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skeechan
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Yay, predatory pricing returns to Comcast

»'Discounted' Competition

Let's hear it for the Robinson-Patman Act!

quote:
TITLE 15 > CHAPTER 1 > § 13

§ 13. Discrimination in price, services, or facilities

Release date: 2004-05-18

(a) Price; selection of customers
It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them...
People in the next Comcast market pay more? Looks to me like that is illegal (predatory pricing) unless Comcast can demonstrate it is actually cheaper to distribute their product in the Google Fiber markets or otherwise is more costly for them to distribute in the other market.

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tshirt
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join:2004-07-11
Snohomish, WA
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1 recommendation

Or perhaps it is Google is the one unfairly discounting?
You want to force them into a price war, and then attack them for responding.



skeechan
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Don't they charge the same price in all of their markets? If so, they are not unfairly discounting, but rather they are following the law.

And no, if Comcast can charge $X in one market, there is nothing stopping them from charging $X in their other markets. That is what the law requires unless there is a difference in the cost of delivering those products like there often is with gasoline.
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tshirt
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That's Not what the law says. (which has not been used since the 60's on the federal level)
It says a wholesaler the owns some retail outlets can't sell to the company owned outlets for less they sell to otherwise identical non-company owned outlets UNLESS they can clearly show a difference in cost.
It does not prevent normal price competition with other retail sellers in the market or in select markets.

Other antimonopoly laws prevent "dumping" of product well below competitive pricing purely to destroy existing or new competitors.


tanzam75

join:2012-07-19
reply to skeechan

said by skeechan:

People in the next Comcast market pay more? Looks to me like that is illegal (predatory pricing) unless Comcast can demonstrate it is actually cheaper to distribute their product in the Google Fiber markets or otherwise is more costly for them to distribute in the other market.

The Robinson-Patman Act only applies if the effect of the discount is to reduce competition. This discount increases competition because it makes Time Warner more competitive against Google. Therefore, the Act does not apply.

There've been cable overbuilders decades before Google got into the game. The law is generally settled on this point. The incumbent is allowed to reduce pricing in response to a new entrant.

Historically, predatory pricing has been the most difficult way to win an antrust case. Just proving that it will hurt Google is not enough -- companies are supposed to try to drive their competitors out of business. The point of antitrust law is to benefit consumers, not competitors.

To win based on predatory pricing, you have to show that the long-term impact of the discount is worse than the reduced pricing that consumers enjoy. This is a very high bar to meet.


skeechan
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3 edits
reply to tshirt

Read it again. The law prevents predatory pricing which is what Comcast is engaging in by charging one price to one franchise population and a much higher price to another.

quote:
...and where the effect of such discrimination may be substantially to lessen competition
Which is why Comcast is doing it. And notice that the law says, MAY BE...Google doesn't have to be significantly harmed or run out of business as the point of the law is to prevent the harm in the first place.

If Comcast wants to compete it should be on the merits of the product, not by using revenues from other franchises to subsidize lower prices in this one.
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skeechan
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reply to tanzam75

said by tanzam75:

The Robinson-Patman Act only applies if the effect of the discount is to reduce competition.

The incumbent is not allowed to charge different prices to different people for the same product unless it can be demonstrated that the cost to deliver the product is different. You don't have to prove the effect after the fact. The law says it is illegal if the result MAY happen.

Meanwhile how do you think antitrust benefits the consumers? It does so by preserving competition.
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tshirt
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reply to skeechan

Comcast "price matching" does not " substantially to lessen competition in the market place shared with Google or in the area not competing with Google as a higher price should encourage/allow space for lower priced competitors (Google or other) to enter the and win market share.
I think you'll have a hard time showing applicability in any court with jurisdiction.

It would apply if ComCast offered NBC content to TWC at a different price then it's own systems in shared areas (if any) or offered it to dish/DTV for less then TWC based on similar factors.


tanzam75

join:2012-07-19

4 edits
reply to skeechan

said by skeechan:

The incumbent is not allowed to charge different prices to different people for the same product unless it can be demonstrated that the cost to deliver the product is different. You don't have to prove the effect after the fact. The law says it is illegal if the result MAY happen.

As I stated, Google is not the first cable overbuilder to come along. This has been tested many times. The incumbent is allowed to meet the challenger's pricing -- provided they do so at above cost. There is no obligation to reduce the price in other cities that do not have a challenger.

In fact, on further research, telecommunications are exempt entirely from the Act:

»www.ftc.gov/speeches/other/patman.shtm

By contrast, courts have concluded that the Act does not apply to intangible products such as cellular telephone service and cellular telephone activation service; 14 the printing of comic books;15 newspaper advertising; 16 real estate leases; 17 long distance voice telecommunications services; 18 and cable television service. 19 When a transaction involves both the sale of goods and the sale of services, the Act applies "only if the 'dominant nature' of the transaction is a sale of goods."20



skeechan
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2 edits
reply to tshirt

said by tshirt:

Comcast "price matching" does not " substantially to lessen competition

It absolutely does which is why Comcast does it, but evidently, programming, is not a commodity, according to a judge who obviously had no education in economics, and that is why they can get away with it. Seems strange since it does apply or airlines which don't provide a good but only a service. Courts aren't exactly known for their consistency I suppose.
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skeechan
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reply to tanzam75

You're right. CATV is exempted as it is not a commodity (which is strange since a commodity is ANY marketable good or service that satisfies a want). Comcast subs in other markets get to subsidize Comcast's predatory pricing vs Google. Yay! Let's celebrate all the other Comcast subs seeing price increases to pay for this!
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