What is predatory pricing?

Predatory pricing is understood as a strategy employed by businesses where they set prices significantly lower than their competitors with the intention of driving them out of the market. This approach can involve selling a product at or even below cost, creating a situation where rivals cannot compete effectively due to the unsustainably low prices. The ultimate goal of predatory pricing is not just to capture market share but to eliminate competition, allowing the business to later raise prices once the rivals have exited the market.

This practice raises important concerns in the field of competition law, as it can lead to monopolistic behavior that harms consumer choice and stifles competition in the long run. By engaging in predatory pricing, a company can establish itself as a dominant player in the market, which can discourage new entrants and potentially lead to higher prices for consumers after the competition is diminished.

The incorrect options represent different pricing strategies that do not align with the concept of predatory pricing. Keeping prices high to maximize profit is a standard pricing strategy aimed at capitalizing on consumer willingness to pay, while compliance with regulatory agencies implies adherence to fair trading laws, which would conflict with the aggressive tactics associated with predatory pricing. Lastly, attracting new customers without impacting competitors suggests a more collaborative or competitive coexistence in