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Authored By-Swastik Shukla,

4th year student of BALLB at National Law Institute University, Bhopal


The concept of Predatory Pricing has been dealt with by antitrust authorities across the globe in a roughly similar fashion. This paper deals with, inter alia, the provisions dealing with predatory pricing present in, major jurisdictions such as the European Union, and do a comparative analysis to find any possible improvements or amends that the Indian legislature should aspire to incorporate in light of its own economic and financial circumstances. The paper also takes a look at landmark judicial pronouncements given by Indian antitrust authorities, which will give a much better idea regarding the technicalities that the judicial as well as legal professionals ought to keep in mind while dealing with issues that arise out of cases where abuse of dominant market position, in the form of predatory pricing, is alleged. The legislative provisions regarding the same are provided under the Competition Act 2002, which is heavily influenced by the Treaty on the Functioning of the European Union, and borrows a good amount of its legislative attributes.

Introduction To The Concept

Predatory pricing, in simple terms, is a widely recognized anti-competitive practice that involves cutting down prices of products (goods or services) for an extended period of time, so as to eliminate all the competing firms from the relevant market. The decrease in prices is significant enough to influence the purchasing choices of the consumers long enough to kick out rival firms and establish a monopolistic market. An example would give a better understanding of what we are dealing with here. Let’s say there is a firm A that manufactures and sells cars, in a country, Z. A has 3 competing firms who sell cars in Z, they are B, C &D respectively. A is the largest firm in Z. At the beginning of, let's say, financial year 20XX, A reduces the prices of all its products by 25%, a significant decrease that none of the rival firms were capable of emulating. A is able to pull an overwhelming majority of consumers to itself, jeopardizing the businesses of its rival firms. In the process, A also incurs severe losses, however, compared to its market capital as well as annual revenue, they aren’t significant. In other words, it will be said that A has deep pockets. Since B, C & D do not, they wouldn't be able to carry out the same strategy and would hence lose any share in the customer base available for cars in country Z. Now on the surface itself, it's clear that the practice is harmful to the rival firms. In the long run, it's also harmful to the consumers whose interests the competition law regime seeks to protect. Once B, C & D are out of business (let's say, by the end of the year 20XX), firm A will increase the prices of the cars in order to compensate for the losses incurred before. This would, obviously, jeopardize the pockets of consumers, and it would be too late to do anything as the consumers will have no choice but to buy from A.

The above explanation, despite all the details, is an oversimplified version aimed at a layman's audience. Next, we will get into the technical intricacies of the practice, especially in light of legislative provisions and judicial pronouncements.

Research Objective

The concept of predatory pricing has been around for quite a while now. However, as far as the Indian competition law regime is concerned, it has been dealt with poorly in the past, to put it a simple way. There was no specific provision dealing with the practice in the Monopoly and Restrictive Trade Practices (MRTP) Act, and the MRTP commission even came up with certain judicial pronouncements that have been heavily criticized. Following the recommendations of the Raghavan Committee report (1999), the Indian legislature came up with the Competition Act, 2002, which now serves as the prime legislation dealing with antitrust issues[1]. This paper seeks to analyze how the new legislation, as well as the Indian judiciary (including judicial pronouncements by the Competition Commission of India), has dealt with the concept of predatory pricing in the context of the Indian market economy, and what can be done to ensure fair competition in light of coming challenges revolving around the said antitrust practice.

A Glance At Indian Competition Act & Relevant Judicial Pronouncements

Section 4(2) of the Competition Act 2002 explicitly deals with the idea of ‘abuse of dominance’. In a capitalist economy, profit-driven private enterprises are capable of damaging the competitors as well as the consumers, if the consumers are completely reliant on a said enterprise, which generally happens in the absence of credible competition. In such conditions, an enterprise is said to be dominant. However, dominance is not illegal per se. Rather, ‘abusing' the dominant power that one holds would make it liable under the relevant legislative provision. "How can a dominant enterprise abuse its dominant position?" is also explained within the same section. Clauses (a) to (e) list down the practices which will amount to an abuse of dominance, predatory pricing being one of them. In fact, predatory pricing (provided for in Section 4(2) (ii) of the Act[2]) is one of the sub-types of unfair or discriminatory pricing which a dominant enterprise can impose upon the customers as a part of its abusive stratagem. 

Now, we’ll look at some of the leading judgments by Indian courts as well as the Competition Commission of India (a quasi-judicial body) which will help us better grasp the idea of predatory pricing and how it is dealt with in Indian jurisprudence. 

MCX Stock Exchange Ltd. (“MCX”) vs. National Stock Exchange of India Ltd (“NSE”)[3] - Widely regarded as the most important judgment with respect to not just the jurisprudential interpretation of predatory pricing, but also that of abuse of dominance and the technical issues that arise while delineating the relevant market, in the context of which, the activities of an enterprise are to be analyzed. The informant in the said case was MCX Stock Exchange, a Mumbai-based government-owned commodity exchange. MCX has filed the information in front of CCI alleging abuse of dominance and imposition of predatory pricing by the National Stock Exchange in the currency derivative segment of the derivative exchange market (CD segment). The main argument that MCX tried to make was that NSE was a dominant player in other segments of the derivative exchange market, and was intended to leverage its dominant position to enter into the CD segment and monopolize it. In order to realize this goal, NSE had waived off transaction fees, data feed fees, and annual subscription charges, the informant alleged.
The first major issue that the CCI took on, in this case, was delineating the relevant market. MCX had a higher share than NSE in the CD segment, while in other segments of the stock market, NSE had a higher market share. Eventually, CCI adjudged that the market for the exchange of currency derivatives was a separate distinct market, as the products in other segments, such as government securities, equity or futures were not substitutable with the currency derivatives. In other words, if a person is trading in the currency derivative market, and wants to shift to some other segment for whatever reasons, he cannot use his possessions from the CD segment, to buy an equivalent amount of, let's say, government securities. Since this is how things work in a relevant market, if a monopolistic enterprise tries to exploit its consumers, they have no refuge. This rationale was applied by CCI to determine the relevant market, i.e., the market for the exchange of currency derivatives in India, in which MCX had a higher market share compared to NSE.

However, this statistic could not be used for making a conclusive statement on whether MCX's case stands or fails. Rather, a whole lot of factors were taken into consideration by the adjudicating CCI panel, as mandated by Section 19(2) of the Competition Act.

A holistic analysis of these factors, namely the brand value of the enterprises, entry barriers in the market, and the financial ability of NSE to work independently, unaffected by the competitive forces acting within the relevant market, was done to arrive at the conclusion that NSE indeed, intended to leverage its dominant position in other markets to dominate and eventually monopolize the CD-exchange market. This take by CCI was indeed a controversial one, as traditionally, the dominant position of a firm is to be determined with respect to the relevant market only. However, in the present case, CCI made a much broader analysis and considered the fact that NSE's dominant position in markets that deal with the exchange of other commodities such as securities and futures will clearly allow it to enter and monopolize the Currency Derivative market with relative ease. In pursuance of the same, NSE waived the transaction, admission, and data feed fees, that too for an extended period time measuring more than 3 years, approximately. NSE tried to argue that it was attempting to penetrate the CD exchange market as it lacked considerable market share in this relatively nascent commodity exchange market. This argument was completely rejected by the CCI’s adjudicating panel, as a penetrative strategy would involve a reduction in the relevant fee structures for, at best, a few months, or a year. NSE's zero pricing strategy extending beyond a couple of years was clearly an attempt to monopolize the relevant market and make it impossible for newer entrants to compete.

M/S Transparent Energy Systems Private Limited v. Tecpro Systems Limited[4]- The information was filed by M/S TESP, an enterprise operating in the market of setting up Waste Heat Recovery Power Plants (WHRPP), against its rival firm TECPRO, who was working in collaboration with a leading firm operating in the Chinese WHRPP market, the Nanjing Triumph Kaineng Environment and Energy Company Limited. The Chinese firm was highly successful on its home turf, and TECPRO, via this collaboration, was expected to replicate the same success on Indian soil.

With the collaboration, both firms were jointly holding 50% of the market share in the concerned market. Further, the informant alleged that in bids that were released for setting up of WHRPPs, the Opposite Parties quoted abnormally low prices and were able to win the majority of the bids. In fact, the price for which they were willing to complete the entire work was equivalent to the price at which the informant was able to only procure the raw materials. As such, the informant argued, TECPRO was trying to use its dominant position (especially that in other sectors, where it was a dominant firm on its own) to eliminate competition in the relevant market.

The CCI panel observed that not only are the Opposing parties not dominant in the relevant market but TECPRO's dominance in other markets cannot be used as a piece of evidence to declare it a dominant enterprise in the market for setting up WHRPPs. Further, in the relevant market, recouping the losses that will be made while constructing the WHRPPs will take a very long period of time, which is not ideal in the whole business of using predatory pricing to eliminate competitors. Another important point in the case was the fact that the informants quoted estimated prices that were required to complete a project (involving setting up a WHRPP). As such, it was not possible for the panel to analyze whether the Opposing Parties were quoting bids that were lower than the average variable cost which they will spend while constructing a project. Since the very basis of determining predatory pricing is to determine whether the price offered by an enterprise is below average variable cost or not, the case against the opposing parties stood even weaker. Finally, CCI ruled in favor of the Opposite Parties and dismissed the informant's case, setting the record straight that the relevant market in question and the nature of products in the market, as well as the qualitative accuracy of the evidence submitted by the informants, are highly significant when it comes to determining abuse of dominance by an enterprise.

Meru Travel Solutions Pvt. Ltd. v ANI Technologies Pvt. Ltd. & Ors.[5] - The informant, in this case, was Meru Travel Solutions Pvt. Ltd., a group holding company whose subsidiaries, Meru Cab and V-Link Automotive Services, were active in the relevant, i.e., the markets for radio taxi services in Kolkata, Chennai, Hyderabad, Mumbai, and Delhi. The informant alleged in front of the CCI that the Opposing Parties were collectively as well as individually dominant in the relevant markets, and were abusing their dominance

by engaging in anti-competitive practices such as the imposition of unfair terms and predatory pricing in the form of incentives provided to drivers, with the intent of driving out the competitors. The OPs also had common institutional investors, most notably the Japanese conglomerate Softbank, and were empowered with high-scale financing which allowed them to offer major incentives in form of below variable cost charges on taxi rides to their consumers. This, the informants alleged, amounted to predatory pricing, and abuse of dominant position. The dominant position was owing to the fact that they had common investors, hence they were operating like a single enterprise and using their financial strength to push out competitors from the market.

The CCI delved into the issue of 'collective dominance' which the informants alleged the OPs were indulging in. CCI made it clear that as per the literary interpretation of the provisions under Section 3 & 4 of the Competition Act, a 'dominant' enterprise is always a 'single' enterprise, hence the act does not deal with the idea of collective dominance in the first place. Without any legislative backing, at the present stage, the informant's allegation with respect to the same stood dismissed. Further, CCI pointed out that the existence of an ‘agreement’ is necessary for a practice to be considered anti-competitive under Section 3, which includes predatory pricing as well. The incentives offered by Opposing Parties did not amount to an agreement in any shape or form, as such any allegation leveled against them under Section 3 was liable to be struck down.

Predatory Pricing In Other Jurisdictions

1. European Union-The European states signed the Treaty on the Functioning of the European Union back in 1957, and the treaty serves as the foundational document for the working of the European Union. It's a comprehensive document that deals with various legal issues such as transport, employment, taxation, and even antitrust. Article 102[6], to be specific, deals with anti-competitive practices, including predatory pricing. When we get into the technical details, we find that the European Court of Justice has ruled that if an enterprise prices its goods or services below average variable cost, it is to be presumed that the enterprise is intending to monopolize the

 relevant market, as otherwise, it'd make no sense for it to indulge in such price-reduction strategy[7]. In India, costing products below average variable cost does attract suspicion from antitrust authorities, but it cannot be regarded as conclusive evidence for holding an enterprise liable under the established competition law[8]. In fact, on separate occasions, the CCI has relied on other benchmarks to determine predatory pricing. Most importantly, CCI takes into consideration whether an intention to drive competitors out of the relevant market was present in the case or not. This is not the case with European jurisprudence, where it is unnecessary to ascertain the intentions of the enterprise once it’s shown that they were pricing their products below average variable cost.

2. United States-Predatory pricing as conduct violates Section 2 of the United States' prime antitrust legislation, the Sherman Act. However, the United States' legal system shows a bias in favor of enterprises and limits the authority of antitrust regulators to investigate into or interfere with firms indulging in severe price reduction strategies. The official website of the Federal Trade Commission[9], in fact, states that even if a firm is pricing its products 'below cost', it does not necessarily mean that the said firm intends to indulge in predatory pricing and drive out its competitors from the relevant market unless there is evidence to prove so, and there is reasonable foreseeability that the said firm will be able to 'recoup' the losses it incurred while cutting prices, by charging exorbitantly from consumers once it has monopolized the relevant market successfully. For example, if a gas station is providing its consumers with a high level of discounts, which a competing gas station's owner believes would lead to loss of consumers (and hence, loss of business revenue) for himself, the latter cannot allege that the former is engaging in predatory pricing simply because of the discounting strategy. The market of gas stations is highly competitive and it's unreasonable for any gas station owner to indulge in such a price-cutting strategy as it would take too much time and would incur an exorbitant amount of losses before the market is monopolized and the said gas station can recoup the losses.

This intense focus on the recoupment element in the judicial analysis of antitrust cases has attracted a lot of criticism in the US as well[10]. The main argument that scholars come up with respect to the recoupment theory is the sheer technical complexity in determining whether the accused firm will be able to recoup its losses or not. The process requires documentary evidence which has to be highly credible, as well as the application of complex mathematical algorithms which generally do not fall within the expertise of adjudicating authorities[11]. Even if there are professionals in the adjudicating panel who are experts in analyzing said evidence, it does not refute the fact that the process of antitrust investigation does become much more inefficient, the scholars argue. Further, they point out that just the very idea of recoupment of losses should not be considered while convicting a firm for predatory pricing. The reason is more abstract than practical for this one. The argument is that antitrust regulations punish conduct that eliminates or seeks to eliminate competition in a relevant market[12]. Hence, when a firm indulges in predatory pricing, and the same is proven before the regulators, it is of no consequence whether the said firm will be able to recoup the losses it incurred in the process. What matters is that the firm indulged in a practice with an intention to eliminate its competitors, and as per established antitrust laws, needs to be penalized for its conduct.


After going through the legislative provisions that deal with the practice of predatory pricing, it can be said for sure that antitrust laws don't perceive it in the same way as doing with other antitrust practices such as cartelization. The main reason is, that predatory pricing, on a technical level, is a paradoxical concept. Cutting prices in any market is a practice that benefits consumers, a situation that can be regarded as favorable if we take into account the ultimate goal of antitrust laws and regulators, i.e., to protect consumer interest. Cutting prices by competing firms can, in fact, be regarded as a sign of the presence of healthy competition. In such circumstances, the regulators have to differentiate between price-cutting strategies that seek to simply increase a firm's consumer base and the ones that intend to eliminate their competitors from the relevant market. In light of these complications, pronouncements by the Indian regulator, the CCI, have helped in creating a framework to deal with antitrust disputes.

Going over the relevant case laws cited in this paper, we can conclude that following are the factors to be kept in mind while dealing with a firm that has been accused of indulging in anti-competitive practices-

Price cutting strategy has to be implemented over an extended period of time, and then only can it be considered an anti-competitive practice. A price-cutting strategy implemented for a short period of time is generally regarded as a 'penetrative' strategy, employed by firms to enter into and establish themselves in a market they were previously inactive in. A reading of the Stock Exchange cases and CCI's judgment in favor of Reliance Jio Telecom helps us conclude the same. In the former case, it was ruled by the CCI that NSE’s waiver of fees in the Currency Derivative segment is not a penetrative strategy, or else the waiver wouldn’t have lasted for more than a period of a few months. Instead, NSE went ahead with the waiver for a period of more than a couple of years, hence NSE's defense of penetrative pricing was rejected. In the case of Reliance Jio[13] on the other

hand, CCI ruled that simply cutting prices or even zero pricing policy cannot be considered inherently anticompetitive, as long as it is practiced in a market with other powerful players, and that too for a short period of time. If the other criteria are fulfilled, then a firm can get away with predatory pricing, under the present circumstances. On the other hand, similar conduct in the European Union is sure to attract an immediate penalty.

As mentioned previously in this paper, the concept of Average Variable Cost is provided for in the CCI Regulations of 2008 as well. However, while CCI does generally relies on it as a benchmark, to determine whether prices quoted by a firm can be considered predatory prices or not, another major factor that is taken into account is 'recoupment', which is generally seen in US antitrust rulings as well. In Indian jurisprudence too, however, we have witnessed in cases such as M/S Transport vs. TECPRO, that recoupment of losses is considered a major factor while adjudicating antitrust disputes. In the given case, which we have discussed in this paper as well, CCI noted that in the relevant market, it wouldn't be practical for TECPRO to eliminate competition via price-cutting strategy, as recouping the losses it would incur in the process would take too long. The significance of recoupment as a factor while adjudicating antitrust disputes in the USA is well established, where it does happen to have a lot of weightage. The scenario is completely opposite in European law, where recoupment is not even considered a factor as long as pricing by the accused firm is below average variable cost.
The idea of collective dominance has not been dealt with by Indian competition law so far. In fact, in the Meru Travel vs ANI Technologies case, the CCI rejected arguments put forth by informants (Meru Travels), that the Opposing Parties, i.e., Ola and Uber, were collectively dominant in the relevant markets and indulging in abuse of dominance. CCI’s panel simply quoted the legislation on this point, wherein it was clearly stated that the provisions of section 4 of the Competition Act, which deals with predatory pricing as well, talk only about a 'single' enterprise, and not a group of them.
Putting together all the pieces of information that we have discussed in this paper so far, it is evident that Indian jurisprudence is not quite as strict as its European counterpart when it comes to dealing with predatory pricing accusations. It is more in line with US jurisprudence, which comes as a surprise given that Indian competition law in general is modeled after the European one.

Further, most Indian laws are more or less inspired by the legacy left behind by the British. Regardless, it is evident from this discourse that Indian regulators do generally give the accused firms a benefit by making it difficult for the informants to prove that an intentional anti-competitive practice is being implemented in the disguise of a price-cutting market strategy.

Most of these factors have been developed in Indian jurisprudence, over the years, as a result of rulings pronounced by the CCI. As such, judicial precedents clearly outweigh legislative provisions in India as far as analysis of predatory pricing-related disputes is concerned. Factors such as recoupment of losses, the intent of a firm, and sustained price-reduction for an extended period of time (and not for a short one), have been recognized by the CCI over a series of landmark judgments. The legislature itself only provides for one significant criterion, i.e., that the pricing should be below the Average Variable Cost. In light of these developments, it can be reasonably concluded that the Indian competition law regime will remain suspicious when it comes to cases that involve allegations of predatory pricing, and will lean in favor of the accused firms, more often than not. The burden of proof that the informants have to carry is simply that big in the concerned area of antitrust disputes.



Competition Act, 2002.
Competition Commission of India (Determination of Cost of Production) Regulations, 2009.
Monopolies and Restrictive Trade Practices Act, 1969.
Sherman Anti-Trust Act, 1890.

Treaty on the Functioning of the European Union (TFEU), 1958.
Case Laws-

MCX Stock Exchange Ltd. (“MCX”) vs. National Stock Exchange of India Ltd (“NSE”) 2011 SCC OnLine CCI 52.
M/S Transparent Energy Systems Private Limited v. Tecpro Systems Limited 2013 SCC OnLine CCI 42.

Meru Travel Solutions Pvt. Ltd. v ANI Technologies Pvt. Ltd. & Ors. Case No. 25-28 of 2017.

Christopher R. Leslie, Predatory Pricing and Recoupment, 113 Columbia Law Review 1695, 1697 (2013).

Online Sources-

M. Govindarajan, Historical Background of the Competition Act, 2002, TAX MANAGEMENT INDIA.COM (June 25, 2022, 01:30 PM), https://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=6419.
Gönenç Gürkaynak & Onur Özgümü?, Predatory Pricing, CONCURRENCES: ANTITRUST PUBLICATIONS AND EVENTS, (June 30, 2022, 10:15 AM), https://www.concurrences.com/en/dictionary/predatory-pricing#auteur.
Lagna Panda & Prachi Agarwal, When does CCI consider low pricing predatory?, INDIAN BUSINESS LAW JOURNAL, (June 30, 2022, 02:30 PM), https://law.asia/when-does-cci-consider-low-pricing-predatory/.
FEDERAL TRADE COMMISSION: PROTECTING AMERICA’S CONSUMERS, https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/single-firm-conduct/predatory-or-below-cost-pricing. (last visited July 02, 2022)
Priyadarshee Mukhopadhyay, Penetrative Pricing: Understanding its Evolution and Rationale Under the Indian Competition Law Regime Through the Revolutionary Jio Case, KLUWER COMPETITION LAW BLOG, (July 04, 2022, 06:00 PM), http://competitionlawblog.kluwercompetitionlaw.com/2019/06/18/penetrative-pricing-understanding-its-evolution-and-rationale-under-the-indian-competition-law-regime-through-the-revolutionary-jio-case/#:~:text=In%202018%2C%20TRAI%20amended%20the,current%20prices%20to%20tackle%20competition.


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