The Competition Commission of India (CCI) has unveiled a fresh set of regulations aimed at sharpening its scrutiny of predatory pricing practices, particularly within the rapidly evolving e-commerce and quick-commerce sectors.
These new norms, officially titled the Competition Commission of India (Determination of Cost of Production) Regulations, 2025, replace the guidelines from 2009 and provide a more nuanced and adaptable framework for assessing whether dominant enterprises are engaging in anti-competitive pricing strategies designed to eliminate competition.
A key highlight of the 2025 regulations is their sector-agnostic nature. Rather than prescribing specific metrics for different industries, the CCI has opted for a case-by-case assessment approach. This flexibility will allow the commission to consider the unique characteristics and dynamic nature of digital markets when evaluating allegations of predatory conduct.
The CCI clarified that while “cost” will generally be considered as the average variable cost (a proxy for marginal cost), it retains the discretion to consider other relevant cost concepts such as average total cost, average avoidable cost, or long-run average incremental cost, depending on the specifics of the industry, market, and technology involved.
This move addresses concerns raised by some stakeholders regarding the lack of clarity in the draft regulations on how costs would be assessed across diverse sectors, especially the digital space. The CCI emphasized that the new framework is designed to be adaptable to various industries, including the digital economy.
To ensure accurate and informed assessments, the new regulations empower the CCI and its investigation arm, the Director General, to enlist the help of suitable experts in determining cost figures. Furthermore, enterprises under scrutiny will have the right to dispute the cost determination made by the commission and request the appointment of their own experts, albeit at their own expense, provided they furnish valid reasons for such a request.
This provision for expert involvement aims to bring greater rigor and specialized knowledge to the process of cost determination, a critical element in identifying anti-competitive pricing conduct, especially in markets with intricate pricing models.
The timing of these new regulations is significant, coming against the backdrop of the CCI actively looking into complaints of alleged unfair business practices, particularly those involving deep discounting and predatory pricing by players in the e-commerce and quick-commerce segments. The regulator’s move indicates a clear intent to create a more level playing field and curb anti-competitive behavior that could harm smaller players and distort the market.
While some stakeholders had suggested retaining market value as a cost benchmark, especially in sectors with cross-subsidization or high fixed costs, the CCI clarified that market value reflects external factors like consumer willingness to pay and perceived value, and therefore does not constitute a reliable cost benchmark for assessing predatory pricing. The focus remains firmly on a cost-based assessment grounded in measurable production costs, aligning with international best practices.
Key Highlights:
- The CCI has notified new regulations in 2025 to assess predatory pricing, replacing the 2009 norms.
- The new framework is sector-agnostic, allowing for case-by-case assessment of costs, primarily using average variable cost.
- The CCI and the Director General can engage experts to determine costs, and companies can challenge these findings with their own experts.
- These regulations aim to address concerns around deep discounting and predatory pricing, particularly in e-commerce and quick commerce.