Predatory Pricing

Subject – Economy

Context – Predatory pricing is prising Indian livelihoods apart

Concept –

Predatory pricing is the illegal act of setting prices low to attempt to eliminate the competition.
Predatory pricing violates antitrust laws, as it makes markets more vulnerable to a monopoly.
Consumers may benefit from lower prices in the short term, but they suffer if the scheme succeeds in eliminating competition, as this would trigger a rise in prices and a decline in choice.
Prosecutions for predatory pricing have been complicated by the short-term consumer benefits and the difficulty of proving the intent to create a market monopoly.
The difference between predatory pricing and competitive pricing is during the recouping phase of lost profits by the dominant firm charging higher prices.
Under the Indian jurisprudence, Predatory pricing is described as ‘unfair or discriminatory’ pricing, and is forbidden by law under Section 4 of the Competition Act, 2002 (hereinafter referred to as “the Act”), which refers to the “Abuse of a Dominant Position”.