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COMPETITION LAW
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Within the competitor test, average avoidable cost (AAC) and long
term average increasing cost (LTAIC) are evaluated. AAC is obtained by
dividing an undertaking’s saved costs in the event it goes out of business
to the total production amount whose production has been abandoned.
LTAIC is found by subtracting the total production cost accrued where
the related product was not produced from the total production costs
of an undertaking and dividing this remaining cost by the production
amount related to said product. In other words, the pricing under the AAC
demonstrates that the undertaking in the dominant position sacrifices
short-term profit and the competitor with equal effectiveness may not be
able to provide services to customers without suffering a loss. Moreover,
the pricing under the LTAIC sets forth that the undertaking in dominant
position cannot bear the entirety of the directly relatable fixed costs
incurred due to production of the related product or service and thus the
competitor with equal effectiveness may be excluded from the market.
The costs expressed above are examined in detail in the Kale Kilit
Decision of the Board
15
.
While analyzing the undertaking in a dominant position, the issue
of whether the implementation has arisen as a result of market forces or
within a systematic plan intended to disable the competitor is investigated.
The Draft Guidelines do not put emphasis on this criterion; nevertheless
the Board considers and examines this criterion in its decisions
16
.
Lastly, the undertaking in a dominant position must reap something
from this implementation. The harvest refers to the earnings accrued
in the long term following the predatory pricing which caused the loss
suffered in the short term. This criterion has not been explained in detail
in the Draft Guidelines.
Conclusion
Predatory pricing represents one of the abuses of dominant position.
The Board has evaluated the practice in detail in different decisions.
15
For further information see the footnote 13.
16
Further information may be found in the Board’s decision dated 06.12.2012 and numbered
12-62/1622-598. To access the decision, see the footnote 13.