CCI seeks public comments on draft rules for determining cost of production

The Competition Commission of India (CCI) on Monday released the draft rules for determination of cost of production, seeking to update its framework for assessing predatory pricing under the competition norms.

This will replace the existing norms set in 2009.

Under the rules, Section 4(2)(a)(ii) prohibits predatory pricing as an abusive conduct by a dominant enterprise.

Further, the law defines "predatory price" as the sale of goods or provision of services at a price below the cost -- as determined by regulations -- with the intent to reduce competition or eliminate competitors.

The draft CCI (Determination of Cost of Production) regulations, 2025, were issued under section 64(2)(a) of the Competition Act, 2002, which empowers the regulator to prescribe cost benchmarks for assessing anti-competitive practices.

 

In a consultation paper floated by CCI, it said the cost will generally be taken as the average variable cost, serving as a proxy for marginal cost in predatory pricing assessments.

However, in specific cases, the commission may consider other measures such as average total cost, average avoidable cost, or long-run average incremental cost.

The move follows amendments to the Competition Act in 2023, which necessitated revisions to several regulations to align with evolving legal and economic standards.

The CCI noted that the review of these regulations aims to align them with modern economic theories, judicial interpretations, and international competition law practices.

Under the proposed norms, in determining costs, the commission or the director general may seek assistance from experts, and enterprises disputing the cost determination can request an independent expert review at their own expense.

Additionally, the draft provides for confidentiality requests regarding submitted documents, which will be assessed in line with the Competition Commission of India (General) Regulations, 2025.

With the introduction of the new framework, the 2009 cost regulations will be repealed. However, any action, decision, or ongoing inquiry under the earlier regulations will remain valid.

The CCI has asked for stakeholders' comments on the draft regulations till March 19.