Competition Commission of India (Determination of Cost of Production) Regulations, 2025:
The Competition Commission of India recently notified the Competition Commission of India (Determination of Cost of Production) Regulations, 2025, aimed at effectively assessing alleged predatory pricing and deep discounting practices in the quick commerce and e-commerce sectors.
- Competition Commission of India (Determination of Cost of Production) Regulations, 2025 was notified by the Competition Commission of India (CCI).
- It is aimed at effectively assessing alleged predatory pricing and deep discounting practices in the quick commerce and e-commerce sectors.
- Predatory pricing refers to a strategy where a dominant company deliberately lowers its prices below the cost of production to drive competitors out of the market.
- Once rival firms are weakened or eliminated, the company typically raises prices to recoup its losses and consolidate market control.
- This practice is specifically prohibited under Section 4(2)(a)(ii) of the Competition Act, 2002, when used to unfairly gain or maintain dominance.
- To strengthen oversight of such behavior, CCI (Determination of Cost of Production) Regulations, 2025, implements updated cost assessment standards.
- These revised benchmarks are designed to reflect modern economic thinking, judicial rulings, and international best practices in competition law.
- According to the latest regulations, the “cost of a good or service would be assumed to be its average variable cost”, which is the total variable cost divided by total output during a particular period.
- Here, the total variable cost refers to the total cost (including everything that goes into the production of that good or service) minus the fixed cost and fixed overheads attributable to the product.
- One of the key changes in the new regulations is the shift from sector-specific benchmarks to a case-by-case assessment model that is flexible and adaptable to various industries, including the digital economy.
- These new regulations repeal the 2009 Cost Regulations and reflect evolving global practices in competition law.
