Draft Removes “Market Value”, Adds ATC to Predatory Pricing Norms

Aiming to revise the methodology for determining production costs in predatory pricing cases, the Competition Commission of India (CCI) has issued the Draft CCI (Determination of Cost of Production) Regulations, 2025 seeking to update the extant CCI (Determination of Cost of Production) Regulations, 2009.

While the proposed regulation is the same as the previous version, one significant change is the removal of the definition of “market value” and the addition of the “average total cost” (ATC). There have been concerns about the vague definition of “market value” provided in the current regulation. “Market value” means the consideration which the customer pays or agrees to pay for a product which is sold or provided or can be sold or provided. Hence predatory pricing would be a price below such a price which seems unreasonable.

Similarly, the concept of “average total cost” was clearly missing from the extant regulations. In the European region, the average total cost may also be taken as a relevant parameter for determination of predatory pricing. This change would bring the regulation in line with global standards.

Predatory pricing is a pernicious anti-competitive strategy wherein a dominant firm deliberately sets prices below its cost of production with the intent of eliminating rivals from the market. Such practices are unequivocally prohibited under Section 4(2)(a)(ii) of the Competition Act, 2002, which expressly forbids the use of pricing tactics that unfairly facilitate the establishment or consolidation of market dominance.

The emergence of digital markets, platform-based economies, and innovative business models has significantly complicated the task of distinguishing predatory pricing from legitimate competitive strategies.

In the past, various stakeholders have expressed concerns over the predatory pricing and zero-pricing models employed by digital commerce companies. Recently, the All India Consumer Products Distributors Federation (AICPDF) accused quick commerce firms of raising capital through aggressive discounting and predatory pricing tactics, putting significant pressure on small retailers and distributors.

E-commerce giants such as Amazon and Flipkart have also faced substantial criticism for their pricing strategies, with allegations that they undermine competition by offering artificially low prices to drive rivals out of the market.

The Confederation of All India Traders (CAIT) has consistently raised concerns about the difficulties faced by small retailers due to the aggressive pricing strategies and exclusive partnerships of large online platforms.

The draft regulations are seen as a response to these grievances, with the aim of creating a more equitable playing field and preventing market monopolization by a few dominant players. The CCI has opened the draft regulations for public consultation, inviting feedback from stakeholders, including industry participants, until March 19 via CCI’s online portal.