The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) dismissed some clauses related to predatory pricing that are part of TRAI’s tariff regulation, citing lack of transparency.
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According to the traditional theory of predatory pricing, the predator, already a dominant firm, sets its prices so low for a sufficient period of time that its competitors leave the market and others are deterred from entering.
This implies that the predator as well as its victims has incurred losses and that these losses are significant. For the predation to be rational, there must be some expectation that these present losses (or foregone profits), like any investment, will be made up by future gains.
This practise of Predatory pricing is criticized for breaking anti-trust laws and making markets more vulnerable to a monopoly. Companies that participate in predatory pricing might also engage in unethical production methods to minimize costs.
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