Sunk costs

Sunk costs in the European Union Law

Concept of Sunk costs provided by the “Glossary of terms used in EU competition policy” (Antitrust and control of concentrations, published in 2002): Sunk costs are () fixed costs that have already been incurred and cannot be recovered. They arise because some activities require specialised assets that cannot readily be diverted to other uses. Second-hand markets for such assets are therefore limited. Examples of sunk costs are investments in equipment that can only produce a specific product, the development of products for specific customers, advertising expenditures and R & D expenditures.