Economic assessment of price squeeze

New and different economic events are emerging due to the development of the free market. Competition rules are that determine how enterprises operating in these markets will compete fairly and effectively without hindering the development of markets and without harming their competitors and consumers. In particular, some unilateral actions of the dominant undertakings/enterprises eliminate the existing competition or create competition violations that hinder the development of the competition.Therefore Abuse of dominant position is prohibited by Article 102 of the Treaty on the Functioning of the European Union Competition Law in European Union and by Article 6 of the Competition Law 4054 in Turkey. Price-based and exclusionary violations are also covered by this prohibition. These violations damage the profitability of other companies operating in the market or cause them to exit the relevant market. Price squeeze is one of these violations. Price squeeze occurs when prices in the downstream are set below the costs, and in the upstream, the input price required for production is high or both are applied at the same time. The dominant undertakings/enterprises that applies price squeezing is an application aimed at eliminating the profitability of its competitors with the pricing policy between the upper and lower market in the short term and the exclusion of competitors from the market in the long term. It is observed that the competitors who want to be excluded in order to be monopolized in the process are the customers of the enterprise that makes price squeeze in the downstream. Exclusion of competitors adversely affects the development of the market, the protection of effective competition and social welfare at the end of the process. Within the scope of the thesis, the economic factors and the legal framework that cause price compression are examined and the reasons why price compression creates a competitive problem, why the firms apply price compression, the rationality of price compression, the methods used to determine the existence of this issue are examined and compared with other violations. Finally, the decisions taken in the European Union (EU) and Turkish Competition Law regarding the applications that are subject to price compression are examined and an economic evaluation is made about their approaches.