At the same time modern economic analysis has developed coherent theories of predation, contravening earlier economic writing claiming that predatory pricing conduct is irrational. 1 Indeed, since Brooke was decided in 1993, no predatory pricing plaintiff has prevailed on the merits in the federal courts. Judicial enforcement is at a low level, following the Supreme Court’s recent Brooke decision, the first major predatory pricing decision in modern times. The dilemma is intensified by recent legal and economic developments. On the one hand, history and economic theory teach that predatory pricing can be an instrument of abuse, but on the other side, price reductions are the hallmark of competition, and the tangible benefit that consumers perhaps most desire from the economic system. Predatory pricing poses a dilemma that has perplexed and intrigued the antitrust community for many years.
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#PREDATORY PRICING DEUTSCH PDF#
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#PREDATORY PRICING DEUTSCH TRIAL#
Wal-Mart Chief Executive David Glass testified during the August trial that the company sold some items below cost but that it didn’t do it to drive others out of business.This document is available in two formats: this web page (for browsing content) and PDF (comparable to original document formatting).
* A variation in prices between the Conway area and other markets * Wal-Mart’s in-store price comparison of goods sold by competitors, including the plaintiffs in the suit * Wal-Mart’s stated pricing policy to “meet or beat the competition without regard to cost” * The number, frequency and extent of below-cost sales However, the Arkansas judge said there was evidence of harmful intent in the Conway case. “To win this kind of lawsuit, you have to prove that a retailer is trying to harm a competitor, and that’s difficult.”
“This practice has a long history,” Nelson said. Wal-Mart will prevail because selling below cost has been a common practice, said Richard Nelson, an industry analyst at Duff & Phelps in Chicago. “If Wal-Mart loses, writes a check for court-ordered damages and complies without contesting it further, you might see widespread effort to bring litigation,” Gresham said.
Larry Gresham, director of the Center for Retailing Studies at Texas A&M University, said many potential litigants will wait for the outcome of Wal-Mart’s appeal. Other industry observers, however, do not expect an immediate spate of lawsuits against low-price leaders. “I would be shocked if this ruling did not become a catalyst for more cases of this type,” Lucas said. Wal-Mart, the nation’s largest retailer, has been blamed for the demise of some long-established businesses in small cities around the country, and many of those merchants will try to use the Arkansas case as a precedent, said George Lucas, a Memphis State University business professor who has served as a witness in predatory-pricing cases.
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