Editing Predatory pricing (section)

===Long-term cost-based rule===
Posner's long-term cost-based rule assumes that long-run marginal costs are a more reliable test of predation than short-run costs. This is due to the predator, who prices at short-run marginal cost, having the ability to eliminate competitors that cannot afford the same losses in the short-run. To determine predation, Posner brought forth a test that substitutes the average costs from the firm's balance sheet to establish a test that relates to the full average costs based on the company's books. The test would include certain prerequisites, an intent element, as well as a defense. As a prerequisite, Posner requires the plaintiff to demonstrate that the market was predestined for effective predatory pricing.<ref>Richard A. Posner, Antitrust Law. An economic Perspective (University of Chicago Press, 1976), 189</ref> As indicators, Posner lists, for instance, that the predator operates in various markets, whereas the prey operates in fewer markets, concentrated markets, slow entry, few fringe firms, homogenous products and numerous buyers. Posner would authorize the firm to defend due to changes in supply or demand, allowing the respondent firm to price its products at short-run marginal cost.<ref>Richard Posner, Antitrust Law: An Economic Perspective 189-190 (1976)</ref>

According to the European Commission's "Guidance on the Commission's Enforcement Priorities in Applying Article 82 of the Treaty to Abusive Exclusionary Conduct by Dominant Undertakings", if a dominant firm does not cover its average avoidable costs or long-run average incremental costs, this implies the dominant firm is operating at a loss in the short-term to foreclose equally efficient competitors from the market.<ref>{{Cite web|title=Guidance on the Commission's Enforcement Priorities in Applying Article 82 of the EC Treaty to Abusive Exclusionary Conduct by Dominant Undertakings|url=https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52009XC0224(01)&from=EN|date=February 24, 2009|publisher=European Commission|at=Paragraph 26|access-date=April 22, 2020|archive-date=March 19, 2020|archive-url=https://web.archive.org/web/20200319184730/https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52009XC0224(01)&from=EN|url-status=live}}</ref> The Guidance does not bind the EU Courts,<ref>[http://curia.europa.eu/juris/document/document.jsf;jsessionid=43AED7BA705C28808688FA3F821FDD7A?text=&docid=169191&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=6938258 Case C-23/14] {{Webarchive|url=https://web.archive.org/web/20200806104314/http://curia.europa.eu/juris/document/document.jsf;jsessionid=43AED7BA705C28808688FA3F821FDD7A?text=&docid=169191&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=6938258 |date=2020-08-06 }}, ''Post Danmark A/S v Konkurrencerådet'' EU:C:2015:651, para 52</ref> however, it is an important document that could influence future decisions.<ref>{{Cite book|last1=Whish|first1=Richard|title=Competition Law|last2=Bailey|first2=David|publisher=Oxford University Press|year=2018|isbn=9780198779063|pages=763}}</ref>