Verdrängungswettbewerb

Verdrängungswettbewerb, often translated as exclusionary competition or predatory pricing, refers to a business strategy where a dominant company significantly lowers its prices to drive smaller competitors out of the market. The goal is to gain a monopoly or a dominant market share, after which the company can then raise prices again. This practice is often illegal under antitrust laws because it harms competition and consumers in the long run.

This strategy typically involves a company with substantial financial resources or market power to sustain prolonged periods of low prices, even at a loss. Competitors, especially smaller ones with less capital, cannot match these prices and are forced to cease operations or be acquired. Once competitors are eliminated, the dominant firm faces little to no opposition and can then exploit its market power to charge higher prices or reduce product quality.

Regulatory bodies monitor markets for signs of Verdrängungswettbewerb. Evidence often includes a sustained period of abnormally low prices by a dominant firm, coupled with the exit of competitors and subsequent price increases. While aggressive price competition is generally encouraged, practices designed to eliminate rivals rather than compete on merit are subject to legal scrutiny. The challenge for regulators lies in distinguishing between legitimate competitive pricing and anticompetitive exclusionary behavior.