Excessive prices or excessive price controls?

Do European competition authorities sanction firms that allegedly exploit their consumers by setting excessive prices? Should they do so, in any case? In a recent discussion paper, TILEC professor Damien Geradin discusses this peculiar area of competition law. First of all, excessive pricing is an antitrust offence only in a limited number of jurisdictions. Second, Article 82(a) EC and equivalent national provisions allowing competition authorities and courts to control excessive prices charged by dominant firms have been enforced only infrequently compared to the bulk of the case-law on abuses of dominance. Clearly, competition authorities have focused their attention on exclusionary pricing measures seeking to foreclose competitors rather than on exploitative practices. This is in line with a growing consensus that competition authorities are ill-suited to carry out price controls, a task which is better left to sector-specific regulators. Damien Geradin argues that controlling prices should indeed be limited to exceptional circumstances. Moreover, where such circumstances justify them, given the inherent risks of costly mistakes and unintended adverse effects, price controls should be based on a sound economic analysis of market characteristics and carried out with the utmost caution.