The Case for Limiting Private Litigation of Excessive Pricing

By Michal Gal (University of Haifa)

In the EU, private litigation of competition law violations is in its nascence. As this article shows, excessive pricing raises strong concerns for such litigation, for three reasons: (1) the inherent difficulty of defining what constitutes an unfair price; (2) additional challenges inherent to private excessive pricing litigation, such as the need to pinpoint when exactly a price becomes unfair; and (3) the institutional features of general courts in EU member states, which are ill-suited to the required tasks. We elaborate on these concerns, pointing to four specific challenges inherent to private litigation and to three instances where a lack of sufficient economic understanding could entrap general courts (a cost trap, a fairness trap, and a monopolistic competition trap). Together, these factors create a risk of error costs much higher than any experienced so far, which could potentially reduce welfare. The article suggests some measures that can be taken to ensure that welfare is served.

Continue Reading…