World Competition
Volume 44, Issue 1 (2021) pp. 109 – 120

https://doi.org/10.54648/woco2021006

Abstract

Predatory pricing has been a concern since the inception of competition policy. Scholars from different schools have large disagreements about it, with some arguing that predation does not exist to others considering it a legitimate threat to competition. As predatory pricing theory is largely concerned with price cost test, the issue is further complicated while looking at two sided platforms. Due to network effects, the value of the platform for the users changes with the number of users on the network. Therefore, the price of services is influenced by multiplicity of factors rather than just the cost of the service.The aim of the paper is to note such economic theory and apply this in the Indian jurisprudence on predatory pricing. Part I of the paper provides a non-technical introduction to the economics of two-sided platforms. It explains the rationale behind below cost pricing and critiques the usage of a price cost test for determining predation in case of two-sided platforms. Part II touches on the international regulation of predatory pricing and establishes the context for the Indian jurisprudence. Part III discusses the Indian jurisprudence surrounding predatory pricing. This elaborates on the legislative history and the judicial decisions concerning predatory pricing and platform competition in India. This part argues that the Indian jurisprudence has completely disregarded the economic theory of predation in case of two-sided platforms and the adjudications are merely based on a price cost test.

Extract

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