Margin Squeeze - Business Management for Financial Advisers

The term margin squeeze (or price squeeze) is a convenient label for some forms of exclusionary abuse involving an interaction between two levels in a supply chain.

A margin squeeze is a form of exclusionary abuse characterised as follows:

  • The firm accused of abuse operates as a vertically integrated entity over several levels of a supply chain.
  • The firm holds a dominant position at one level of the supply chain — say, upstream.
  • The firm faces competition or the prospect of competition, at another level of the supply chain — say, downstream.
  • The firm has some influence on downstream market prices (this need not be a second dominant position).
  • The relationship between the upstream price (set by the firm in a dominant position) and the prevailing price in the downstream market is such that a competitor or potential competitor is forced out of the downstream market.

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