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Originally Posted by SteveEisenberg
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The courts threw out that case. (
http://www.businessweek.com/magazine...0/b3732075.htm)
The example cited in that article is Dallas. When a low-cost competitor added flights to/from Dallas, American would match them and add flights; when they left, prices went up. But American still didn't take a loss on those cheaper flights, and
matched rather than
undercut the competitors.
We could see this as American being predatory -- or the low-cost airlines behaving in a "predatory" (or merely bare-knuckled) fashion, by significantly undercutting American's pricing. If American didn't change its pricing, let the low-cost airline drove American out of Dallas, and watched the low-cost airline increase its prices, would that be unfair competition?
And I have to ask....
• Are you siding with the loser of that battle?
• Is it illegal for American to earn a higher profit margins on specific routes?
• Is the purpose of anti-trust laws to keep consumer prices low? Or is it to preserve competition? (And yes, those are two very different goals.)
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Originally Posted by SteveEisenberg
We can argue back and forth whether the book industry has potential to become like airlines. But we surely know that, in some industries, below cost pricing is used as a temporary tactic to drive up prices sky-high.
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What most of us know is that real predatory pricing is rare. It's difficult to pull off without going broke, difficult to distinguish from aggressive competition, and even more difficult to prove in court.
We know that an agency-priced book can't be priced in a predatory manner. We know that publishers can't discriminate on price except based on volume. We've repeatedly seen Amazon and Walmart and B&N go toe-to-toe in price wars, which means no big player in that industry has or is going to allow themselves to be underpriced.
Predatory pricing is not happening in the book biz, and is unlikely to do so -- especially if agency pricing is upheld.