The Competition Commission of India (Determination of Cost of Production) Regulations, 2025.
The Competition Commission of India has notified the Competition Commission of India (Determination of Cost of Production) Regulations, 2025.
These Regulations aim to modernize the framework for assessing predatory pricing under the Competition Act, 2002, replacing the 2009 regulations. These regulations align with contemporary economic theories, global competition law practices, and amendments introduced by the Competition (Amendment) Act, 2023.
The regulations provide a methodology for determining the cost of production to evaluate predatory pricing, defined under Section 4(2)(a)(ii) of the Competition Act as selling goods or services below cost by a dominant firm with the intent to reduce competition or eliminate competitors. The updated framework seeks to ensure clarity, transparency, and fairness in identifying anti-competitive pricing strategies while promoting fair competition and consumer protection.
Key Provisions
Cost Benchmarks:
The default cost metric is the average variable cost (total variable cost divided by total output), used as a proxy for marginal cost.
In specific cases, the CCI may consider alternative metrics like average total cost (total cost divided by total output), average avoidable cost, or long-run average incremental cost, depending on the industry, market conditions, and technology.
The ambiguous term “market value” from the 2009 regulations has been removed to reduce uncertainty.
Expert Involvement:
The CCI or Director General may engage experts to assist in determining cost figures.
Enterprises disputing the CCI’s cost determination can request an independent expert review at their own expense, ensuring fairness and transparency.
Confidentiality:
Enterprises can request confidentiality for sensitive documents submitted to the CCI or Director General, evaluated per the Competition Commission of India (General) Regulations, 2025.
Flexibility in Procedure:
For situations not covered by the Act, rules, or regulations, or in cases of interpretation disputes, the CCI has the authority to determine the procedure for cost determination.
Repeal of 2009 Regulations:
The 2009 regulations will be repealed upon the enforcement of the 2025 regulations.
Actions, decisions, or ongoing inquiries under the 2009 regulations will remain valid and be deemed to have been taken under the new regulations
Download CCI India (Determination of Cost of Production) Regulations 2025 >>
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