Pricing strategy designed to eliminate competition from the market place.
action on the part of one firm to set a price below its shutdown point in order to drive its competitors out of business.
The practice of setting price at a low level in order to drive a rival firm out of business.
Pricing tactics employed by a dominant firm to drive competitors out of business, such as temporally selling below cost and dropping the price only in certain markets.
Predatory pricing is a possible breach of s. 46 of the Trade Practices Act, being a type of misuse of market power. It occurs when a business with substantial market power engages in strategic price cuts for the purpose of damaging or eliminating a competitor or preventing a competitor from entering the market or engaging in competitive conduct. It is difficult but important to distinguish predatory pricing from legitimate competitive conduct
the practice of cutting prices below the marginal costs of production to drive out a new firm (or to deter future entry), at which point prices can be raised again
when a business sets an unrealistically low price for the purpose of forcing a competitor to withdraw from the market.
It may be an infringement under UK/EU competition laws (i.e Competition Act 1980 and the Treaty of Rome), particularly where the party concerned is in a dominant position in a market, to price goods at a low level (below ex-factory costs) in order to drive competitors from that market.
Predatory pricing is the practice of a firm selling a product at very low price with the intent of driving competitors out of the market, or create a barrier to entry into the market for potential new competitors. If the other firms cannot sustain equal or lower prices without losing money, they go out of business. The predatory pricer then has fewer competitors or even a monopoly, allowing it to raise prices above what the market would otherwise bear.