Predatory pricing is outlawed by which laws?

Predatory pricing is outlawed by which laws?

• A. Sherman Act only
• B. FTC Act only
• C. Sherman Act and FTC Act
• D. Clayton Act

Answer: (C)

Predatory pricing is an anticompetitive tactic where a firm temporarily lowers prices, often below cost, to push competitors out and gain monopoly power, with the plan to raise prices later. This behavior is addressed by two main antitrust tools. The Sherman Act targets restraints of trade and monopolization, so if a company with market power uses pricing to eliminate rivals or acquire monopoly control, that conduct can be unlawful under this law. The FTC Act prohibits unfair methods of competition and unfair or deceptive acts or practices, meaning pricing strategies that harm competition can be challenged as unfair competition. The Clayton Act does not specifically outlaw predatory pricing on its own; it focuses more on other practices like certain price discrimination, mergers, and exclusive dealing. So the combination of the Sherman Act and the FTC Act provides the appropriate legal framework against predatory pricing.

Predatory pricing is an anticompetitive tactic where a firm temporarily lowers prices, often below cost, to push competitors out and gain monopoly power, with the plan to raise prices later. This behavior is addressed by two main antitrust tools. The Sherman Act targets restraints of trade and monopolization, so if a company with market power uses pricing to eliminate rivals or acquire monopoly control, that conduct can be unlawful under this law. The FTC Act prohibits unfair methods of competition and unfair or deceptive acts or practices, meaning pricing strategies that harm competition can be challenged as unfair competition. The Clayton Act does not specifically outlaw predatory pricing on its own; it focuses more on other practices like certain price discrimination, mergers, and exclusive dealing. So the combination of the Sherman Act and the FTC Act provides the appropriate legal framework against predatory pricing.