CCI Cost of Production Regulations 2025 on Predatory Pricing
Why in the news
CCI introduced cost benchmarks to judge predatory pricing, aiming at stronger competition safeguards in digital and capital-intensive markets.
Key facts
- Regulation: Determination of Cost of Production Regulations, 2025 by the Competition Commission of India.
- Benchmark: Average Total Cost (ATC).
- Illustration cited: NSE vs MCX, where zero pricing in currency derivatives drew exclusion allegations.
Predatory pricing
A dominant firm deliberately prices below cost to remove competitors and gain monopoly power; consumers gain briefly but face harm later, with less choice and innovation.
| Type | Meaning |
|---|---|
| Direct predation | Prices kept below cost |
| Cross-subsidisation | Profits from one segment fund undercutting in another |
| Discriminatory pricing | Cheap rates for targeted segments |
Why it occurs
- Dominant firms with deep reserves.
- Network externalities in digital markets.
- Weak enforcement: only one case upheld before 2025.
- No clear cost metric earlier; cross-border e-commerce gaps.
Regulatory challenges
- Proving intent under Section 4.
- Chilling effect on AI and FinTech startups.
- Fragmented market surveillance and judicial delays.
Exam angle
- Cost benchmark: ATC; section on abuse of dominance: Section 4, Competition Act.