Shane McEntee
Question:119 Mr. McEntee asked the Minister for Enterprise, Trade and Employment the action he intends to take to outlaw predatory pricing; and if he will make a statement on the matter. [4070/06]
View answerTuesday, 7 February 2006
Questions (32)
Written answers
The 2002 Competition Act prohibits anti-competitive practices in the same way as the prohibitions set down in Articles 81 and 82 of the EU treaty. Section 4 of the Competition Act reflects the prohibitions in Article 81 of the treaty regarding anti-competitive agreements, decisions and concerted practices while section 5 mirrors Article 82 of the treaty which prohibits the abuse of a dominant position.
Predatory pricing is an abusive and anti-competitive practice that acts against the interests of consumers. It is a tactic employed by a firm that is dominant in its market and involves the sale of product below cost for a prolonged period in order to damage or eliminate a competitor. Therefore, predatory pricing is already prohibited by section 5 of the Competition Act 2002 which outlaws the abuse of a dominant position and I do not consider that any action is necessary to further outlaw this practice.
Predatory pricing should not, however, be confused with other forms of low cost selling, such as promotional sales, disposing of old stock, or matching competitors' prices. These are legitimate pro-competitive pricing strategies which benefit consumers. Low prices are only predatory when they are reduced in order to subsequently harm consumers through higher prices later.