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tanzam75

join:2012-07-19
reply to skeechan

Re: Yay, predatory pricing returns to Comcast

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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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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tanzam75

join:2012-07-19

4 edits

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
Ai Otsukaholic
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join:2012-01-26
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Reviews:
·Clear Wireless
·Cox HSI
·Verizon FiOS

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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