Though it can be determined that both concepts have similarities in terms of 'low-cost sales' and 'exhaustion of competitors', numerous differences have been noted: Dumping refers to the practice of selling commodities in overseas markets at a lower price than within the domestic market. The geographic market for predatory pricing is the country's domestic market which differentiates it from 'dumping'. The principal aspect of predatory pricing is that the seller in the market has a certain economic or technical strength which distinguishes it from price discrimination, where competition exists amongst both buyers and sellers.Ģ. Due to this, countries often have laws and regulations enforced to prevent dumping and other forms of predatory pricing strategies that may distort trade. This can result in negative effects on the home market and cause harm to domestic supplies and producers. The use of predatory pricing to gain a foothold in a market in one territory while maintaining high prices in the suppliers' home market (also known as ' dumping') creates a risk that the loss-making product will find its way back to the home market and drive down prices there. Assessing other factors, such as barriers to entry, can suffice in demonstrating how predatory pricing can lead to foreclosure of competitors from the market. However, recoupment is not a precondition for establishing whether predatory pricing is an abuse of dominance under Article 102 TFEU. This is because predatory pricing can only be considered economically effective if a firm can recover its short-term losses from pricing below Average Variable Costs (AVC). Under EU law, the European Commission can account for recoupment as a factor when determining whether predatory pricing is abusive. This is what differentiates predatory pricing from normal competitive pricing. This price adjustment can put consumers under pressure, as they are now forced to accept the higher price without any fair-priced competition, thus resulting in consumer harm. The second stage is the recoupment, during which the dominant firm readjusts its product and service prices to approach monopoly prices (or a monopoly price, depending on remaining industry players and the dominant firm's market share) to recover their losses in the long-term. The principle behind this strategy is that, unlike new entrants and current players, the dominant firm has the size and capital to sustain short-term loss in profits, thus forcing a game of survival that the dominant firm is likely to win. This drop in price forces the market price for those goods or services to readjust to this lower price, putting smaller firms and industry entrants at risk of exiting the industry. The first stage of predatory pricing (predation) involves the dominant firm offering goods and services at below-cost rate which, in turn, leads to a reduction in the firm's immediate short-term profits. Predatory pricing is split into a two-stage strategy. If strategy is successful, predatory pricing can cause consumer harm and is, therefore, considered anti-competitive in many jurisdictions making the practice illegal under numerous competition laws. Despite initial buyer's market created through firms' competing for consumer preference, as the price war favours the dominant firm, consumers will be forced to accept fewer options and higher prices for the same goods and services in the monopolistic market. The critical difference between predatory pricing and other market strategies is the potential for consumer harm in the long-term. Once competition has been driven from the market, consumers are forced into a monopolistic market where the dominant firm can safely increase prices to recoup its losses. The aim is to force existing or potential competitors within the industry to abandon the market so that the dominant firm may establish a stronger market position and create further barriers to entry. For a period of time, the prices are set unrealistically low to ensure competitors are unable to effectively compete with the dominant firm without making substantial loss. This is where an industry dominant firm with sizable market power will deliberately reduce the prices of a product or service to loss-making levels to attract all consumers and create a monopoly.

Predatory pricing is a commercial pricing strategy which involves the use of large scale undercutting to eliminate competition.

Penetration pricing occurs when