Predatory Pricing

In ordinary business language, predatory pricing means pricing that is not merely low, but strategically loss-making in order to weaken or eliminate rivals. Indian law captures that idea in Section 4. A predatory price is a price below cost, as determined by regulations, adopted with a view to reduce competition or eliminate competitors. Two things follow immediately from the statutory text. First, low prices are not unlawful by themselves. Second, predatory pricing sits inside abuse of dominance, so dominance must ordinarily be shown before the theory can succeed. The Act also expressly protects prices adopted to meet the competition, which prevents Section 4 from punishing legitimate competitive responses.

That is why predatory pricing is one of the most contested competition-law ideas. Introductory discounts, penetration pricing, festival promotions, loyalty rewards, and platform subsidies can all be perfectly normal. New firms often price aggressively to build volume. Digital platforms may subsidize one side of the market while earning from another. None of that is automatically unlawful. The legal concern begins when below-cost pricing by a dominant firm appears tied to a strategy of foreclosure rather than competition on the merits.

The early NSE case remains the classic Indian authority. In MCX v NSE, the Commission treated zero pricing in the currency derivatives segment by a dominant incumbent as predatory because zero transaction fees in the relevant segment were viewed as evidence of sacrificing revenue in the short term for exclusionary advantage. The order is still important because it anchors the Indian understanding that predation is not just about low prices, but about the combination of below-cost pricing, market power, and exclusionary design.

At the same time, Indian decisional practice has been careful not to turn every discount strategy into predation. In the Ola case, the Commission closed the allegations, finding that Ola was not dominant in the relevant market and that the available material did not establish pricing below average variable cost. That is a very useful contrast. Even intense discounting in a bruising market is not enough if the dominance limb fails or if the cost benchmark is not crossed. The case also shows that in dynamic platform markets, market shares and losses must be interpreted cautiously. Not every subsidized ride is an antitrust violation.

The Uber litigation illustrates the same caution from the opposite direction. The Supreme Court did not make a final finding of abuse in Uber v CCI. What it did hold was that the material alleging significant per-trip losses and fidelity-inducing incentives to drivers was enough to sustain a Section 26(1) investigation. That procedural point matters because predation is often hard to prove without full investigation into internal pricing logic, cost structure, and exclusionary effect. The Court’s judgment is therefore best read as a reminder that prima facie scrutiny should not be set unrealistically high where the pricing pattern appears economically irrational except as a means of reducing competition.

Cost methodology also matters. Historically, Indian enforcement often used average variable cost as an important screen. The 2025 Cost Regulations refer to concepts including average variable cost and average avoidable cost, replacing the older 2009 framework with a more refined cost toolkit. The direction of travel is sensible. In modern markets, especially platforms, the right benchmark is often contested, and the law needs enough flexibility to distinguish genuine exclusion from ordinary investment or customer acquisition.

What the Commission is really looking for in a predatory pricing case is a pattern. Is the firm dominant. Is pricing genuinely below the relevant cost benchmark. Is the conduct sustained in a way that suggests exclusion rather than competition. Are rivals being weakened, disciplined, or forced to match losses they cannot bear. Is there a plausible path by which the dominant firm protects or strengthens its position after foreclosure. Indian decisions do not always speak in the same economic vocabulary, but those are the recurring practical questions.

For businesses, the safest instinct is not to avoid aggressive pricing, but to document why the pricing is commercially rational apart from exclusion. If the strategy reflects launch investment, inventory clearance, capacity utilization, customer acquisition, or a competitive response, the evidence should exist. For claimants, the lesson is the reverse. A predation case without credible cost evidence and a coherent dominance story will rarely travel far. Indian law is willing to investigate hard, but it does not prohibit winning customers through lower prices as such. It prohibits the use of below-cost power by a dominant firm to damage the competitive process itself.