Predatory pricing

As Kampfpreisunterbietung (English: predatory pricing ) refers to a pricing strategy whose goal is to force competitors out of a market or to create insurmountable barriers to entry for competitors.

General

The " predatory " in itself is unobjectionable without further notice. Low sale prices (including those below cost price ), a variety of commercially reasonable and not unfair grounds have: sales crises, revival of a market, bearing difficulties, etc. The problem low sale prices, however if they are used specifically to undercut a competitor and take him as to its withdrawal from the market. The manifestations of such pricing arrangements are varied, but they have in common that companies take by undercutting their considerable losses. Since predatory strategies can only be successful hence, when the onset company is much financially stronger than the competition and also has the prospect to generate losses after displacement of competitors again, was partly denied that company ever be too inclined to use this remedy.

Antitrust

The Kampfpreisunterbietung comes as case group rather rare in the German and European antitrust jurisprudence. You may be prohibited by Article 102 TFEU and § 19 / § 20 GWB, addressees are dominant companies. As a leading case here is to call the AKZO judgment in which the ECJ answers the question whether a still permissible pricing or already exists Kampfpreisunterbietung based on the resulting costs for the company. Falls below it at its variable costs (ie costs that vary depending on the quantities produced), it is fundamentally unfair. If only the total average costs ( fixed costs plus variable costs) below, so also must still predatory intent to enter.

This practice is not without controversy in the literature. The cost of a company can not always have accurately detect and are also easy to manipulate, so that by some stronger parking is required on subjective criteria.

Competition Law

Even at the level of unfair competition law may develop a low-price policy prove to be inadmissible. The central issue here is § 4 No. 10 UWG. Unfair is also undercutting with predatory intent. However, you may be allowed as a defense measure, insofar as it affects any unaffiliated third parties and their existence at risk.