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United Kingdom
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Predation meaning
Published by a LexisNexis Competition expert
What does Predation mean?
Predation (often called predatory pricing) describes a dominant supplier deliberately engaging in below-cost pricing to discipline, deter or eliminate rivals, with a view to weakening competition and, once rivals exit or are deterred, sustaining supra-competitive prices.
In UK and Irish competition law it is addressed as an abuse of dominance, not a freestanding offence. In the UK this falls under Chapter II of the Competition Act 1998; in Ireland (and EU law) under section 5 of the Competition Act 2002 and Article 102 TFEU.
Key legal features include: (1) the undertaking is dominant; (2) prices are below cost by reference to established benchmarks (for example, average variable/avoidable cost (AVC/AAC), or between AVC/AAC and average total cost/long-run average incremental cost (ATC/LRAIC) with evidence of exclusionary intent or likely exclusionary effects); and (3) proof of eventual recoupment is not required, though it may inform the analysis.
Typical evidence includes selective pricing in contested areas, internal documents pointing to exclusionary strategy, capacity to sustain losses and barriers to entry.
Practical significance: the CMA, CCPC and sector regulators may impose fines, directions or interim measures, and private damages and injunctive relief are available. Usage is broadly consistent across England & Wales, Scotland, Northern Ireland and Ireland.
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View the related Practice Notes about Predation
PRACTICE NOTES
Pricing under TFEU Articles 101/102 and UK CA 1998: price coordination (RPM, RRPs, MFNs) and dominance abuses (loyalty rebates, predation, margin squeeze, excessive and discriminatory pricing)
Types of pricing conduct In broad terms, EU and UK competition rules concentrate on two classes of pricing behaviour: agreements and/or concerted practices concerning price; and pricing strategies pursued by ‘dominant’ undertakings. Agreements and concerted practices Arrangements and coordinated conduct between two or more undertakings about the level at which prices are fixed or otherwise aligned (directly or indirectly via contractual devices, off‑the‑record behaviour, and/or exchanges of information). These ‘price restrictions’ (covering vertical distribution/resale terms, price parity clauses, horizontal cooperation, and cartel or cartel‑like behaviour) chiefly raise Article 101(1) TFEU/Chapter I of the UK Competition Act 1998 (CA 98) issues (see the prohibition on restrictive agreements and the Chapter I prohibition). Price coordination (whether horizontal or vertical) is generally viewed as illegitimate—being among the most problematic restraints as it conflicts with the very essence of competition (ie, the freedom to set prices competitively and independently). Nevertheless, some pricing agreements may be harmless or even pro‑competitive because...
21 May
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PRACTICE NOTES
EU General Court upholds Commission’s rejection of Fakro Article 102 complaint against Velux: discretion to prioritise, limited complainant access, no manifest error on rebates, predation, fighting brands or exclusivity
CASE HUB NOTE-appeal lodged before the Court of Justice in Case C- 149/21 ARCHIVED -this archived case hub reflects the position at the date of the judgment of 16 December 2020; it is no longer maintained. See further: timeline. Case facts Outline An action before the General Court contesting the European Commission’s decision of 14 June 2018 which, under Article 7(2) of Regulation 773/2004, dismissed a complaint filed by Fakro sp. z o.o. against VKR Holding A/S alleging abuse of a dominant position (Case AT.39451). Outcome On 16 December 2020, the General Court handed down its judgment and rejected the appeal in full. Among other findings, the Court concluded that the Commission had not committed a manifest error when refusing Fakro sp. z o.o.’s request. Parties Applicant: Fakro sp. z o.o. (Fakro): Fakro is a Polish manufacturer of roof window and accessories. Defendant: European Commission Background Commission investigation On...
27 May
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