Context:
The Competition Commission of India (CCI) has notified the Determination of Cost of Production Regulations, 2025, marking a major reform in how predatory pricing is assessed and regulated in India. These reforms aim to reinforce competition safeguards, especially in digital and capital-intensive markets, by introducing clear, consistent benchmarks based on Average Total Cost (ATC).
What is Predatory Pricing?
Definition:
Predatory pricing involves a dominant firm deliberately setting prices below cost to eliminate competitors, eventually gaining monopoly power.
Example:most asked
“RBI MPC Unpacked: Key Theory Meets Today’s Macro Trends”Tap to play · from the C4S channel
NSE vs. MCX case—NSE deployed zero-pricing strategies in currency derivatives, leading to allegations of market exclusion and regulatory scrutiny.
Key Features of Predatory Pricing
- Prices below production costs
- Intent to eliminate competitors
- Short-term consumer benefits followed by long-term monopoly harms
- Reduced market choice and innovation
A clean PDF of this page with the C4S header — it opens right away, and the link comes to your WhatsApp too.
Types:
- Direct Predation – Prices deliberately kept below cost.
- Cross-subsidisation – Using profits from one business segment to undercut rivals in another.
- Discriminatory Pricing – Targeting specific segments with lower prices to squeeze out competition.
Factors Encouraging Predatory Pricing
- Dominant Market Power with deep reserves
- Network Externalities in digital markets (e.g., data lock-ins)
- Weak Enforcement Record (only one predatory pricing case upheld pre-2025)
- Lack of Metric Clarity (older rules didn’t define “cost” benchmarks)
- Jurisdiction Gaps in cross-border e-commerce
- Short-Term Myopia in consumer response
Challenges in Regulation
- Proof of Intent: Predatory motive is difficult to establish under Section 4 of the Competition Act.
- Chilling Effect: Startups in AI, FinTech often avoid competitive segments due to fear of capital-intensive predation.
- Fragmented Market Surveillance: Absence of dynamic monitoring tools delays early detection.
- Judicial Delays: Legal battles often outlast the market cycle they intend to correct.
