From Bartho at Dad’s Army in big iron predation:
The Australian Competition and Consumer Commission chairman, Rod Sims, doesn’t appear to think so. As he pointed out in a newspaper interview today, it is difficult to find predation when producers are selling product at a price significantly above their costs.
“What I find strange,” he said, “is that people can assess a budget, or the effect on the economy, of pricing in a cyclical commodity over just one or two years.
“What iron ore is doing for Australia you really have to assess at long run average prices. If the price happens to be below that long term price, and I’m guessing at is say, $US70 to $US75 a tonne, you don’t adjust the budget strategy. Likewise, when the price is above that long run number, you don’t adjust your strategy.”
Unless you built a business with debt leveraged to peak prices. Then you PR it up.
