Vol. 5, Issue 2 (2019)
Predatory pricing: An enigmatic insertion
Author(s): Samiksha Gupta
Abstract: Predatory Pricing law censures the illegitimate reduction of price to a certain level below cost which has the impact of driving out the rival competitors. This artificial reduction of price ultimately compels other players to move out who cannot stand firm with the predator. On the other hand, it has a devastating effect on the consumers who have to incur losses due to the sudden increase in price after driving out competitors. The paradox of predatory pricing is that the measure taken to condemn predatory pricing will sometimes lead to destruction of honest and permissible reduction of prices because of adjudicatory weapon in the hands of rival firms. The law on predatory pricing has to tread a fine line between not condemning competitive responses on the part of dominant firms on the one hand and prohibiting unreasonable exclusionary conduct on the other. The prerequisites for identification are a detailed inquiry into the dominance, costing and expenditure incurred by the industry, predatory intent etc with the aid and assistance of economic tools. The competition jurisprudence is directed towards promoting fair trade while deterring activities that jeopardize competition. This report is aimed at coherently dealing with the aspects required for determination of predatory pricing through a comparative analysis of the competition laws of EU and US from which the Indian law has been derived.