FOR YOUR INFORMATION......................December 14, 1987




     The Federal Trade Commission staff has recommended that
Wyoming authorities carefully consider the consequences of
broadening the Wyoming below-cost selling statute because, under
an excessively strict law, "businesses may be deterred from
vigorous but legitimate price competition."
     The FTC staff submitted comments on its experience with
predatory pricing matters at the request of Wyoming's Assistant
Attorney General.
     In a letter, the FTC staff said, "Predatory pricing is
difficult to accomplish and is therefore quite rare."  The staff
stated that in their experience -- consistent with two recent
Supreme Court decisions -- "firms will rarely engage in genuine
below-cost pricing, since they typically know that they cannot
count on a later period of monopoly power during which they can
raise prices above their costs and recoup their earlier losses."
     In addition, according to the staff, entry barriers are
essential in a predatory-pricing scheme for firms to regain their
initial losses, and there are few industries in the U.S. economy
that are subject to long-term entry barriers.
     The FTC staff emphasized the importance of having a critical
independent review of all predation claims, since some businesses
complain that competitors engage in predatory pricing without
having data to support those claims.  The staff also suggested
that in examining predatory pricing cases, law enforcement
authorities may want to consider how a market is structured
before looking at costs and prices.  If the market is structured
in a way that does not lend itself to predatory pricing, then
many cases can be dismissed without further inquiry.
     The letter represents the views of the Bureaus of Consumer
Protection, Competition, and Economics and does not necessarily
reflect the views of the Commission or any individual
Commissioner.  The vote to submit the comments to the Wyoming
Assistant Attorney General was 3-2, with Commissioners Patricia
P. Bailey and Andrew J. Strenio Jr. dissenting.
     Copies of the letter are available from the FTC's Public
Reference Branch, Room 130, 6th St. and Pennsylvania Ave. N.W.,
Washington, D.C. 20580; 202-326-2222; TTY 202-326-2502.

                              # # #


MEDIA CONTACT:  Dee Ellison, Office of Public Affairs, 202-326-
                2177

STAFF CONTACT:  Neil Averitt, Bureau of Competition, 202-326-2885


[WyoPred]