects for a successful complaint or claim.

*Franck Latrémolière

What is a margin squeeze

A margin squeeze is a form of exclusionary abuse characterised as follows:

Economic analysis of margin squeeze allegations

A margin squeeze claim can be analysed in two ways:

Claiming predatory abuse in a margin squeeze situation involves showing that the prices offered by the accused firm in the potentially competitive market are so low that their object was to use the upstream dominant position so as to exclude one or more competitors from the downstream market. This would need to rest on evidence that:

Claiming constructive refusal to supply would require evidence that support a different set of assertions:

Some patterns of conduct may infringe Article 82 on both counts, such that the distinctions drawn above do not matter. But in other cases the evidence available to support analysis under the two heads may be significantly different, making it important to specify clearly the nature of the claim.

See also

See also: Predatory abuse

See also: Competition law

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Reckon LLP is an economics consultancy with expertise in data analysis, economic regulation and competition law.