The following is provided for educational purposes, and not to be considered legal advice.
United States
In the United States, predatory pricing occurs when a company in a dominant or monopoly position sells products below the marginal cost of manufacturing, processing, and distributing such products, with the goal of eliminating competition, and later of increasing prices when competition is destroyed.
Merely reducing prices to meet a competitor’s pricing by itself is not anticompetitive, but reducing prices to below cost even without a predatory pricing intent could be a competitive violation.
Canada
In Canada, predatory pricing is found when there is a policy of selling at unreasonably low prices with the effect of substantially lessening competition or eliminating a competitor. Prices are unreasonably low when they are below cost. Factors to consider whether a company has a predatory pricing policy include:
(a) magnitude of price cuts and losses incurred,
(b) absence of legitimate rationale for price cuts,
(c) whether the company has less than 35% of a market.
Note: A company with less than 35% of a market is unlikely to affect industry pricing in Canada, unless it is able to build market power to impose price levels on the market long enough to harm competitors financially, and to recoup losses incurred once competitors are forced to leave the market.
(a) magnitude of price cuts and losses incurred,
(b) absence of legitimate rationale for price cuts,
(c) whether the company has less than 35% of a market.
European Economic Area (EEA)
In the EEA, it is considered an abuse for a company in a dominant position to impose unfair purchase or selling prices or other unfair trading conditions. In France, discounts on goods or services are valid as long as they do not lead to “excessively low pricing” or “resale at loss”. In Italy, predatory pricing involves seeking to achieve a monopolistic position, and is considered unfair competition. In Germany, companies are not allowed to request customers to refuse to purchase from competitors, with the intention of harming competition.
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