We also make the case against extending the price-cost test to more complex pricing strategies, such as loyalty discounts, in which the motivation for a stringent rule-to avoid costly false positives-has little purchase. As we explain using new historical research, this was not the Court’s initial plan after oral argument, but Justice Kennedy switched his vote. A further reason to confine Brooke Group’s dicta is the Court’s highly unusual reweighing of the evidence presented at trial. Economic scholars recognise predatory pricing’s first stage of predation as when a brand initially offers a good or service at a below-cost rate. The dicta do not apply, for example, to a monopolist who recoups by earning a reputation for predation. The term refers to a practice whereby an incumbent firm (the predator) sets prices very aggressively with the aim of excluding a rival from the market (that is, forcing the rival to leave the market or discouraging it from entering) or marginalising the rival and relegating it to a niche role. In considering recoupment, Brooke Group’s skeptical dicta should be confined to the particular market structure and theory of recoupment analyzed in that case. Under the price-cost test, a plaintiff has leeway to select an appropriate measure of cost, including incremental cost. It happens when a dominant player in the market sells its product at a price. ![]() We identify points of flexibility within the Court’s framework that permit an empirically grounded evaluation of the predation claim. Predatory pricing primarily aims at capturing and influencing the market terms. Beyond this framework, the Court opined in dicta that predation is implausible. A predatory pricing strategy, a term commonly used in marketing, refers to a pricing strategy in which goods or services are offered at a very low price point, with the intention of driving out competition and creating barriers to entry. The practices associated with this pricing behavior are setting prices shy of the expenses, price discrimination, and price warring. ![]() Predatory pricing violates antitrust laws, as its. The objective of predatory pricing is to lower the prices, especially below costs in an attempt to maximize profits in the long term by putting the competitors from the market. This framework, which was adopted without any contested presentation of its merits, has endured despite its flaws. Predatory pricing is the illegal business practice of setting prices for a product unrealistically low in order to eliminate the competition. Brooke Group requires a plaintiff to show that the defendant set a price below cost and had a sufficient likelihood of recouping its investment in predation. This Feature offers a roadmap for bringing and deciding predatory pricing cases under the Supreme Court’s restrictive Brooke Group decision.
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