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WestJet’s accused of ‘predatory pricing,’ but (surprise!) there’s actually no such thing

6 1 14

The executive chairman of Canada Jetlines recently made the case in FP Comment that WestJet, through its Swoop brand, may running afoul of the country’s competition law by engaging in predatory pricing. In this scenario, if established players like WestJet are cast as predators, new entrants like Jetlines, an upstart ultra-low cost airline poised to enter the market, see themselves as the prey in need of protection.

Yet it is an open secret that the economics underlying competition law is highly contentious. Legislation that purports to help the least well-off by exposing large companies to lawsuits if they lower their prices should at least arouse skepticism. And this is precisely what competition law does, combined with a whiff of delusion about how we can control, through legislation and judicial decisions, economic developments that are really the result of technological change, geography, history, cost structures in different industries, the availability of capital, and the evolution of consumer tastes versus the prices they’re willing to pay for products and their alternatives.

But the old canard of........

© Financial Post