The Competition Tribunal dismissed the lawsuit by GPS Chile against Enptel PCS, for alleged predatory practices, margin squeeze and cross-subsidies in the commercialization of vehicle positioning services, or AVL.
In its ruling, the Tribunal dismissed GPS Chile’s predatory pricing accusation, because Entel PCS did not possess sufficient market power at the time of the alleged conducts, in order to have a reasonable expectation of recouping the short term losses that a predatory pricing strategy would generate, and because the annual return of Entel PCS’s AVL service, analyzed as a whole –this is, considering the joint provision of GPS equipment and AVL services- was always positive, even if it diminished in 2006 in comparison to 2005.
The Tribunal dismissed GPS Chile’s accusation of margin squeeze because, in its opinion, this practice was not feasible for the defendant. For it to have been feasible, Entel PCS should have had the capacity of determining non competitive prices in the data transmission markets (given that this is a necessary input for providing AVL services). This is not credible, because Movistar currently is a competitor of Entel PCS in said market, and because of the certain possibility of entry by other companies.
Lastly, the Tribunal also dismissed GPS Chile’s accusation of cross-subsidies, given that no proof of this practice or its circumstances was provided by the plaintiff.