1) If your costs are legitimately less than the competition then charging less is not illegal. If you're taking a loss to gain market share and then upping the price once the competitors go out of business that's a problem.
2) Have you seen gas stations? If setting your price to be the same was illegal there'd be so many convicted people.
3) I don't remember profiteering being illegal. Literally a ton of companies have been recording record profit and certainly people have been complaining but who was fined/imprisoned? Martin Shkreli wasn't convicted of profiteering cause it's not a crime.
Sold after they were practically run out of business by Amazon's pricing.
> Quidsi could now taste its own blood. At one point, Quidsi executives took what they knew about shipping rates, factored in Procter & Gamble’s (PG) wholesale prices, and calculated that Amazon was on track to lose $100 million over three months in the diaper category alone.
You're right it has not been demonstrated. Maybe some governing body should investigate and come to a conclusion about whether Amazon engages in unfair methods of competition such as what is purported by Quidsi.
Is a retailer now obliged to run every single product they sell at a profit? So Costco can't do their chicken deal (which costs them millions and customers love), nobody is allowed loss leaders?
I'm saying: Amazon's diaper thing was the same as Costco's chicken thing. Retailers shouldn't be obliged to run every single product at a profit just in case there is a single product retailer.
I'm saying that no one ever said you shouldn't be allowed to do loss leaders. Predatory pricing is a specific set of actions in a specific context that happen to do with selling products at a loss for a period of time.
e.g. Driving a car is legal, driving the getaway car for a bank robbery is not.
I believe you have a good understanding of the nuances here. But I also believe that the nuances can be used by career hungry folks at the relevant agencies to bring bogus cases against companies almost at will (current case against Meta is an example) and any extra power granted (or taken) is a bad thing.
> 2. same as the competition - collusion, price fixing
Only true if you arrived at those prices via collusion
> 3. higher than the competition - gouging, profiteering
In the US gouging is pretty much always legally defined as "raising prices by [xx%] in the immediate aftermath of a civil emergency on necessary items". People might use the terms colloquially but that doesn't make it illegal.
> Only true if you arrived at those prices via collusion
The same prices is evidence enough of collusion to file charges.
> In the US gouging is pretty much always legally defined as "raising prices by [xx%] in the immediate aftermath of a civil emergency on necessary items"
I.e. they can file such charges whenever they like. Note that this does not take into account the cost of supplying these goods.
First of all, the article (and original source [1]) doesn't actually discuss pricing. Page 12 starts a list of historic examples, none mention pricing.
Important quote (page 8):
> "The method of competition must be unfair, meaning that the conduct goes beyond competition on the merits. Competition on the merits may include, for example, superior products or services, superior business acumen, truthful marketing and advertising practices, investment in research and development that leads to innovative outputs, or attracting employees and workers through the offering of better employment terms."
Second of all, this is intentionally one-sided perspective to say all are illegal (its not). Personally, I say screw the giant corps, do what's best for people in society, even at the expense of profit margins. Why do we sympathize with giant corporations? With inflation rising, IMO we should expect that business take smaller profit margins to keep prices from inflating higher. What is the harm in shareholders missing out on profits a bit in 2022? Surely less to society than all the lower-income folks missing out on buying food.
To address the "all three prices are illegal" point (which, again, is not true)
1. If you price your product at a loss in the attempt to drive your competition out of business, then maybe this applies, but only maybe.
2. Only if you actually collude/price fix. You can find the same natural market price as competition without collusion. Coffee shops sell coffee at similar prices because the all the businesses have similar costs, and consumers have a limit to their willingness to spend.
3. Only if you do it under limited circumstances. Price gouging is rare. BMW doesn't price gouge for selling more expensive cars than Toyota, but buying 100% of the supply of a drug and 100x'ing the price just to make more money is bad for society, and more likely to be price gouging.
Giant corps are the engines that drive the economy. Take them away, and you've got an economy in the dumpster. (Small businesses are the future. A healthy economy requires both.)
> we should expect that business take smaller profit margins to keep prices from inflating higher
Businesses neither aid nor retard inflation. Inflation is a monetary phenomenon caused by deficit spending. If you want less inflation, vote against the deficit spenders.
> which, again, is not true
Amusingly, your exposition admits they are all illegal, although selectively applied. Mostly for BS reasons, like Microsoft being charged with giving away a browser for free (no harm to consumers was ever established).
> Giant corps are the engines that drive the economy. Take them away, and you've got an economy in the dumpster.
I didn't say take them away, I said don't prioritize them. There is no reason to cater to big corporations. No one will voluntarily not make more money, so there is no reason to assume that regulation will disincentive growth. Same way taxes don't stop people from wanting to make more money.
Make corporations do things that are in societies interest, not their own. Why do we require people to sign up for the draft or pay taxes? Not because people want to enlist, but because its good for society. Why do we require drivers licenses and car insurance and air bags? Because having competence and protections is good.
> Businesses neither aid nor retard inflation.
Today, there is record inflation constantly in the news. Many businesses are also posting larger profit margins. We could lower prices closer to their pre-inflation values if they lowered their profit margins to pre-inflation values too.
> your exposition admits they are all illegal, although selectively applied.
Yea, thats the difference between legal and not illegal in most cases?
Driving 50 mph is illegal in a school zone but not a highway. Its even more illegal to drive 50 mph into a group of children crossing the road in said school zone. The laws protect against behavior that is bad in a certain context.
> Mostly for BS reasons, like Microsoft being charged with giving away a browser for free
The Microsoft case rested on the fact that bundling the product restricted market entrants ability to compete, not on pricing.
> (no harm to consumers was ever established)
Thats not necessary to prove anti-competitive. Anti-competitive is when you're bad for competition not consumers. Specifically, the FTC claims that their purpose is to prevent monopolies, not to prevent consumer harm...
> ...the legislative history is replete with statements to the effect that Congress wanted the FTC to stop monopolies in their “incipiency"...
> We could lower prices closer to their pre-inflation values if they lowered their profit margins to pre-inflation values too
That's a fantasy. Communist countries have inflation, too (and higher), and the industries don't make any profits.
> Yea, thats the difference between legal and not illegal in most cases?
The difference here is extremely subjective. Selective prosecution is a real thing, and it's not about whether a crime was committed or not.
> The Microsoft case rested on the fact that bundling the product restricted market entrants ability to compete, not on pricing.
It was about giving it away for free. (Microsoft never tried to prevent Netscape from running.) Note that everybody gives it away for free today. As for bundling, operating systems have always "bundled" all sorts of programs and utilities. My Kindle even comes with a browser "bundled" into it. Oh, the humanity!
Apple's walled garden ecosystem is far, far more anticompetitive than MS and Explorer, and not a peep from the Justice Dept.
> Specifically, the FTC claims that their purpose is to prevent monopolies, not to prevent consumer harm...
Or maybe Bill Gates did not acknowledge the authority of the FTC and the FTC decided to show him who's the boss. This is not unfounded, there was a fair amount of talk about that at the time.
All potentially illegal, but more often legal and not even controversial. The important distinction is whether the prices were set to maintain or exploit a non-competitive situation, vs. to compete in a still fair/open market. There's no issue with undercutting competitors if they exist. There's no issue with charging a brand premium. In either case, competitors can respond as they see fit. It's only when there are no competitors that these choices deserve scrutiny.
Clearly the answer is a price that isn't disclosed online, and requires the customer to fill out a form disclosing their name ("ethnicity"), address ("socioeconomic status"), and title/company ("education level") before they can receive a quote on the item. /s
1. lower than the competition - unfair competition, dumping, predatory pricing
2. same as the competition - collusion, price fixing
3. higher than the competition - gouging, profiteering
All three price points are illegal.