How Competition Litigation Shapes the Fight Against Predatory Pricing

September 23, 2025
8:47 am

Competition litigation plays a critical role in maintaining fair market practices, especially when it comes to predatory pricing. Businesses that sell products below cost to edge out competitors can face complex legal challenges, and understanding the landscape is essential for any company seeking to remain compliant. AMR Partnership provides strategic guidance to navigate these disputes effectively, helping firms mitigate risk and respond confidently in legal proceedings.

Why Predatory Pricing Sparks Litigation

Predatory pricing occurs when a company deliberately prices goods or services below cost to eliminate competitors or prevent new market entrants. Such actions not only harm competitors but can destabilize markets and reduce consumer choice in the long term. The legal consequences often fall under competition litigation, which seeks to hold dominant firms accountable for anti-competitive conduct.

Globally, regulators have been updating laws to address these practices. In New Zealand, reforms in 2025 clarified cost benchmarks, while the EU and the US have maintained rigorous enforcement standards through landmark cases. These trends indicate that businesses operating internationally must be vigilant about pricing strategies and the potential for litigation.

Breaking Down Predatory Pricing

At its core, predatory pricing is about selling below cost to weaken or eliminate competitors. However, distinguishing illegal predatory pricing from legitimate competitive pricing strategies can be challenging. Businesses must consider the following:

Cost thresholds mean that prices consistently below average variable or avoidable cost may indicate predatory intent
Intent involves evidence that a company aims to exclude competitors which is crucial in litigation
Impact refers to sustained below cost pricing that must threaten competition and not just reflect temporary promotions or efficiency gains

Proving predatory pricing requires demonstrating both intent and market impact, which can involve extensive financial and economic analysis. This is why expert guidance, like the services offered by AMR Partnership, is invaluable for companies under investigation.

How Courts and Regulators Define the Line

Different jurisdictions apply varying standards when evaluating predatory pricing claims:

New Zealand

The 2025 reforms introduced clear economic benchmarks. Pricing below Average Variable Cost (AVC) or Average Avoidable Cost (AAC) over time is presumed unlawful. Prices above these costs but below long-run average incremental costs may still be challenged if there is evidence of exclusionary intent.

Australia

Australian authorities focus on serial acquisitions and cost tests, assessing whether repeated low-cost strategies could harm market competition. Companies are expected to maintain careful pricing documentation.

European Union

The EU applies a strict liability approach, exemplified by cases like AKZO, where dominant firms faced litigation for pricing strategies that could distort the market regardless of actual intent. Firms must demonstrate efficiency justifications and competitive rationale.

United States

US law, highlighted in the Brooke Group case, requires proving both pricing below cost and the likelihood of recouping losses through future monopolistic pricing. These dual criteria make US predatory pricing litigation particularly complex.

For global businesses, these variations highlight the importance of tailored compliance strategies, risk assessments, and ongoing monitoring of market behavior.

Best Practices for Businesses to Stay Safe

To minimize litigation risk, companies should adopt proactive measures:

Implement robust internal pricing reviews before launching promotions or discounts.
Document the rationale behind pricing decisions, including cost structures and market analyses.
Consult with legal counsel or competition experts to ensure pricing strategies comply with local and international regulations.
Regularly train staff on compliance and competition law updates.

By following these practices, businesses can demonstrate good faith and reduce exposure to claims of predatory pricing.

Common Pitfalls That Trigger Litigation

Several common mistakes can increase the likelihood of facing competition litigation:

Overusing aggressive discounting campaigns without clear business justification.
Failing to monitor cost benchmarks or understand market power implications.
Assuming short-term sales promotions are automatically safe from legal scrutiny.

Avoiding these pitfalls requires careful planning, continuous monitoring, and documentation of all pricing decisions.

What to Do If Your Pricing Is Challenged

Companies facing litigation should act promptly and strategically:

Engage legal experts to assess the claim and develop a defense.
Gather and maintain evidence supporting the legitimacy of pricing strategies, including financial records and market analysis.
Communicate transparently with regulators when required and follow procedural timelines closely.
Leverage the expertise of AMR Partnership to build a compelling case and navigate complex proceedings.

Early intervention and structured response can mitigate penalties, reputational damage, and business disruption.

The Bigger Picture: Litigation Trends to Watch

Competition litigation is evolving with market innovations and technological advances:

Algorithmic predation AI driven pricing strategies are emerging as a new frontier with regulators scrutinizing automated systems that may unintentionally or deliberately facilitate predatory pricing
Concentrated markets firms in highly concentrated sectors face higher risk as regulators are more vigilant
Cross border enforcement cooperation among global regulators is increasing making international compliance more critical

Staying ahead requires businesses to understand these trends, assess exposure, and proactively adjust strategies.

Turning Risk Into Resilience

Competition litigation, especially in predatory pricing cases, poses significant challenges for businesses. However, by adopting best practices, engaging experts, and documenting strategies, firms can transform potential risks into opportunities for sustainable growth. AMR Partnership offers practical support, guiding companies through investigations, developing defense strategies, and advising on compliance measures. For a sneak peek at service options and pricing, contact AMR Partnership directly via WhatsApp or Instagram to discuss tailored solutions that fit your business needs. Implementing robust pricing and compliance strategies today ensures your company can compete fairly and confidently in tomorrow’s market.

Learn more about competition litigation and proactive legal strategies at amr.co.id.