Predatory Pricing

Current Context : Recently, the Competition Commission of India (CCI) notified the Competition Commission of India (Determination of Cost of Production) Regulations, 2025 to strengthen its ability to tackle predatory pricing by dominant enterprises.

About Predatory Pricing

• Definition: Selling goods or services below cost to eliminate competitors and then recoup losses via monopoly pricing.
• Legal Provision: Identified as an abusive practice under Section 4(2) of the Competition Act, 2002.

Key Features of Cost Regulations, 2025

• Sector-Agnostic Framework: Flexible, case-by-case cost determination adaptable to all industries, including digital markets.
• Primary Benchmark: Average Variable Cost serves as the main reference for predation.
• Alternative Measures: Permits use of Average Total Cost, Average Avoidable Cost, or Long-Run Average Incremental Cost (LRAIC) based on market dynamics.
• Expert Engagement: Allows CCI to engage independent experts (cost accountants, economists, chartered accountants) for technical accuracy.
• Repeal of 2009 Rules: Replaces outdated Cost Regulations, 2009 to align with evolving global competition practices.