Predatory Pricing: Limiting Brooke Group to Monopolies and Sound Implementation of Price-Cost Comparisons

C. Scott Hemphill and Philip Weiser point out several infirmities of the Brooke Group predatory pricing decision, including the fact that the Supreme Court laid down the below-cost pricing and recoupment requirements without hearing either party present counterarguments to them. In light of this fact and complex market realities, they argue for flexibility in satisfying these requirements. In this Response, I go further, arguing that in monopoly cases the greatest competitive danger likely results from above-cost pricing, so the Brooke Group safe harbor for above-cost pricing should not have been extended to monopolies. When price-cost tests are implemented, I show that many cost measures other than average variable cost can be appropriate to demonstrate profit sacrifice.