What Is Predatory Pricing And Its Prohibition Rules In Indonesia

What is predatory pricing (Freepik)

YOGYAKARTA - predatory pricing is allegedly carried out by TikTok as a platform that provides online buying and selling features. The Minister of Cooperatives and SMEs, Teten Masduki, asked KPPU to proactively investigate predatory pricing on the platform from China. So what is predatory pricing and how does it look?

Head of KPPU Deswin Nur revealed that his party will explore and study allegations of predatory pricing on TikTok. This video sharing platform is associated with predatory pricing because it sells goods at a lower price than products sold by local MSMEs. However, not all products marketed at low prices are included as predatory pricing.

Predatory pricing is often done to win so fierce business competition. However, this action is prohibited or should not be carried out in business competition. What exactly is predatory pricing and for example?

Predatory Pricing is an act of selling goods or products at prices below capital or the market. This action is usually done to win business competition in order to attract customers. predatory pricing actors dare to hit prices or sell losses extremely.

In the business world, predatory pricing is one of the prohibited actions regulated in Article 20 of Law 5/1999 concerning the prohibition of Monopoly Practices and Unhealthy Business Competition of the Anti Monopoly Law. This action can damage market and economic conditions in general, to monopolies.

predatory pricing is illegal in the business world because it is prone to causing a market monopoly. When a producer or seller sells a price much lower than the market price, consumers will choose a product from it.

In the world of trade, sellers must install prices whose values are adjusted to market conditions. There is a price formation mechanism that needs to be done in order to both provide benefits to producers and consumers. predatory pricing action can destroy this mechanism.

predatory pricing has resulted in a number of adverse effects that harm producers and consumers. Here are some of the impacts of predatory pricing:

Price wars are the impact of predatory pricing. Initially this would be profitable for consumers because they can enjoy cheaper prices in a short time. Usually consumers will take advantage of this opportunity to buy products in large numbers or large parties. At this time, producers will try to lower their product prices to stay competitive.

In longer than predatory pricing is the occurrence of a business monopoly. When the competition has been won by predatory pricing actors, there is the potential for a monopoly from a single producer to be able to get rid of its competitors.

Later, the producer will start to dare to increase prices again because they already have customers or catch the market. Consumers will certainly feel disadvantaged by the increase in product prices.

The Indonesian government strictly prohibits predatory pricing in the business world. Policies regarding the prohibition of predatory pricing are regulated in Law 5/1999 concerning the Prohibition of Monopoly Practices and Unhealthy Business Competition.

The regulation stipulates that every entrepreneur is prohibited from setting very low prices at the aim of eliminating competitors or competitors.

That's a review of what predatory pricing is and how the rules are prohibited in Indonesia. Responding to TikTok's allegations of predatory pricing, KPPU will continue to explore and trace a number of aspects to see the truth.

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