Antitrust risks of platform pricing

Abstract

Platform pricing may be connected to antitrust risks, which a company can face under excessive or predatory price scrutiny when the platform is recognized as dominant in the market. Since Federal Antitrust Service of Russia (FAS Russia) prefers price-cost comparison when studying excessive or predatory pricing, we suggest using tariff regulation approaches when analyzing platform prices and calculating long-run average incremental costs (LRAIC). By using this approach one can reduce the risks of simultaneously perceiving platform prices for functionally different consumer groups as predatory and excessive. Having identified antitrust risks of platforms changing their prices (both downward and upward), we show that price increase within the inflation rate may be preferable from the point of view of possible antitrust risks and the transaction costs of interactions with the antitrust authority. However, this method of antitrust compliance could potentially conflict with the company’s long-term development goals as a platform.