Proposed Standards for Identifying Predation: Williamson's Perspective and the Court

Abstract

Predatory pricing is the act of pricing below a rival's costs in order to drive the rival out of the market. Predatory behavior and competitive behavior often look alike, and as such, require appropriate standards to detect truly anticompetitive conduct. A number of standards to identify predation have been offered in the antitrust literature since the 1970s. Oliver Williamson offered an output-based test to detect predation. In this article, I discuss the contribution of Williamson's proposal, relative to the other prominent offerings in the literature. I examine these tests relative to existing Supreme Court precedent, which has adopted a standard resembling the ideas of Areeda & Turner. I provide some analysis of the differences between theoretical predatory pricing and the alleged predatory behavior that has been examined by the Court.