Original Research

Does import parity pricing constitute evidence of excessive pricing and what are the consequences of attempting to remedy it?

Richard Murgatroyd, Simon Baker
Journal of Economic and Financial Sciences | Vol 4, No 3 | a372 | DOI: https://doi.org/10.4102/jef.v4i4.372 | © 2018 Richard Murgatroyd, Simon Baker | This work is licensed under CC Attribution 4.0
Submitted: 01 July 2018 | Published: 31 August 2011

About the author(s)

Richard Murgatroyd, RBB Economics, South Africa
Simon Baker, RBB Economics, South Africa

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Abstract

Although provisions prohibiting abuses of dominance through the setting of excessive prices have long been present under many competition jurisdictions, prohibitions have been seldom applied in practice. This is most likely due to the profound conceptual and practical difficulties in differentiating between pricing conduct that is neutral from a competition law perspective and conduct that genuinely constitutes excessive pricing, and then further problems in remedying genuine abuses. However, recent developments in South African competition policy have focussed on use of import parity pricing as a possible indicator of excessive pricing, although in our view the mere existence of import parity pricing is unlikely to be a reliable indicator of such conduct. This paper draws upon economic theory and relevant jurisprudence to provide clarity as to the circumstances under which import parity pricing might reflect excessive pricing. It then considers the prospects for effective remedies if an abuse is identified.

Keywords

excessive pricing; dominance; imports; pricing; import parity pricing; competition policy; antitrust; remedy

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