This paper aims to study the historical origins of margin squeeze cases in the USA and Europe.
The author compares and contrasts major margin squeeze investigations in the USA and the European Union (EU) in terms of the role of efficiency and fairness and shows their roots in the socialist calculation debate of the 1940s.
It was found that the USA and EU diverge in their approaches towards margin squeeze claims. While the USA case law focuses more on efficiency, the European Commission makes decisions based more on fairness and “protection of rivals”. This shows that political and ideological preferences influence legal decision-making.
The paper is limited to major cases in telecommunications. It leaves aside cases in other areas. Thus, the author cautions that the generalization of the findings of the paper to all margin squeeze cases, or competition policy in general, may be difficult.
While there is extensive literature on margin squeeze cases in the USA and EU, there is little work on the historical and ideological connections. The paper contributes to the literature by drawing attention to political influences over technical decisions.
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