Predatory dumping is a strategy to eliminate local competition by selling products at unsustainably low prices, eventually leading to monopoly formation. Success requires substantial financial resources, a responsive demand for products, barriers to re-entry for competitors, and a lack of government restrictions. An example includes Walmart's acquisition of Massmart in South Africa, aimed at driving down prices to dominate the market, which prompted regulatory measures to address competition concerns.

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Predatory Dumping

2. 1. Meaning
2. Requirements for Success
3. Example
4. Reference
Content

3.  It is more permanent or occurs more frequently than the sporadic form of dumping but less than persistent form of
dumping.
 The main objective of is to price products in such a way that local competition in the destination country is
completely destroyed.
 In the long term, this form of dumping leads to the formation of a monopoly.
 Also known as intermittent dumping.
Meaning

4. 1. Deep Pockets:
The first and foremost prerequisite for a company that relies on predatory dumping abroad is financial strength. It must
have enormous financial resources to support its dumping rate as it sells at its marginal cost or even sell at a price at
which they cannot even cover their basic costs. To finance this loss for a longer period of time, the company should have
sufficient financial resources.
2. Price Elasticity of Demand:
The demand for the products should respond to a change in the price of these products. As part of the strategy of
predatory dumping, the company reduces the price of its products with the aim of quickly entering the foreign market to
gain a considerable market share in a short period of time.
3. Re-emergence of Competition:
The competition already driven out of the market should not emerge as a challenger again after some time. Moreover, the
product and the segment should be such that new entrants do not easily establish themselves in the same product line.
There should be sufficient barriers to entry into the business segment.
Requirement for Success

5. 4. Government & International Trade Regulation:
For the success of predatory dumping, it is essential that the government and international trade regulators do not
impose curbs and restrictions on those products. It may include the imposition of anti-dumping import duties and tariffs,
setting up of import quota or an embargo, entering into trade agreements, etc.
Requirement for Success

6. Massmart was then the second largest distributor of consumer goods in South Africa when the US retail chain Walmart
acquired a 51% stake in the local retail chain of Massmart in South Africa. Its sole intention was to sell its products at
rock-bottom prices through the network of Massmart stores and distribution chains to force competition out of the
market. And thus take the form of a monopoly power.
The South African national competition tribunal immediately sprang into action and imposed a series of restrictive and
corrective measures to take full control of the deal.
Example

7. Reference
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