Areeda Turner Test: A Comprehensive Guide to Predatory Pricing

Q: How is the Areeda Turner Test applied?

Courts evaluate whether prices are set below average variable costs to assess potential anti-competitive behavior.

Q: Can I file a complaint based on the Areeda Turner Test?

Yes, if you believe predatory pricing is affecting your business, you can file a complaint using legal forms.

Definition & meaning

The Areeda Turner Test is an economic framework used in U.S. law to evaluate predatory pricing practices. Specifically, it establishes that a price set below the average variable cost is presumed to be illegal or predatory. This test is named after its coauthors, Philip Areeda and Donald F. Turner, who introduced it in a significant law review article. While some economists criticize the test for lacking economic rigor, it remains a widely accepted standard in federal courts for assessing pricing strategies that may harm competition.

Table of content

Legal use & context

The Areeda Turner Test is primarily used in antitrust law, specifically in cases involving allegations of predatory pricing. Legal practitioners apply this test to determine whether a company's pricing strategy is intended to eliminate competition by setting prices below cost. This framework helps courts assess whether a business practice is anti-competitive and may involve the use of legal forms and templates for filing complaints or defenses related to antitrust violations.

Key legal elements

Real-world examples

Here are a couple of examples of abatement:

(Hypothetical example) A large retail chain sets prices on certain products significantly lower than the average variable cost to drive a smaller competitor out of business. If challenged in court, the Areeda Turner Test may be applied to determine if this pricing strategy is predatory.

Comparison with related terms

Term	Definition
Predatory Pricing	Setting prices low with the intent to eliminate competition.
Cost-Based Test	A method to evaluate pricing strategies based on cost structures.
Below-Cost Pricing	Pricing products or services below the cost of production.

Common misunderstandings

What to do if this term applies to you

If you believe you are facing predatory pricing practices, consider documenting the pricing strategies and their impact on competition. You may explore US Legal Forms for templates that can assist you in filing a complaint or seeking legal recourse. If the situation is complex, consulting with a legal professional is advisable.

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Quick facts

Typical threshold: Prices below average variable cost.
Jurisdiction: Federal courts in the U.S.
Potential consequences: Legal action for antitrust violations.

Key takeaways

FAQs

What is the Areeda Turner Test?

It is an economic test used to determine whether pricing strategies are predatory.