Predatory Pricing

noun (uncountable)

/ˈprɛdətəri ˈpraɪsɪŋ/

An anti-competitive strategy whereby a dominant firm sets prices deliberately below cost (or below competitors' costs) to drive rivals out of the market, with the intent to recoup losses through monopoly pricing once competition is eliminated. In India, predatory pricing is prohibited under Section 4 of the Competition Act, 2002 and adjudicated by the Competition Commission of India (CCI); a landmark CCI case (2015) examined Reliance Jio's introductory free-service period for evidence of predatory intent.

✍️ Usage in a UPSC answer

The CCI's investigation into Reliance Jio's zero-tariff introductory offer in 2016 raised foundational questions about the line between legitimately aggressive competition and predatory pricing designed to eliminate Airtel, Vodafone, and Idea from the market.

Synonyms

below-cost pricingloss-leader strategyexclusionary pricingruinous pricingundercutting

Antonyms

fair pricingcost-plus pricingcompetitive pricingprice parity

🌱 Word Family

predator (noun), predatory (adjective), predation (noun), prey (noun/verb)

🔡 Root

Latin praedator = plunderer, from praeda = prey, booty; prae- = before + -da (root related to catching)

📜 Etymology

The legal concept of predatory pricing developed in American antitrust law in the late 19th century, flowing from Standard Oil-era concerns about below-cost pricing to eliminate competition. It was codified in the Sherman Act (1890) context and later the Areeda-Turner test (1975) set out the cost-based standard still widely used. India's Competition Act, 2002 adopts a dominance-plus-below-cost-or-exclusionary-intent standard.

🧠 Memory Hook

PREDATOR prices: like a lion stalking prey, the dominant firm hunts competitors by slashing prices below cost — once the rivals (prey) are eliminated, the predator raises prices and feasts on monopoly profits.

💰 Indian Economy 📖 Seen in: Indian Economy — Growth, Planning & De...

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