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KembaraXtra – Legal Terms – Loss Leader
A loss leader is a product or service sold below cost price in order to attract customers. Businesses use this strategy to encourage consumers to purchase additional profitable items.
Although the practice is generally lawful, competition law places restrictions on dominant companies that use below-cost pricing to eliminate competitors. Such conduct may amount to predatory pricing under the Competition Act 1998 and EU competition rules.
For businesses without dominant market power, pricing freedom is broader. However, resale pricing restrictions imposed on customers may still raise legal concerns under competition law principles.
A loss leader is a product or service sold below cost price in order to attract customers. Businesses use this strategy to encourage consumers to purchase additional profitable items.
Although the practice is generally lawful, competition law places restrictions on dominant companies that use below-cost pricing to eliminate competitors. Such conduct may amount to predatory pricing under the Competition Act 1998 and EU competition rules.
For businesses without dominant market power, pricing freedom is broader. However, resale pricing restrictions imposed on customers may still raise legal concerns under competition law principles.
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