They will only intervene if the competitors are killed off and the predator becomes a monopoly. If the predator’s competitors survive its predatory pricing strategy, the authorities in most countries will not intervene, because lower prices, more choice and a competitive market is good for consumers. If a monopoly is enjoying mega-profits, it is bound to attract new players into the scene.
It is a method used to deal with new companies that enter a market.
Dumping – exporting goods at a lower price than at home or lower than the cost of production – is a type of predatory pricing. Predatory pricing, when successful, can help the predator establish or re-establish a monopoly. When competing companies have left the market, the predator pushes prices back up. The predator is willing to sell at a loss – below cost – for a period, in the hope that its rivals either go bust or decide stop selling that product. Predatory pricing involves charging very low prices, the aim being to get rid of competitors so that the supplier can charge considerably higher prices later.
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