OFT Rejects Predatory Pricing Claim

February 27, 2012

OFT Rejects Predatory Pricing Claim

When a company engages in below-cost pricing or other ‘predatory’ practices, the Office of Fair Trading (OFT) is often called upon to investigate. Where anti-competitive practice is confirmed, the fines can be substantial, especially when the supplier is in a dominant position in the market.

However, a recent investigation shows how difficult it can be to prove the existence of predatory practices.

It concerned a company engaged in the supply of diagnostic testing services for veterinary practices. The following practices engaged in by the company were the subject of a complaint to the OFT:

  • The supply of equipment to vets at a discount if they agreed to use its services;
  • The supply of free or heavily discounted equipment to vets who spent a minimum amount each month on materials needed to use the equipment; and
  • The supply of discounted testing services on a bundle of tests which included tests supplied by the company.

After a year’s investigation, the OFT concluded that the company’s conduct was such that it was unlikely to impair effective competition in the market and that there were therefore no grounds on which it should take action.

The OFT’s decision is carefully presented and substantial, and serves as a useful guide to the approach it will take if these sorts of practices are adopted to win or maintain market share.