PREDATORY PRICING - ECONOMY
News: Predatory
pricing: TRAI to look into all tariff plans — past and present
What's in the news?
● The
Telecom Regulatory Authority of India has widened its probe in the matter of
predatory pricing and unlimited offers, by including all the tariff plans —
past as well as present of all the operators.
Predatory Pricing:
● 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.
Long-term issues of Predatory Pricing:
● 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.
Prohibited by law:
● 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”.