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Competition and Anti-competitive Practices?

Margin squeeze

A margin squeeze may arise where a vertically integrated undertaking with a substantial degree of market power supplies an important input to undertakings operating on a downstream market where it also operates.

A margin squeeze occurs where the undertaking with a substantial degree of market power reduces or "squeezes" the margin between the price it charges for the input to its competitors on the downstream market and the price its downstream operations charge to its own customers, such that the downstream competitor is unable to compete effectively. A margin squeeze requires that the undertaking supplying the relevant input has a substantial degree of market power in the market where it sells the input – that is, the upstream market.

For further information, please refer to Guideline on the Second Conduct Rule (in particular, paragraphs 5.13 to 5.15). 

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