Predatory Dumping

DEFINITION of 'Predatory Dumping'

A type of anti-competitive event in which foreign companies or governments price their products below market values in an attempt to drive out domestic competition. This may lead to conditions where one company has a monopoly in a certain product or industry. Antitrust or competition laws forbid predatory dumping in many countries such as the U.S. and the European Union.

Also referred to as "predatory pricing".

BREAKING DOWN 'Predatory Dumping'

For example, suppose there are two companies selling identical products; company Y is a domestic firm and company X is a foreign firm. Company X wants to drive company Y out of the market, so it prices its product far below the cost of producing it. Company Y must compete by lowering its prices, which eventually causes the company to lose money and exit the market.