What does predatory pricing involve?

Predatory pricing, also known as undercutting, is a strategy whereby a company sets the prices of its goods or services extremely low in order to drive competitors out of the market and create obstacles for new competitors.

Predatory pricing is illegal in the United States because it is in violation of anti-trust laws, which prohibit large companies from using such strategies in attempt to monopolize markets, making it impossible for small businesses to compete. In addition to the United States, the European Union, Australia, Canada, and India also prohibit predatory pricing, as the practice violates their competition laws.