In June, a discount store chain was hit with three separate lawsuits, of pricing

Question

In June, a discount store chain was hit with three separate lawsuits, of pricing goods below cost with an intent to drive competitors out of the market. In another state, the same chain faces a private lawsuit alleging similar illegal pricing practices. State 1 filed a complaint with an administrative law judge accusing the retailer of violating the state's antitrust law. The complaint says that the chain sold butter, milk, laundry detergent, and other staple goods below cost in stores in Foxhollow, Oshkosh, Racine, Clinton, and Stillman. The company intended to force other stores out of business, gain a monopoly in local markets, and ultimately recoup its losses through higher prices. What was the store chain accused of and why is this kind of action illegal?

Explanation / Answer

Below the good cost sales is called the Predatory Pricing if it is kept intentionally to draw out the market competitor and bring in monopoly for self.

While there are laws available under the name of antitrust law which says that Predatory Pricing is not allowed and illegal. Under this law one can file a lawsuit if it is not only taking over rivals but creating a monopoly and breaking the competition. But there are many hurdles that government has created under this act which requires one to provide the proofs for the same and till the time proofs are provided, competition is swept away. Thus the purpose it to maintaing high competitive environment of Business just fades away.

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