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In antitrust law, broadly speaking, the following conducts are sanctioned: collusions, vertical restraints, and abuses of dominant position.
In abuses of dominant position, there are two elements. On one hand, there is the structural element, the dominant position of a company, which is generally conceptualized as holding substantial market power (furthermore, in theory, it is possible for collective dominance to exist). On the other hand, there is the behavioral element, the abusive action.
Regarding the behavioral element, a distinction is generally made between: 1) exclusionary abuses, in which a company seeks to harm the competitive position of a competitor or exclude said competitor from the market; 2) exploitative abuses, in which a company uses its power to impose unfair, excessive, or discriminatory terms on consumers or entities with which it negotiates, and 3) mixed abuses, in which a conduct has both exclusionary and exploitative effects.
This glossary reviews the structure of a particular exploitative abuse, excessive pricing (to see other types of exploitative abuses, see Glossary “Exploitative Abuses” which mainly focuses on digital exploitative abuses). To achieve its purpose, this glossary first reviews general aspects and foundations of the sanctioning of exploitative abuses and, second, reviews the sanctioning of excessive pricing.
As noted, exploitative abuses are those in which a company uses its power to impose unfair, excessive, or discriminatory terms on consumers or entities with which it negotiates directly (that is, without affecting the position of its competitors). Excessive pricing, as well as the determination of unfair trading conditions, can be considered exploitative abuses (figures that, as already stated, are reviewed in the more general glossary of exploitative abuses).
These abuses are sanctioned in various jurisdictions, but their establishment is not universal. Thus, they are not sanctioned in the U.S., as said jurisdiction operates on the premise that a deregulated economy is essentially competitive (Domper & Retamales, 2019, p. 116; Gal, 2013, p. 1). Furthermore, it is considered that the possibility of exploiting a dominant position is part of what drives entrepreneurship, an idea captured in the much-cited Trinko ruling: “The mere possession of monopoly power, and the concomitant charging of monopoly prices, is not only not unlawful; it is an important element of the free-market system. The opportunity to charge monopoly prices—at least for a short period—is what attracts ‘business acumen’ in the first place; it induces risk taking that produces innovation and economic growth.” (Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP (540 U.S. 398, 2004).
That being said, the sanctioning of exploitative abuses is established in other countries: in Chile, letter b) of article 3 of Decree Law 211 (DL 211) expressly establishes the figure of “abusive exploitation”; and in the European Union in article 102 of the Treaty on the Functioning of the European Union (TFEU); among other jurisdictions.
It should be noted from the outset that the regulation of exploitative practices is complex and controversial (Gal, 2013, p. 9; Whish & Bailey, 2012, p. 716). For this reason, competition authorities have historically preferred to allocate their resources to the prosecution of exclusionary abuses (Whish & Bailey, 2012, p. 720), although this has varied with the rise of the digital economy (Botta, 2023, p. 102).
This conduct occurs when a monopolist or dominant company, individually (or collectively), exploits its position by charging excessive prices (that is, supra-competitive prices) (Whish & Bailey, 2012, p. 718)
Among the reasons for sanctioning excessive pricing, we can find the following. First, when there are excessive prices, the monopolist is using its monopoly position to reap commercial benefits that it would not have reaped had effective competition existed (Gal, 2013, p. 3). This would be negative because, from an economic perspective, setting prices far above marginal cost implies a transfer of welfare from consumers to producers and a loss of aggregate social welfare (that is, of allocative efficiency) (Gal, 2013, p. 3).
Second, prices should be fair because, otherwise, commutative justice would be violated —that is, the exchange of goods of equal value (Gal, 2013, p. 5). Thus, the sanctioning of excessive prices is based on the notion of the just price, which has ancient historical and ideological roots.
Third, applying this doctrine may be optimal when there is no sectoral regulation because the scale of the activity does not justify it.
That being said, multiple arguments have been presented against the application of this figure. First, if the normal operation of the market occurs, the fact that a monopolist has large profits should, in the absence of barriers to entry and expansion, attract new entrants to the market; therefore, the extraction of monopoly rents would be self-defeating.
Second, establishing what a “reasonable” price would be by adding an acceptable profit margin to the actual cost of producing goods or providing services is fraught with difficulties (Whish & Bailey, 2012, p. 719). This is, among other reasons, because it is not clear which relevant cost should be used as a benchmark (among other problems, “should one look at the historical costs involved in establishing a production line or at the cost of establishing one at current prices?”).
Third, the charging of high prices by a monopolist allows it to have profits high enough to make costly investments in research and development.
Fourth, it is not clear what remedies a competition authority should impose for excessive pricing: beyond imposing a fine, it is not clear what future directions the company in question should follow (Whish & Bailey, 2012, p. 719). If a certain price is sanctioned as excessive, which price would be permissible? Would it be enough to lower the price slightly to avoid future sanctions?
Fifth, if we consider competition as a process in which companies are encouraged to participate and compete, the regulation of monopoly prices constitutes an unfair denial of the rewards obtained.
It is worth closing with a few notes. First, due to how controversial the figure is, various authors have proposed “firewall” criteria to prevent it from being applied excessively. Thus, the figure should only be applied in cases where: 1) there are significant barriers to entry; 2) the market is unlikely to self-correct; 3) there is no other structural remedy available; and 4) there is no sectoral regulator in charge of price-fixing (O’Donoghue & Padilla, 2020, p. 950).
Second, as is usual in antitrust, conducts that are sanctioned when performed by a monopoly are also sanctioned when perpetrated by a monopsony (making the respective adjustments) (O’Donoghue & Padilla, 2020, p. 1024). Thus, obtaining an unjustifiably low price by a company with substantial purchasing power may be abusive (Whish & Bailey, 2012, p. 725).
Third, there are those who deny the autonomy of the category. This is because (according to some readings) whenever an exploitative abuse is sanctioned, in essence, “the mentioned companies could have been sued for the use of other strategies that allow for the abuse of a dominant position and that result in the charging of excessive prices” (Domper & Retamales, 2019, p. 129; Domper and Retamales focus on sanctions for excessive pricing in the pharmaceutical industry).
All this being said, beyond the criticisms, various legislations sanction the fixing of excessive prices. In what follows, we review its treatment.
Article 102 of the TFEU states that: “Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States. Such abuse may, in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions.”
This rule sanctions practices that, without prejudice to not damaging the market structure, directly harm consumers (Whish & Bailey, 2012, p. 721). In this regard, it is worth noting the vagueness of the rule, which has resulted in: 1) the absence of a single adequate method to determine if a price is excessive, leaving a margin of maneuver for the authorities (McMahon, 2023, p. 135) and 2) the necessity of court intervention to give meaning to the prohibition (Montt & Vásquez, 2023, p. 22).
Turning to caselaw, an initial definition was proposed in General Motors (1975), where the European Court of Justice pointed out that a price is excessive when “when it is excessive in relation to the value of the service provided” (P. 12). Another important case is United Brands (1978), where definitions and legal tests were established to determine if someone is facing an excessive price. In this case, the Court of Justice outlined the following considerations: “[I]t is advisable therefore to ascertain whether the dominant undertaking has made use of the opportunities arising out of its dominant position in such a way as to reap trading benefits which it would not have reaped if there had been normal and sufficiently effective competition [249]; [C]harging a price which is excessive because it has no reasonable relation to the economic value of the product supplied would be such an abuse [250]; (…) [T]he questions therefore to be determined are whether the difference between the costs actually incurred and the price actually charged is excessive , and , if the answer to this question is in the affirmative , whether a price has been imposed which is either unfair in itself or when compared to competing products [252]; [O]ther ways may be devised (…) of selecting the rules for determining whether the price of a product is unfair [253]” (paragraphs 249-253).
Several criteria can be extracted from these statements. First, that the presence of an excessive price relates to whether the price charged has no reasonable relation to the economic value of the consideration (paragraph 250) (this initial conceptual definition has been criticized as it is not clear what the Court refers to by “economic value” (Whish & Bailey, 2012, p. 721)).
Second, excessive prices should be determined according to a two-part test. According to said test, first, it must be determined if the difference between the costs incurred and the price is excessive and, second, it must be determined if the price charged is unfair in itself or in comparison to other products (paragraph 252). In this regard, while the first part can be understood as establishing a benchmark parameter with which to compare the actual price, the second introduces a methodology to evaluate if the gap between the actual price and said parameter is unfair (Gal, 2013, p. 14). According to O’Donoghue and Padilla, the second part of the test is crucial, as there are multiple reasons why a price may be well above cost (O’Donoghue & Padilla, 2020, pp. 294-295). Additionally, this test has been criticized because the Court did not indicate what margin between costs and prices is excessive, nor did it provide examples of cases in which prices would be unfair in themselves, or provide guidelines regarding which costs should be considered to measure margins (Montt & Vásquez, 2023, p. 23).
That said: 1) a distinction is not always made between both parts of the test established in United Brands (Gal, 2013, p. 14); 2) there is discussion as to whether the requirements are cumulative or alternative (O’Donoghue & Padilla, 2020, p. 903); and, 3) in practice, various methods have been designed to establish if a price is excessive.
Notwithstanding the above, it should be noted that, in general terms, the question of whether one is facing excessive prices is generally answered by considering the costs of the product sold and comparing them with its prices (Whish & Bailey, 2012, p. 716). However, as the reference to costs is vague and these are sometimes difficult to ascertain, various approaches have been taken when determining that prices are excessive which, above all, depend on benchmarks that indirectly reflect the difference between price and production costs (Domper & Retamales, 2019, p. 118).
According to Domper and Retamales (who follow European jurisprudence), to determine if excessive prices have been charged, the price charged is normally compared with: 1) the price charged to other consumers for the same product; 2) the price charged to the same consumers but at another time; 3) the price charged in other market segments where it is more competitive; and, 4) the price charged in other geographical markets (Domper & Retamales, 2019, p. 118).
To conclude this section, two things must be mentioned. First, as a rule of thumb, once the plaintiff demonstrates significant differences in profit margins, the burden of proof falls on the defendant, who may justify said margin (Gal, 2013, p. 16).
Second, if the costs of a dominant company were higher than those of companies providing the same service elsewhere, the prices could be excessive, even if the profits were not (Gal, 2013, p. 16). To the extent that inefficiency is not to be rewarded, excessive or disproportionate costs should not be taken into account when determining the reasonableness of prices (Whish & Bailey, 2012, p. 723).
Regarding Chile, DL 211 states in letter b) of the second paragraph of Article 3 that the following is considered anti-competitive: “The abusive exploitation by an economic agent, or a group of them, of a dominant position in the market, fixing purchase or selling prices, tying the sale of one product to another, assigning market zones or quotas, or imposing other similar abuses.” In the words of Enrique Vergara, former National Economic Prosecutor and former President of the Tribunal de Defensa de la Libre Competencia (TDLC), “the text is quite explicit, as it points out that the fixing of purchase or selling prices can constitute an abusive exploitation of a dominant position in the market, without distinguishing whether that price fixing is carried out with the aim of excluding competitors or exploiting consumers” (Vergara, 2024, p. 28).
That said, although the jurisprudence of the TDLC has fluctuated regarding whether the sanctioning of excessive prices is permitted, recently the admissibility of the figure seems to be accepted (to see older cases: Vergara, 2024, pp. 28-31).
Regarding this point, one must first consider Ruling 93/2010. In this ruling, the TDLC first stated that it was improper for the Court to sanction for abusive prices, as doing so would transform it into a price regulator (C. 30). Secondly, it noted that: “the mere fact that a company charges excessive prices without any abusive conduct on its part does not constitute a case of abusive exploitation of its dominant position. This follows from the text of Article 3, letter b) of DL 211, which requires that the exploitation of a dominant position be abusive in order to infringe upon free competition” (C. 33). Thus, according to this doctrine, excessive prices must also be abusive (Montt & Vásquez, 2023, p. 25). In other words, a price would only be illegally excessive if said excessive price can be charged because an exclusionary offense was committed that allowed those excessive prices to be charged, not because the prices charged were in themselves excessive.
This decision was not without controversy. Thus, two Justices of the Court, Javier Tapia and Eduardo Saavedra, have pointed out that the decision was based on a “reductionist argument [that] is hardly sustainable under the current Chilean legal text (…) This expressly refers to the need to avoid the ‘abusive exploitation’ of the dominant position” (Tapia & Saavedra, 2019, p. 119) (a defense of the criteria used by the TDLC in this case can be found in a writing by its then-President: Menchaca, 2011).
The TDLC eventually moved toward accepting the sanctioning of excessive prices with Ruling 140/2014. In this case, although the lawsuit was dismissed, it was accepted —in a divided vote— that under exceptional circumstances, excessive prices can be sanctioned as an autonomous offense (Montt & Vásquez, 2023, p. 26). Thus, it was stated that: “an infringement of free competition by this type of act will only occur when a firm with high market power, which does not stem from its own investments or its capacity to innovate, charges prices significantly higher than those resulting from the application of one or more comparison standards whose results, reasonably weighted, are consistent with each other” (C. 20).
Enrique Vergara, one of the Justices who signed the ruling, explains the two-stage test established by the decision: “(i) the first consists of analyzing the market structure to determine the source of dominance (past investments or innovation vs. special and exclusive rights) and, most especially, the existence of high barriers to entry that are very difficult to overcome in practice; and (ii) the second is to examine whether the prices are extremely excessive, for which the greatest number of available comparison standards should be used” (Vergara, 2024, pp. 30-31).
Recently, the TDLC has actually used this figure to fine companies. For instance, in Ruling No. 204/2025, it sanctioned WOM for imposing excessive prices for sending certain SMS messages (more details in Sandoval, 2025 and in the caselaw at the end of this glossary). Above all, it stated that excessive prices “are sanctionable in this venue as an independent conduct, without the need for it to mediate or be a consequence of another abusive conduct” (C. 163).
That said, the TDLC established a three-stage test (C. 169). According to it, the following criteria must be met:
In 2025, the TDLC issued Ruling No. 204/2025, in case Index C-454-2022, titled ” Demanda de Connectus SpA y otros contra WOM S.A.”. The TDLC partially upheld the lawsuit and convicted WOM S.A. (WOM) for excessive pricing. Although the Supreme Court’s review of this case is still pending, it is worth examining, as it is currently the only instance in which the TDLC has sanctioned for excessive pricing.
The plaintiffs —Connectus and others— are telecommunications companies that hold concessions for Voice over Internet Protocol (VoIP) public services, or public telephone services. These concessions allow them to provide their clients with (i) Voice calls; (ii) VoIP calls; and (iii) Short Message Service (SMS). In turn, the SMS messaging service distinguishes between three types of messages based on the sender and receiver: (i) P2P SMS (person to person); (ii) A2P SMS (application to person), sent by an application to a person; and (iii) P2A SMS (person to application), sent by a person to an application.
In this case, the plaintiffs offered companies a bulk A2P SMS delivery service to end customers (usually related to advertising, notifications, etc.). To send an SMS to the end customers’ mobile phones, the plaintiffs must interconnect with the Mobile Network Operator (MNO) of the customer’s phone. Each MNO (such as Entel, Movistar, Claro, and WOM) offers mobile telephony services using its own network and infrastructure. Thus, for example, if a company wishes to send an SMS to one person who has an Entel mobile and another who has a WOM mobile, it must pay both Entel and WOM the rate that each charges for interconnection to its network.
In this context, the plaintiffs entered into SMS service operability contracts with WOM, by which WOM was obliged to receive SMS from the plaintiffs on its platforms at a rate of $1.4 pesos including VAT, without distinction between P2P or A2P messages. What was the problem? In August 2021, WOM notified the plaintiffs of various changes to the existing contracts, which boiled down to a dilemma: either 1) they contracted a service with a WOM-associated company, Infobip, which provides a platform allowing users (companies) to send SMS to end customers through several mobile operators at once, or 2) the rate charged by WOM for each Int A2P SMS would rise to $79 + VAT. None of the plaintiffs subscribed to the Infobip service, so WOM began charging them the new rate.
As background, it should be noted that SMS messaging services were determined by the free flow of market forces. This changed later because, since January 2024, the Undersecretariat of Telecommunications (Subtel) included the termination of SMS messages as a service subject to price regulation.
The companies Connectus, Habla, Linksat, ITD, and Vozdigital sued WOM, alleging that it had abused its dominant position in the short message service (“SMS”) termination market by unilaterally modifying the commercial conditions agreed upon for the service.
The TDLC convicted WOM of charging excessive prices. Thus, it sentenced WOM to pay a fine and imposed the obligation to annul the invoices issued during the period in which the excessive prices were allegedly charged.
The TDLC carried out an analysis of the concurrence of behavioral and structural elements in three stages. According to it, the court had to:
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