Is Aggressive Competition Anti-Competitive?
from the what's-the-difference dept
For any company, one of the most important decisions it has to make is the price of its goods or services. Straddling the line between competitiveness and profitability is a task that’s made harder by the fact that from time to time, certain pricing decisions are deemed to be illegal, or at least the competition claims as such. We saw cries, earlier this year, that Microsoft’s decision to sell its anti-virus suite at a cut-rate price was anti-competitive. Of course, while Microsoft’s aggressive pricing may have been rough on the competition, it was a positive for customers, many of whom took to the offering. The Supreme Court is currently hearing an interesting case that involves paper and timber company Weyerhauser. The company is accused of buying too much lumber, to drive up the cost for their competitors, and then undercharging for the finished goods, again, to wreak havoc on their competitors profit margins and drive them out of business. It seems like the company has two valid defenses. The first is that you can’t demonstrate the company’s intent. Perhaps it really just wanted to buy up a lot of raw materials, and felt that it could still do well at that volume. The second is that even if the company took these actions for the express purpose of harming its competitors, then that’s just aggressive business. Naturally a company wants to see their competitors pay more for raw materials. And as in the Microsoft case, it would seem like the end user benefits from Weyerhauser’s actions, in the form of lower prices on end goods. Considering all of the questions surrounding intent, and the difference between being competitive and anti-competitive (which is an odd phrase), it definitely seems like a mistake to meddle in something as important as pricing.