Predatory Pricing: What Indian consumers need to know

In a market filled with discounts, festive sales, and price wars, it can be hard to tell whether a low price is a genuine bargain or part of a strategy that might hurt consumers in the long run. One practice that often hides behind attractive price tags is predatory pricing.

What is predatory pricing?

Predatory pricing happens when a company deliberately sells products at extremely low prices (sometimes even below cost!) with the specific intention to drive competitors out of the market. Once the competition weakens or shuts down, the same company raises prices again, leaving consumers with fewer choices and higher bills.

How it works

1. A big company cuts prices drastically.
   Smaller businesses that don’t have deep pockets can’t match these prices.
2. Competitors start losing customers.
   Reduced profits force some to shut down or exit the market.
3. The dominating company gains monopoly-like power.
4. Prices go up again.
   With no competition left, consumers end up paying more than before.

Is predatory pricing illegal in india?

In India, the Competition Act, 2002 means that predatory pricing is considered an abuse of dominant position. 

The Competition Commission of India (CCI) can investigate and penalise companies found engaging in this practice.

However, not every low price is illegal. A company must be:

• Dominant in the market, and
• Intentionally lowering prices to eliminate competitors

Only then can the pricing be called “predatory.”

Why should consumers care?

The fact is that when only a handful of companies survive, they gain disproportionate control over markets, from pricing to product variety.

With predatory pricing, short-term discounts can hide long-term losses. Those exciting deals may lead to fewer market players tomorrow and that often means higher prices later.

Another way that consumers end up paying in the long run is reduced choice. Once competitors exit the market, consumers have limited options. This can affect quality, availability, and innovation.

Finally, the harm to local businesses cannot be overstated. Predatory pricing can entirely wipe out small retailers, neighbourhood stores, and local brands, hurting livelihoods and weakening the broader economy.

How can you spot predatory pricing?

While you don’t need to analyse cost structures, here are some warning signs:

• Prices drop dramatically for a long period, with no festival or valid reason.
• Discounts seem too good to be true, even compared to wholesale costs.
• Smaller competitors start closing or reporting losses.
• Once rivals disappear, prices suddenly shoot up.

What can consumers do?

• Stay informed. Understand that extremely low prices can impact the market.
• Support local sellers where possible, especially for essential goods and services.
• Report suspicious pricing practices to the Competition Commission of India through their online portal.
• Diversify your shopping options. Avoid relying on a single platform or brand.

Getting a great deal feels good but it’s important to know the difference between healthy competition and harmful predatory tactics. 

As Indian consumers, staying alert and informed helps ensure that the marketplace remains fair, competitive, and full of choices. Because a truly healthy market is one where many businesses can thrive and consumers benefit from variety and strong local economies.