Selling items for less than they cost to produce is known as "dumping" in international trade (where it is generally disallowed by trade organizations) and can be illegal in the US if the intent is to eliminate competition [0]. That last factor can be hard to prove, and I don't think the FTC is doing much about anticompetitive behavior these days.
Yes, I can imagine it’s hard to prove, which is a pretty good indicator it’s a slippery concept to being with. Everyone wants to “eliminate the competition”, including your competition!
The predatory pricing pattern the FTC would in theory sure over would be: selling items at an artificially low price until the competition goes out of business, then raising prices once you are the only seller left standing. It's the second step that makes it anticompetitive instead of just competitive
Standard grocery margins are usually lower, in the 30%-40% range, and are often much lower for promotional items. Rotating "loss leaders" to get people in the door are standard practice. IMHO that would make it hard to bring an antitrust action against a grocery chain, as pretty much every store engages in a limited amount of predatory pricing as a marketing technique.
50% is the standard retail markup, but it varies by industry.
I don't think Amazon was producing anything they sold in their grocery stores. They were probably buying the same white label items as everyone else for their store brand.
The Biden admin went slightly harder against anti-competitive actions and anti-consumer actions by companies and all the billionaires freaked out and poured money into Republican campaigns in 2024 in order to roll all that back.
What was rolled back? There was no major change in action whatsoever, only rhetoric, which is meaningless. As for funding, Trump raised substantially less in 2024 than 2020 while Harris raised more money than any campaign ever has, by a wide margin. [1] Dark money also overwhelmingly flowed to the DNC. [2] And a large chunk of all of Trump's funding came after the previous administration tried to imprison him, which rather freaked people out - even those not particularly fond of him. That also likely played a significant role in the more DGAF presidency we're seeing today relative to 2016.
To add onto sibling comment: it is specifically when they sell below cost to eliminate competition, with the goal of later being able to raise prices to recover those losses (and more) once they are the only player in town and can jack the prices up all they want. The later price elevations are what result in consumer harm, which is why it is illegal.
A big gorilla comes in and under prices the entire market. They can do that because they already have tons of money. They do this long enough to break the market and drive the competition out of business. Once the competitors are gone they jack up the prices to unprecedented levels because there's no more alternatives available and bleed the market for all the money.
This presupposes some athletic new competitor can’t enter the market and take the margin off the fat incumbent.
It’s why we have capital markets: If capturing a profitable opportunity requires spending some money, someone who wants to profit will send that money your way.
But it should only be because they indeed have lower margins or more efficient operations. It should not be funded by external money (other departments or investors), only to undercut competition too force them out only to raise prices to above the previous point after.
So a simple law could be that prices can only be raised to the point where they were at before the competition was squashed.
Selling items for less than they cost to produce is known as "dumping" in international trade (where it is generally disallowed by trade organizations) and can be illegal in the US if the intent is to eliminate competition [0]. That last factor can be hard to prove, and I don't think the FTC is doing much about anticompetitive behavior these days.
[0]: https://www.ftc.gov/advice-guidance/competition-guidance/gui...
Yes, I can imagine it’s hard to prove, which is a pretty good indicator it’s a slippery concept to being with. Everyone wants to “eliminate the competition”, including your competition!
The predatory pricing pattern the FTC would in theory sure over would be: selling items at an artificially low price until the competition goes out of business, then raising prices once you are the only seller left standing. It's the second step that makes it anticompetitive instead of just competitive
5 replies →
Selling it at cost though isn’t. And the cost to make a good is often less than 50% retail
Standard grocery margins are usually lower, in the 30%-40% range, and are often much lower for promotional items. Rotating "loss leaders" to get people in the door are standard practice. IMHO that would make it hard to bring an antitrust action against a grocery chain, as pretty much every store engages in a limited amount of predatory pricing as a marketing technique.
50% is the standard retail markup, but it varies by industry.
I'd be unsurprised in this case that Amazon could produce the product profitably for less than half the cost due to scale.
I don't think Amazon was producing anything they sold in their grocery stores. They were probably buying the same white label items as everyone else for their store brand.
The Biden admin went slightly harder against anti-competitive actions and anti-consumer actions by companies and all the billionaires freaked out and poured money into Republican campaigns in 2024 in order to roll all that back.
What was rolled back? There was no major change in action whatsoever, only rhetoric, which is meaningless. As for funding, Trump raised substantially less in 2024 than 2020 while Harris raised more money than any campaign ever has, by a wide margin. [1] Dark money also overwhelmingly flowed to the DNC. [2] And a large chunk of all of Trump's funding came after the previous administration tried to imprison him, which rather freaked people out - even those not particularly fond of him. That also likely played a significant role in the more DGAF presidency we're seeing today relative to 2016.
[1] - https://ballotpedia.org/Presidential_election_campaign_finan...
[2] - https://www.brennancenter.org/our-work/research-reports/dark...
3 replies →
To add onto sibling comment: it is specifically when they sell below cost to eliminate competition, with the goal of later being able to raise prices to recover those losses (and more) once they are the only player in town and can jack the prices up all they want. The later price elevations are what result in consumer harm, which is why it is illegal.
Predatory pricing:
A big gorilla comes in and under prices the entire market. They can do that because they already have tons of money. They do this long enough to break the market and drive the competition out of business. Once the competitors are gone they jack up the prices to unprecedented levels because there's no more alternatives available and bleed the market for all the money.
Regular pricing:
Charge a fair price based on actual costs.
This presupposes some athletic new competitor can’t enter the market and take the margin off the fat incumbent.
It’s why we have capital markets: If capturing a profitable opportunity requires spending some money, someone who wants to profit will send that money your way.
But it should only be because they indeed have lower margins or more efficient operations. It should not be funded by external money (other departments or investors), only to undercut competition too force them out only to raise prices to above the previous point after.
So a simple law could be that prices can only be raised to the point where they were at before the competition was squashed.
You can do this to a low margin business. In fact you can increase the margin once the dust settles.