UKNM: Fair Trading - Amazon, etc. -Reply

[John Enser]

Michael,


You are right that there is some legal protection out there against big

companies driving little ones out of a market, but it is damned hard to get

there.


The key is not just trading at a loss, to be unfair, it has to be "predatory"

and carried out by a "dominant" company.  Economists have spent many

years arguing about what is predatory (or indeed whether it is unfair at

all) but the European Court says something is only predatory if below

incremental cost or (sometimes) if above incremental cost but below 

average cost.  Dominant generally means market share of 45% + (and

someone would have to claim that online book retailing was a different

market than bricks and mortar...).  


Disclaimer - not legal advice etc


John


 >

>> <Speechradaol [dot] com> 6/January/2000 09:47pm >>>

I am prompted by this to ask list members' opinions.

In a message dated 06/01/00 19:27:12 GMT Standard Time,

bentloyibm [dot] net

writes:


<< Going hand in hand with this is the significant drop in share price of

   AMAZON yesterday, when they announced that even though their

sales had

   increased and their losses (which I believe are expected to be in the

region

   of ($500m) for this financial) wouldn't increase - but they weren't

   decreasing. >>

Amazon have repeatedly said in interviews something to the effect that

they 

are not trying to make a profit but to grab market share so that they are 

left standing when e-commerce takes off - or words to that effect. I'm

sure I 

heard Mr Bezos say something similar on a BBC TV interview.

My understanding of UK law is that if, say, Dixons, Tesco or WH Smith, 

decided to trade at a loss until all the competition went away that the 

Office of Fair Trading would take a dim view of that sort of practise.  I'm 

sure that there are similar regulations in the USA (I'm told, for example, 

that it is actually illegal to give away food on the streets in the US ???)

Of course, I may have got this wrong, Amazon may be trying to make a

profit 

but just aren't very good at it.

Any legal experts (or Amazon competitors) out there have an opinion on

this?


Michael Trott

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