New Draft Regulations on Predatory Pricing in India

March 4, 2025

Recently, the Competition Commission of India (CCI) proposed new regulations to replace the 2009 guidelines on predatory pricing. The draft regulations titled “The Competition Commission of India (Determination of Cost of Production) Regulations, 2025” aim to modernise the framework for assessing predatory pricing. This move aligns with contemporary economic theories and global best practices.

About Predatory Pricing

Predatory pricing is defined as selling goods or services below cost by a dominant firm to eliminate competition.
According to Section 4(2)(a)(ii) of the Competition Act, three conditions must be met for a pricing strategy to be classified as predatory – dominance in the market, pricing below cost, and intent to eliminate competitors.

Key Changes in the New Regulations

The most change is the removal of “market value,” which caused confusion. The new regulations introduce “average total cost (ATC)” as the benchmark for assessing pricing. Other measures like average avoidable cost and long-run average incremental cost may also be considered based on industry specifics.

Cost Determination

The CCI or its director general can seek expert assistance to determine cost figures. If enterprises dispute these determinations, they can request an independent expert review at their own expense. This ensures transparency and fairness in the assessment process.

CCI’s Approach to Market Dynamics

The CCI has historically applied the earlier regulations in limited cases and refrains from intervening in market pricing. Market prices should be dictated by competition and the dynamics among participants. This approach ensures consumers benefit from quality and fair pricing.

Legitimate Price Reductions

Price reductions can stem from various legitimate factors, such as promotional discounts or government subsidies. These do not constitute predatory pricing. The new regulations acknowledge that not all price reductions are anti-competitive.

Media and E-commerce Concerns

Certain media outlets have linked the new regulations to e-commerce practices, alleging unfair competition against traditional retailers. However, the CCI maintains that these regulations do not directly affect e-commerce platforms. Existing provisions of the Act will address any unfair practices.

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