Predatory Pricing - An Analysis Of The Existing Framework And Its Shortcomings

V. Sudekshana, BA LLB (Hons), School of Law, Christ (Deemed To Be) University

ABSTRACT

The Competition Act, 2002 purports to promote competition in the market and thereby provide a level playing ground for all players. It sanctions all anti-competitive practices by the players. Predatory pricing is one such practice which is adopted by incumbent Firms to drive out competition by reducing the prices to levels which cannot sustain the business of other Firms and ultimately drive them out. Inorder to effectively deter or prevent anti- competitive practices, the legal framework should be airtight without room for loopholes. This paper undertakes to point out the shortcomings with the current approach and to highlight the other factors which the framework is to take into consideration. The various other elements which the paper proposes to take into consideration are; above cost predatory pricing, cross subsidization, intention, penetrative pricing etc. Further it points out the inherent problems with the assumption that only dominant Firms can indulge in predatory pricing and also highlights the difficulties in market definition for this purpose. In conclusion, the paper lays down suggestions for a more comprehensive framework on predatory pricing.

Keywords: Predatory pricing, competition law, anti-competitive practice, pricing strategy, recoupment