- January 17, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Subject – Economy
Context – Predatory pricing is prising Indian livelihoods apart
- 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”.